The Business Man's Encyclopedia Vol. 1 Books 1 - IV
A. W. SHAW COMPANY, 1912

BOOK I

THE DEPARTMENTS IN DETAIL.

Manufacturing and Purchasing.—When a business depends upon purchasing to secure its stock—that is when it is a jobbing business, either absolute or in a modified form—comparatively little supervision is necessary. Management then vests in the Buying Department. It is here that the success or non-success of the business is bound to show. On the ability of the buyer depends the entire success of the institution. Now, because the Buying Department is small; because it has not many employees, it demands a kind of supervision that is not needed in the factory. The broad rules which the buyer is to observe will be marked out by the Business Manager. To him is then left the de- tail work of the taking on a satisfactory stock at a right price. If the stock is wrongly assorted, or if the price at which it is bought, is too high, the business loses money. As a general thing the Business manager will confine himself more particularly to determining what lines and what quantities are to be bought; the Buyer then devotes his energy to the price and to the problem of handling the salesman. He makes a study of qualities and lists—keeps a graphic chart of prices for a number of years, with which to compare present prices—and in every possible way, works for efficiency in his purchasing methods.

Buying Methods Not Spectacular.—The reason why the Buying Department of a business is often under rated is because buying methods have nothing of the spectacular. In manufacturing, an extensive plant must be maintained. The detail connected with the making of a product from the time of purchase to the time when it is stored for sale is not only intensely interesting, but calls for a large force of employees. To manufacture even a small amount of goods may require an enormous outlay for a plant or factory. To buy the same amount for jobbing purposes requires practically no outlay for an organization. It utilizes capital and a knowledge of the buying and selling market, that is all.

The Buying Department of a Factory.—The purchasing for a factory may be done by any one of the various employees. Usually the manager, the assistant manager, or if the factory is a large one, a purchasing agent handles the buying. In some cases the work is split up into divisions. A foreman may requisition material, subject to the O. K. of a department head. He may even order certain material on his own responsibility, merely forwarding a purchase notification to another department. Usually heavy buying—that requiring an expenditure above a certain sum—is done in the head office. By the use of systems a demand for the material is automatically shown by inventory and stock records.

No General Rule to Be Laid Down for Purchasing.— Sometimes it is best to localize the buying in one person; sometimes it is better to distribute it among a number. Which of various plans is preferable is usually determined by trying different methods and using the one best adapted to the particular business.

The Storage Department.—The Storage Department of a business concerns itself with (1) The storage of the raw material. (2) The storage of finished product. Material once purchased must be immediately available for manufacture. It must be so stored that the quality and quantity—particularly the latter, are immediately determinable.
There are two general methods of storing. In the first the product is kept in one store room in charge of a stockkeeper, who is responsible for the entire amount on storage. He signs receipts for incoming material and gives out material only on requisition from some one authorized to call for it. He keeps track—by means of perpetual inventories—of the amount of stock on hand and when any ot it reaches the minimum amount he notifies the buyer.

The second method of keeping track of stock is that in which the stockkeeping department is not localized. There may be from two to a dozen or more stockrooms. The kind of material to be manufactured may be such that it is impossible to keep it in one room, under one stockkeeper's charge. For instance, in a manufacturing business, using large quantities of iron and also many small parts, the heavy material might be piled in a yard, while the lighter material—being subject to depreciation, would be kept carefully in a suitable stock room.

The management and supervision of the two kinds of storage conditions differ considerably. In the first— where there is one storage room—the stockkeeper is an important employee. Upon his accuracy and judgment may depend considerably the success of the business. Where the buying authority, however, is vested in one man and the Storage Departments are distributed about the plant in charge if different stockkeepers, the Storage Department is really an adjunct to the Buying Department. As such it is not so important.

The Storage of Raw Material.—The main requisite in the storage of raw material is that it be easily found and available for use without loss of time and money in moving it. For instance, a manufacturing plant would unload its cars as near as possible at the point to which manufacturing begins. The store rooms would be situated at the beginning point of manufacture. Those raw supplies that were necessary only at the certain stages of the later parts of manufacture would rightly be stored at the most adjacent points. The idea is to avoid all handling of material that is not absolutely necessary to manufacture. In the larger type of factories the flow of manufacture is direct from the point of supply to the point of finishing. If there be more than one point of supply, the material is placed as nearly as possible where it will be needed as the product is made up.

The Finished Product.—Finished product is of two kinds—the finished components which enter into the manufacture of a product and the product when it is laid down ready for sale. For instance, in the manufacture of a typewriter or cash register, there would be a large number of component parts, which are uniform throughout the various machines. These components could be made up ahead of the time of use. They would then be stored in charge of the stock- keeper and requisite from time to time as needed. These parts, considered as parts, are the finished product as they need no processing in order to be used. Food management provides for not only the manufacture of these parts, but the storing and keeping track of them so that they may be available for use whenever needed.

The true meaning of Finished Product is "the goods, article or commodity which is manufactured, when that product is laid down ready for sale." With the exception of supplies necessarily to be "aged," the product is not stored, but Is boxed immediately and put out by the Shipping Department. Particularly in good times, when all manufacturing establishments are behind on their orders, this condition is found. As a consequence, the storage of finished product is not a large part of the work of the stockkeeper. In fact, a product once finished goes to the Shipping Department, for boxing, cartage and shipping.

There are certain lines in which a sale of component parts is often made a feature of the business. For instance, in the manufacture of agricultural implements, there is a large sale on the repair parts. These parts would be simply the components of the various machines. Usually a separate sales department would be maintained for these "supplies" as they are called. In the manufacture of electrical machinery it is possible that these components would not be stored separately, but would be requisited directly from stock.

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