Rule 214 of The General Financial Rules 2017 Buffer Stock
Original Rule Text
Visual Summary
Competent authority determines ideal buffer stock levels.
Considers frequency, quantity, and supply patterns.
Materials over one year considered surplus, managed per Rule 217.
Executive Summary
Rule 214 of the General Financial Rules, 2017, outlines the principles for determining optimum buffer stock levels for consumable materials. It mandates that the competent authority consider factors like frequency of requirement, quantity, and supply patterns. The rule also introduces the concept of surplus material, defining items remaining in stock for over a year as generally surplus, and directs their disposal according to Rule 217, emphasizing efficient inventory management and cost control.
In-Depth Analysis of the Rule
Introduction: Rule 214 is a critical component of inventory management within government operations, focusing on the strategic maintenance of buffer stocks for consumable materials. This rule aims to balance the need for continuous supply with the imperative of minimizing carrying costs and preventing waste.
Breakdown of the Rule:
- Buffer Stock Determination: The core of the rule is the requirement for the competent authority to determine the ‘optimum buffer stock’ for consumable materials. This is not an arbitrary decision but one based on specific analytical considerations.
- Key Factors for Determination: The rule explicitly lists three crucial factors: the frequency of requirement, the quantity of material needed, and the pattern of supply. These elements ensure a data-driven approach to inventory planning.
- Role of Competent Authority: The responsibility for determining the optimum buffer stock rests with the ‘competent authority,’ underscoring the need for an authorized and knowledgeable decision-maker in this process.
- Definition of Surplus Stock: A significant note within the rule defines a material remaining in stock for over a year as generally ‘surplus,’ unless there are adequate reasons to justify its retention. This highlights the importance of regular inventory review.
- Disposal of Surplus: For items declared surplus, the rule mandates that they be dealt with according to the procedure laid down under Rule 217, establishing a clear process for managing excess inventory.
Practical Example: Consider a government department that regularly uses office stationery like paper, pens, and printer cartridges. The competent authority for this department would analyze the monthly consumption rate (frequency and quantity), the lead time for new orders, and the reliability of suppliers (supply pattern). Based on this, they would determine an optimum buffer stock to ensure that operations are not interrupted due to shortages. If, after a year, a large quantity of a specific type of pen remains unused, it would be flagged as surplus and processed for disposal as per Rule 217, preventing unnecessary carrying costs and freeing up storage space.
Related Provisions
Rule 214 is part of a broader framework for inventory management. Other relevant provisions include:
- Rule 217 of The General Financial Rules 2017 Disposal of Goods: Details the procedures for disposing of surplus, obsolete, or unserviceable goods.
- Rule 213 of The General Financial Rules 2017 Physical Verification of Assets: Outlines the requirements for physical verification of fixed assets and consumables, which helps in identifying surplus stock.
- Rule 211 of The General Financial Rules 2017 Lists and Accounts of Inventory: Prescribes the maintenance of suitable item-wise lists and accounts for goods and materials in charge.
Learning Aids
Mnemonics
- BUFFER: Balance Utility, Frequency, Factors, Excess Review.
Process Flowchart
Multiple Choice Questions
1. According to Rule 214 of the General Financial Rules, 2017, what is the primary purpose of determining optimum buffer stock?
- A) To maximize inventory carrying costs.
- B) To ensure continuous supply of consumable materials.
- C) To identify materials for immediate disposal.
- D) To reduce the frequency of material requirements.
Show Answer
Correct Answer: B) To ensure continuous supply of consumable materials.
2. Which of the following factors is NOT explicitly mentioned in Rule 214 of the General Financial Rules, 2017, for determining optimum buffer stock?
- A) Frequency of requirement.
- B) Quantity of consumable material.
- C) Market price fluctuations.
- D) Pattern of supply.
Show Answer
Correct Answer: C) Market price fluctuations.
3. Who is responsible for determining the optimum buffer stock according to Rule 214 of the General Financial Rules, 2017?
- A) The Accounts Officer.
- B) The Head of the Department.
- C) The competent authority.
- D) The supplier of the material.
Show Answer
Correct Answer: C) The competent authority.
4. Under Rule 214 of the General Financial Rules, 2017, a material is generally considered surplus if it remains in stock for how long?
- A) Six months.
- B) One year.
- C) Two years.
- D) Three months.
Show Answer
Correct Answer: B) One year.
5. What rule governs the disposal of items declared surplus as per Rule 214 of the General Financial Rules, 2017?
- A) Rule 210.
- B) Rule 211.
- C) Rule 217.
- D) Rule 208.
Show Answer
Correct Answer: C) Rule 217.
Frequently Asked Questions
What is the primary purpose of Rule 214 of the General Financial Rules, 2017?
The primary purpose of Rule 214 is to ensure that government departments maintain an optimum level of buffer stock for consumable materials, balancing the need for uninterrupted operations with efficient inventory management and cost control.
What factors influence the determination of optimum buffer stock under Rule 214?
According to Rule 214, the optimum buffer stock is determined by considering the frequency of requirement, the quantity of the consumable material, and the pattern of its supply.
When is a material generally considered surplus according to Rule 214 of the General Financial Rules, 2017?
A material is generally considered surplus if it remains in stock for over a year, unless there are adequate, documented reasons to treat it otherwise. Such surplus items are then managed as per Rule 217.
Key Takeaways
- Rule 214 mandates the determination of optimum buffer stock for consumable materials by the competent authority.
- Key factors for this determination include the frequency of requirement, quantity, and supply patterns.
- Materials remaining in stock for over a year are generally deemed surplus, aiming to minimize inventory carrying costs.
- The disposal of such surplus items is governed by the procedures outlined in Rule 217.
- Effective implementation of Rule 214 is crucial for financial propriety and operational efficiency in government departments.
Conclusion
Rule 214 of the General Financial Rules, 2017, provides essential guidance for managing consumable inventory, a often-overlooked aspect of financial management. By systematically determining buffer stocks and identifying surplus materials, government entities can significantly enhance operational continuity, reduce unnecessary expenditure, and uphold high standards of financial propriety. Its linkage to Rule 217 ensures a complete lifecycle approach to inventory from procurement to disposal.