Mapping out a supply chain is one of the critical steps in performing an external analysis in a strategic planning process. The importance of clearly laying out the supply chain is that it helps the institution define its own market for supplies and products. The supply chain management should result in lower costs and a faster process, and production cycle.
A typical supply chain begins with the ecological, biological, and political regulation of natural resources, followed by the human extraction of raw material, and includes several production links (e.g., felling, skidding, transfer to the mill, sawmilling) before moving on to several layers of storage facilities of ever-decreasing size and increasingly remote geographical locations, and finally reaching the consumer. Supply chain activities transform natural resources, raw materials, and components into a finished product that is delivered to the end customer.
In forestry, typical supply chains involve the chains of custody for the forest products. For example, the chain of custody for timber from plantations starts with the forest owner at the tree stump. The tree is sold to a person who fells the tree and crosscuts it into logs. The logs may be transported to a sawmill located far from the forest. The sawmiller then takes custody of the logs and cuts them into timber. A timber dealer buys the timber and transports it to the timber yard, from where a building construction company buys it and transports it to the construction site.
The forest products chain of custody is given in more detail in Section 4.3.
Instruction 459: The institution should perform supply chain analysis for its various products and inputs:
• The FMI shall identify its products and the organizations, people, activities, information, and resources involved in supplying a product or service to a consumer.
• The supply chain should identity producers, vendors, warehouses, transportation companies, distribution centres, and retailers involved.
Instruction 460: Ultimately, the FMI may sign on to certification of the products in its custody using credible certification schemes. For example, this should serve a marketing strategy well if a FMI decides to sell timber to organisations which wish to communicate to their clients that they are environmentally and socially responsive.
Instruction 461: The following considerations shall be key ingredients in the management of stores
(a) Stores buildings shall be weatherproof and secure, with adequate shelving to enable items to be stored tidily.
(b) The store shall have pallets on which to lay items that may not be stacked in the shelves because of their weight and volume such as cement, fertilisers etc.
(c) Adequate spacing shall be provided between shelves or pallets to provide passage so that all items are easily accessible.
(d) Store items shall not be stacked or piled against the walls, but adequate space (0.5 metres) shall be left from the walls
(e) Petrol and other highly inflammable materials shall be stored separately and well away from other buildings
(f) The store shall be installed with fire extinguishers in accessible strategic positions as a safety measure in the event of fires
(g) The store shall be kept clean and tidy
(h) The store shall be kept locked with the keys under custody of one Responsible Officer for accountability purposes
(i) Stores for chemicals shall be separate from other stores
Government FMIs are required to follow the Public Procurement and Disposal of Public Assets Act, 2003 (the PPDA Act), the Central Government PPDA Regulations, 2014, the LG PPDA Regulations 2006, the various guidelines and Circulars issued under the PPDA Act[1] .
Instruction 462: The purchase of stores shall be handled according to the (PPDA Act) and the associated Regulations, which guides procurements financed by public funds. The act entrusts the overall responsibility of the execution of procurement and disposal process to the Accounting Officer of a procuring and disposing entity.
Receipt, inspection, and storage of stores is important to ensure accountability of resources of the institution. The Accounting Officer is responsible for the procurement and safe custody of inventories under his or her control. (Treasury Instruction 2017: 15.1.1)
Instruction 463: FMIs shall adapt the ingredients outlined below to fit particular situations
(a) Every public officer is personally responsible for Government stores under his or her control. (Treasury Instruction 2017: 15.1.2)
(b) Only goods ordered with an authentic Local purchase order shall be received into the store by the storekeeper.
(c) The storekeeper shall check the items in the delivery note to match with items in the copy of the Local purchase order to ensure right quality and quantity specified in the Local purchase order, and correct amounts.
(d) The Responsible Officer shall document any shortages in delivery of goods and initiate appropriate action to rectify the anomaly.
(e) So far as is possible, the task of receiving and checking stores inventories shall be carried out by a public officer other than the one who places the orders and authorizes payment for the supplies, and the documentation shall permit the various elements of the transaction, including ordering, receipt and payment, to be identified with and checked against each other. (Treasury Instruction 2017: 15.2.2)
(f) The Accounting Officer shall arrange for the stores for which he or she is responsible to be inspected regularly, and for written reports to be made to them on the sufficiency of the storage accommodation and on the general condition of stores and storage facilities. (Treasury Instruction 2017: 15.6.1)
(g) The inspecting public officer shall report to the Accounting Officer promptly and in writing, any case of loss, shortage, leakage, damage, waste, deterioration or irregularity observed in the course of his or her inspection, and the Accounting Officer shall take prompt and appropriate action to correct any defects or deficiencies reported. (Treasury Instruction 2017: 15.6.2)
Instruction 464: An appropriate record shall be kept in respect of every store received in accordance with a format that shows details of movement and cost. (Treasury Instruction 2017: 15.6.2).
Instruction 465: The following shall constitute a minimum procedure of stores issue:
(a) Each item issued from the store must have a well filled in store issue voucher that authorizes the store keeper to issue the goods. The requester should be any member of the particular department requesting the goods.
(b) The goods issue voucher shall be dully approved by an authorized officer before the goods are issued out of the store.
(c) The person issuing the goods must be clearly identified on the stores issue voucher. This should be the storekeeper or person of similar function in charge of the store
(d) The person receiving the goods shall acknowledge receipt by signing the issue voucher. In case the goods are received by a transporter to deliver to field offices, the delivery must then be documented with a waybill, which will contain all the details of the point of origin, point of destination and exact content of the consignment. The waybill shall be in triplicate of which one copy remains in the book at the point of origin and two copies are sent along with the goods. At destination, the two copies are signed by the consignee and one of them is returned to the issuing store.
(e) The Responsible Officer should open and maintain a stores ledger card/record for each stores item which should be updated with receipts and issues of stores reflecting the effect of the transactions promptly.
The inventory of stores may constitute any item held in store for use in the operational activities of the institution or goods held for sale by the institution. Good management of the inventory shall endeavour to realize a more organized store, increased information transparency, accurate planning, increased efficiency and productivity, improved delivery performance and lower costs, resulting in decreased inventory write-offs.
Instruction 466: Accounting Officers of government FMIs may, with the authority of the Secretary to the Treasury, write-off minor items of inventories which have been accidentally lost or broken beyond repair such as glassware and small tools, or perishable items which have become unserviceable, provided that no question of fraud, theft or negligence is involved and the value does not exceed the maximum value determined by the Accountant General from time to time.(Treasury Instruction 2017: 15.10.1)
Instruction 467: In each case of minor inventories lost or broken, the Accounting Officer may, after an investigation, order that the cost of the article shall be recovered from the public officer found culpable. (Treasury Instruction 2017: 15.10.2)
Instruction 468: All write-offs shall be compiled and reported (using TF 29) to the Secretary to the Treasury for inclusion in a Supplementary Appropriations Bill to be introduced in Parliament. (Treasury Instruction 2017: 15.10.3)
The major objective for stock control is to maintain the appropriate quantity of stock, so that the institution can meet operational and customer demand without delay while keeping the costs of holding stock to a minimum. Customers may be internal or external. Stock control is important because it can be the difference between loss and gains/profit. Done right, it keeps costs down while increasing profitability/surplus.
Instruction 469: FMIs should observe the following:
(a) Use efficient methods of stock control that may include: Just-in-time (JIT), First In First Out policy for issuing out stock, observe Economic Order Quantity[2] , use Vendor-managed inventory[3] , etc. Where big volumes and numerous types of different types of inventory are involved use a digital software for inventory management as much as possible.
(b) Ensure that whenever one public officer relinquishes to another, the whole or part of his or her responsibilities for any store, the inventories and stores ledgers are properly examined and the hand-over conducted in such a manner that there can be no doubt or ambiguity as to the items handed over and taken over. (Treasury Instruction 15.8.1)
(c) Stock taking by an officer who is not tasked with managing the store shall be conducted quarterly
(d) Prepare monthly reports showing opening balance, total quantity received in the month, total quantity issued in the month, discrepancy amount, and closing balance for each stores item.
(e) The possible explanation for any discrepancy shall be given and a higher officer shall investigate the discrepancy
The goal of the EOQ approach to control of stores is to identify the optimal number of product units to order. If achieved, a company can minimize its costs for buying, delivery, and storing units ↩︎
The buyer of a product provides information to a vendor of that product and the vendor takes full responsibility for maintaining an agreed inventory level of the material, usually at the buyer's consumption location. In other words, the vendor is responsible for supplying the customer when the items are needed ↩︎