them through, and, by all means, the company should be in charge of the class. As Mr. Glover says, someone should have enough interest in it to follow it through, also by having lectures and by giving the opportunity for students to refer any questions. I wish to express my thanks for the encouragement I have received. I. THE CHAIRMAN: The next item on the program is the Report of the Purchasing and Storeroom Accounting Committee. Mr. W. F. Stevens, the Chairman, unfortunately is not able to be here. I will call on the Vice-Chairman of that Committee, Mr. Charles Marden, to present that report. Report of Purchasing and Storeroom Accounting Committee The Committee begs leave to submit the following Part II. Part I-Following Vendors for Delivery The Committee finds that the various processes of following vendors for the material in use today among the larger companies may be classified according to division of responsibility among the departments interested as follows: 1. The Purchasing Department undertakes the responsibility of following for the delivery as far as it can be done without reference to the other department interested. 2. The department interested initiates the process by following the Purchasing Department, which in turn follows the vendor. The replies are referred back to the source and the transaction is considered closed unless reopened by the interested department. 3. The interested department completes the matter directly with the vendor without reference in any way to the Purchasing Department except in extreme cases. Consideration of the relative values of each of these methods from the viewpoint of the commonly accepted standards of division of responsibility that have been developed in our industry lead to the conclusion indicated in the following: Dealings between the company and vendor tending to terminate in money transactions are essentially purchasing functions. But while this is so, it works out in practice that better efficiency in operation is obtained by delegating some of these, it being especially so in engineering studies not resulting in formal quotations and to some extent in matters relating to the completion of work or delivery of material after the purchase arrangements have been effected. This latter point is based upon experience which seems to show that those nearest to the source of the operation of initiating the purchase order are usually in a better position than is the Purchasing Department to carry out a large proportion of all cases of following for material with the least amount of lost motion. Part IV. Method of Handling Cash Discounts on Invoices for Supply Material. Part V. Adjustment of Claims on Purchased Material. Part VI. Subjects Referred to the Succeeding Committee. on Purchase Orders for Supply Material A plan which will harmonize both the diverse conditions noted above has been worked out in the following, which in the judgment of your Committee seems to conform to the trend of good practice today: The Stores Department will organize to initiate all following operations and continue them to a conclusion or until the results indicate that considerable pressure must be put upon the vendor, in which case the matter will be referred to the Purchasing Department for action or advice. Such dealing with the vendor may be carried on in the name of the Stores Department or the Purchasing Department, and all except verbal requests may actually pass through the hands of the Purchasing Department for signature and approval if the Purchasing Department is represented nearby the source of the following. Such procedure will allow the vendor to carry on all formal dealings with one department. Within the past year one company has installed such a method, which is reported as giving quicker and surer results with less communication with the vendor than under the previous method of having the Stores Department follow the Purchasing Department and the latter follow the vendor in series. A description of the details of this system is given:-Two forms of Purchase Orders are used: 1. PETTY CASH or EMERGENCY Representing about 60% by number and 3% by value of all orders drawn for the Stores Department. 2. FORMAL Representing 40% by number and 97% by value. Purchases on Emergency Orders require little written following, as they usually are drawn on local vendors and, in following, the telephone can be used successfully; also the goods are generally of such quantity and character that they are sup plied complete from stock or with small delay. Fig. 25. Folder and last copy of Purchase Order with "tickle r file" arrangement at top. Reverse side used for recording part shipments and verbal information regarding order. Written information filed in the folder. Purchases on Formal Orders require more attention on the part of both the company and the vendor and a more comprehensive method has been worked out for this class, of which a description in detail is shown in the following: The last copy of the purchase order is reproduced on a folder (see Fig. 25) in "tickler" form with the dates arranged at the top for use with a movable metal tab. These latter are first set arbitrarily in all cases at one week after the order is sent out, and the order is scheduled then to come up for preliminary inspection at that time and the exact setting of the first follow-up date. Many orders are eliminated by completion within the week and much work is saved thereby. In this folder is filed all correspondence with the vendor concerning the order, shipping notices and other advice pertaining to the progress of fulfillment. Letters pertaining to prices, however, are always filed with the Purchasing Department. Space is provided on the reverse side of the folder for notations of verbal information as well as part shipment receipts. The telephone is used extensively with local vendors in cases where it is easy to get in touch with some responsible representative who is able to give reliable information, but often this is not possible and written followers are used. To vendors outside the city or who are not available otherwise, perfunctory following and all except the most special ones are taken care of by the use of a series of carefully worked out form letters. Copies of these forms are in the hands of the stenographers, and by supplying such facts as the vendor's name, order number, material on order, etc., the letter can be constructed to appear as if dictated. The result of this is a great saving in time of both the dictator and the stenographer. In cases where such preconstructed forms do not fit the case, letters are built up from a series of formulated paragraphs designated by numbers. Special letters are thus readily constructed by the stenographers by supplying a series of numbers. For the best results, judgment must be used not to repeat or overdo the use of this style of correspondence even on the following of different orders on the same vendor as the impression created may be that following is being pursued as a matter of course rather than from actual needs. Therefore, it is occasionally desirable to dictate special letters, usually, however, only after all the form and paragraph letters applicable to the circumstances have been used or found not appropriate, which letters generally go more into detail and result in a more personal appeal. The telegram is resorted to in urgent cases and those in which letters fail to bring a reply. It has been found that this method gets better attention and quicker action than any form of letter. When telegrams fail, or for other reasons, the long distance phone is used, which has the advantage of giving a better understanding as to the actual conditions surrounding the case. All information concerning the progress of orders is gathered by the Stores Department, and from there sent out to departments interested in material which is being obtained for their special use, thus centralizing the following for special purposes as well as for general stock. When cases arise where the satisfactory results of any case are especially bad, or the service in general is poor after the use of the usual methods, the procedure is to refer the cases to the Purchasing Agent for such action as he may suggest. In practice the proportion of such cases is small. What is called a "service claim" is sent to the Purchasing Agent in such cases, together with all papers, including a review or history. The methods previously described apply to cases in which the material has not left the factory in time to meet the needs of the user or to maintain the required reserve in the most important types of stock. This condition may require asking for an earlier shipment than called for in the purchase order. It is usually due to the vendor failing to keep the original date called for. Conditions arise in transportation which the vendor is unable to control and require a special type of following outside the scope of that described here. The knowledge of bad transportation conditions may call for shipment of the material in advance of the time specified, which conditions may be guarded against by special means. The following statistics show the extent to Telephone followers (daily).......... 25 6 1 Service claims to Purchasing Agent (monthly) 6 References to Transportation Department (monthly) 6 The work involved in following for the delivery of purchased material is handled as a subdivision of the Stores Department office and is treated as a part of Stock Control work upon the theory that the regulation of incoming stock is a function of maintaining the proper investment in the Stock Accounts. Part II-Method of Handling and Accounting for Returnable Reels and Containers The only difficulty of much importance that has arisen in practice in connection with the application of stock methods to this subject is that of preparing a record of original charges when the articles are shipped back to the vendor in such a way that: 1. The shipper is sure of his position; 2. The vendor can check the statement of the shipper from examination of the material. Two methods are found in common practice today: 1. To use identification numbers when put on by the vendor. This cannot cover all cases, as some items are not permanently numbered by the vendor. 2. To apply a new series of numbers by the purchaser with a record of the corresponding vendor's number. It has commonly worked out that those companies now using the second method formerly used the first and made the change because of trouble that developed in the multiplicity of series of numbers and the imperfect methods of attaching the numbers ir some cases. The Committee has examined various ways of carrying on the work by both methods and believes. that the second one is the more practical for large companies, although it involves some added expense in connection with the physical process of attaching the numbers. The following method is selected for detailed description, being one in use by the Consolidated Gas, Electric Light & Power Co. of Baltimore with good results for a number of years. IDENTIFICATION Reels and drums are identified by serial number. An aluminum or brass tag bearing company's name and the serial number is tacked on side of each reel or soldered on top of each drum. Aluminum tags cannot be conveniently soldered on iron drums and brass tags are used for drums. (See Fig. 26.) RECORD Brass for Use on Drums BALTIMOR Aluminum for Use on Reels Fig. 26. Brass and aluminum serial numbered tags used for identification purposes. Purchaser's number of reel or drum together with factory number are reported by receiving clerk on form from which (Fig. 28) invoice is passed for payment. When invoice is passed, card record should be made showing (Fig. 27): 1. Purchaser's number. 2. Factory number. 3. Name of shipper. 4. Purchaser's requisition or order number. 5. Date received. 6. Amount charged for reel or drum and cost of reel or drum is charged to Reel and Drum Account. Cards are filed in numerical sequence of company numbers in cabinet marked "Reels and Drums on Hand." When reels and drums are shipped to manufacturer, memorandum of company numbers are made, cards drawn from the file and bill rendered against manufacturer for original cost. Proper records are made on cards to identify same with bill against manufacturer and cards are then filed in numerical order in obsolete file. When reels and drums are returned to manufacturer, the Reel and Drum Account is credited with value of containers returned. If reel or drum is delivered to a customer, same procedure is followed. QUANTITY Reels VIA DO CHARGE Trepaid 19 81758 CAR INITIAL and No. 269 4/0 ft 2000000 1 70 MATERIAL WAY-BILL 6.M. Lingle Band PoL 240 Matle with pression tors 6. No A6196-Pastory 4A 38056 Fig. 28. Receiving form on which is reported the necessary information regarding the receipts of returnable containers. Part III-Control of Stock By way of introduction it may be stated that the reason for the general interest of late in the subject of this report may be attributed largely to (A) the uncertainty of the immediate future requirements for expansion; (B) the realization of a consistent and long ex |