The Need for Proper Store Keeping in Manufacturing Company

The Need for Proper Store Keeping in Manufacturing Company

CHAPTER ONE

OBJECTIVE OF THE STUDY

The major objective of this study is to determine of the need for store keeping keeping in a manufacturing company. The specific objectives of this study are as follows:

To determine to what extent the ineffective store keeping in Ama Breweries plc has caused low productivity in the company.
To examine the extent to which insufficient inventory of finished goods cause loss of sales to the company.
To identify the degree to which poor inventory modern used by the company has resulted to low productivity in the company.
To ascertain whether the company has suffered from poor management and control of inventories.

CHAPTER TWO

LITERATURE REVIEW

CONCEPT OF INVENTORY

Inventories are vital to the successful functioning of manufacturing and retailing organizations. This is because many companies hold inventories as part of their business operation. Inventories make up the most significant part of current assets of most companies especially the manufacturing companies. The need for management to ensure inventory control if properly managed cannot be over emphasized. A firm neglecting store keeping will be jeopardizing its ling run profitability and it may end up failing in its business. The definition of inventory has been defined by many professional bodies and scholars in different ways. The Microsoft Encarta premium defined it as the quantity of goods and mateials on hand. A manufacturer’s inventory represents those items that are ready and available for sale.

According to Nwaorgu (2005:123), inventory can be defined as a tangible property held to resale in the ordinary course or business, in the production for sale, to be consumed in the production of goods and services According to Jain (1999:472), inventory is the aggregate of these items of intangible property which are held for sale in the ordinary cause of the business, held in the process of production for such sales to be currently consumed in the production of goods and services to be made available for sale.

CHAPTER THREE

RESEARCH METHODOLOGY

RESEARCH DESIGN

The research design adopted in this work is the survey design method which comprises of the use of questionnaires and oral interviews.

POPULATION OF THE STUDY

The population of the study for Ama Greenfield Breweries plc has a total number of 500 employees but because of the nature of this work, the population will be reduced to a total number of 60 which consists of the production department, sales department and the marketing department.

CHAPTER FOUR

DATA PRESENTATION AND ANALYSIS

PRESENTATION OF DATA

CHAPTER FIVE

SUMMARY, CONCLUSION AND RECOMMENDATION

SUMMARY OF FINDINGS

The main objective of this research work is to highlight the need for store keeping keeping in a manufacturing company specifically Ama Greenfield Breweries plc. Relevant related literature on store keeping was received to find out the extent of work already done. The instrument used for data collection was questionnaires which were subjected to reliability and validity before it was being administered to the respondents.

The sample size used for this study was 52 out of 500, using a systematic random sampling. However, having analyzed the data the following are the findings which were deduced from this study:

Ama Breweries, the company used as the case study makes formal inventory policies. This is supported by table 4.5 in chapter 4 which shows that all the respondents agreed that the company makes formal inventory policies. This is a clear indication that the company attached some degree of importance to the management of inventories.
It was discovered that the company makes use of replenishment model and the re-order date is not fixed rather, minimum and maximum levels are set. When stock is depleted to the minimum level, an order for replenishment is placed to bring the stock to the maximum level. It was also discovered that the company monitors the stock levels through the perpetual stock taking methods so that they can know when to re-order for stocks.
There is a divergence between policies and the practices of those policies made in the company under this study because it was observed that the company does not adhere strictly to her inventory policies. This was confirmed by the responses in table4.7 of the questionnaire where 25 of the respondents agreed that the company does not adhere strictly to her inventory policies. In order words, policy decisions are made by the company, but sometimes it fails to follow such procedures or policies made.

A number of reasons were given by the respondents that constrain effective management of inventories in the company, they are as follows:

Inadequate flow of information:

This was the reasons given as result of the occasional depletion of materials below the re-order point before a replenishment procedure is initiated. Sometimes information as to the issue of materials by the sales department are not given promptly, thereby leading to inadequate update of inventory records as a result of inadequate flow of information.

Inflationary pressures:

This is a general problem as was stated by the various respondents in the various departments. This according to them destabilizes their plans and causes them to invest more than planned on inventory since prices of materials are increasing rapidly. This means that sometimes the company exceeds her stipulated maximum stock level because it expects increases in prices in the future.

Scarcity of materials:

These like inflationary pressures causes the company to exceed her stipulated maximum stock level, the respondents when interviewed explained that since some of the materials which are being used are scarce, they are bought in large quantities so that they can be used for future purposes thereby exceeding re-order level.

It was also discovered that the company runs out of stock from time to time and when asked why, the researcher was made to understand that although minimum stock is maintained, the reasons for stock out was attributed to unexpected delay in delivery or exceptionally high consumption during the lead time.

CONCLUSION

During the course of the study on the need for store keeping keeping in a manufacturing company, it was discovered that inventory is the bedrock in the existence of any manufacturing firm and effective store keeping will lead to effective control of the organization. However, whatever system or technique of store keeping, it much be channeled towards the reduction of stock to the barest minimum. These inventory techniques should be monitored to ensure its effectiveness. Therefore, from the results of the data analysis it is right to conclude that store keeping has not been very effective in Ama Breweries and this is as a result of the fact that inventory policies are not strictly adhered to. Therefore, efforts are needed to be made in order to improve on these present situations.

Therefore, the researcher highlighted some recommendations which if implemented, Ama Breweries will have its profitability improved as a result of reduction in cost which will enable it to reduce price and increase its turnover thereby spreading its overhead costs over increased output which will in turn result in reduced cost of reduction.

RECOMMENDATION

Having carried out a study of store keeping in a manufacturing company with a specific focus on Ama Greenfield Breweries plc, the following are some recommendations given by the researcher which if implemented, will have its profitability improved as a result of reduction in cost to enable wider gross margin of the company:

The company should try by all means to adhere to inventory polices made. A situation is a case whereby materials or items are allowed to leave the stores without proper requisition, this shows that the internal control is weak. In order to ensure that the company adheres to inventory policies, under no circumstance should items of inventory be allowed to leave stores without proper requisition.
The company should employ the economic order quantity method when placing orders. The economic order quantity model puts into account the relevant costs associated with ordering and carrying inventory. Every business organization aims at reducing cost to the barest minimum and one of the avenues by which this could be achieved is adopting the economic order quantity method of placing order.
Sufficient stock should be held in order to avoid stock-out so that when the ordering level is high; there will be enough stock to be delivered.
The flow of information should be increased and should be circulated adequately in order to enhance adequate updates of inventory records.

BIBLIOGRAPHY

Agu, A. O (2008). Research Methodology, 2^nd Edition, Anambra: Najutel Nigerian Publishers.
Buchan, S., & Keansburg. (1966). Scientific Inventory
Management. New Delhi: Prentice – Hall Inc.
Charles, T. H. (1982). Cost Accounting: A Managerial
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Donald W. K., & Edward A.S. (1980). The Manager’s Guide to statistic and quantitative Methods. London: McGraw Hill Publishing.
Fred, W. J., & Thomas, C. (1985). Essentials of Management
Finance. London: Dryden Press.
Hadley, G. & Whitin, T. M. (1963). Analysis of Inventory
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James, M. I. (1963). Questions for Solving Inventory

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