Role Of Stock Control In A Manufacturing Company
(A Case Study Of Consolidated Breweries Plc Awo-Omamma, Imo State)
Stock control plays a crucial role in the efficient operations of a manufacturing company, ensuring optimal inventory levels to meet production demands while minimizing costs and maximizing profitability. By implementing effective stock control mechanisms, such as inventory tracking systems and demand forecasting, manufacturing companies can avoid stockouts and overstock situations, thus preventing disruptions to production schedules and reducing storage costs. Moreover, strategic stock control enables companies to optimize cash flow by minimizing tied-up capital in excess inventory and identifying slow-moving or obsolete stock for timely disposition. Additionally, by continuously monitoring stock levels and procurement processes, manufacturing companies can enhance supply chain efficiency, streamline purchasing activities, and foster better supplier relationships. Ultimately, proficient stock control not only enhances operational agility and customer satisfaction but also strengthens the competitive position of the manufacturing company in the market landscape.
1.1 Title page i
1.2 Approval page ii
1.3 Dedication iii
1.4 Acknowledge iv
1.5 Abstract v
1.6 Table of Contents vi
CHAPTER ONE
1.0 INTRODUCTION 1
1.1 GENERAL OVERVIEWS 3
1.2 STATEMENT OF THE PROBLEM 4
1.3 OBJECTIVE OF THE STUDY 4
1.4 SIGNIFICANCE OF THE STUDY 5
1.5 RESEARCH QUESTION 7
1.6 HYPOTHESIS 7
1.7 SCOPE OF THE STUDY 7
1.8 LIMITATION OF THE STUDY 8
1.9 OPERATIONAL DEFINITION OF TERMS 9
CHAPTER TWO
2.0 LITERATURE REVIEW 11
2.1 HISTORICAL BACKGROUNDS 12
2.2 MEANING OF STOCK CONTROL 13
2.3 OBJECTIVE OF STOCK CONTROL 14
2.4 INFORMATION NECESSARY FOR EFFECTIVE STOCK CONTROL 16
2.5 FACTORS TO CONSIDER WHEN CONTROLLING STOCK BY QUALITY 18
2.6 DETERMINATIONS OF STOCK LEVELS 19
2.7 METHODS OF STOCK CONTROL 22
CHAPTER THREE
3.0 INTRODUCTION 27
3.1 RESEARCH DESIGNS 27
3.2 QUESTIONNAIRE DESIGN 28
3.3 POPULATION/SAMPLE SELECTION 28
3.4 SOURCE OF DATA 29
3.4.1 PRIMARY SOURCE 30
3.4.2 SECONDARY SOURCE 30
3.5 DATA COLLECTION TECHNIQUES 30
3.5.1 THE SURVEY 31
3.5.2 OBSERVATION 31
3.6 METHODS OF DATA ANALYSIS 32
CHAPTER FOUR
4.0 DATA PRESENTATION AND ANALYSIS OF FINDINGS
4.1 DATA PRESENTATION 33
4.2 ANALYSIS OF DATA 33
4.3 TESTING OF HYPOTHESIS 49
4.4 DECISION RULE 51
CHAPTER FIVE
5.0 SUMMARY, CONCLUSION AND RECOMMENDATION
5.1 SUMMARY 53
5.2 CONCLUSION 54
5.3 RECOMMENDATION 54
BIBLIOGRAPHY 56
APPENDIX 1 57
QUESTIONNAIRE 57
1.0 INTRODUCTION
Stock and its control have a concept which has been as old as human race in the history of mankind. If the origin of stock control is well traced, we discover that it has some elements of recognition. In the story of the early man, we were made to understand that they lived an unsettled life having no control and kept nothing for future use, and due to this, they were faces with different problems caused by out of stock.
These days, manufacturing companies tend to put stock control into practice having known that such are expected from them, therefore as the management practice are becoming are becoming increasingly dynamic with the passage of them, numerous future planning and controlling activities that are formally performed by clerks have reading efforts in
Corporate objectives and inventory control as a vital element of materials management is of function that should be given proper attention.
According to mocker (1984), control can be defined as a systematic effort by business management to compare performance to predetermined standards plans of objective, to see where performance is in line with standards and presumably take to any remedy actions required to see that human and corporate resources are been used in the most effective and efficient manner in achieving cooperate objective. Therefore stock control according to A.M. Uzor (2006) represent the correct quantity of materials made available and as when required with due regards to economy storage and ordering cost purchase price and use of working capital, Zenz (1994:1640). Further stressed that stock control should be regarded as any item of materials used within the production process, or in the operation of the business.
From the above set of definitions, one is left in no doubt of the fact that stock control is the life wire of any industry.
1.1 BRIEF HISTORY OF CONSOLIDATED BREWERIES
Consolidated breweries plc was incorporated in September 20th 1968 under the name eastern brewery was changed to continental y’s ery limited with the brewery of 33 lager beer.
In 1996, continental brewery plc gave birth to consolidated brewery plc which was originated from France. it began producing the second product (hi malt) in 1983, therefore becoming one of the largest producing malt in the country as at that time, consolidated breweries became a public quoted company in Nigeria stock exchange market. Meanwhile, the company has about 25,000 Nigerian shareholder holding 90% of the company’s equity while 105 of the company’s equity are held by foreign association and citizens.
This company has its head office at Lagos and two branches producing at Ijebu-ode and Awo-Ommama, it has about 500 employees of which junior staff has the highest of 77% of workers.
1.2 STATEMENT OF THE PROBLEM
This study titled the role of stock control in a manufacturing company, a case study of a consolidated breweries plc Awo-Amama in Imo state is aimed at examining and understanding the predicament associated with inventory or stock control system and to eventually relate these problems to stock control in a manufacturing company and they include;
1. The problems that affect the implementation of stock control system.
2. To know the present stock control procedure measurement using consolidated breweries plc Awo-Omama as a suitable case study.
3. To examine the reason for holding stock
4. To also recognize the key roles/functions of stock control
1.3 OBJECTIVES OF THE STUDY
Stock of materials firms up to 60% of the total resources of an organization and stock control management which contributes immensely to the effectively and efficient running of the organization and the objectives of the study is to;
1. Find out the roles and benefits of stock control system and how to enhance the profit of an organization.
2. To study and understand the factors affecting stock control system.
3. To analyze and consider the pros and cons of stock control management.
4. To critically examine the economic order quantity (EOQ) associated with stock control system management.
1.4 SIGNIFICANCE OF THE STUDY
The study is vital because it will bring to the knowledge of all the manufacturing organization the numerous solutions to the problems encountered by various stock control management within any manufacturing company. The study is also interested in assessing the ways of providing reliable costing information as regards to records of materials issues and receipts.
Finally, production operations cannot flow effectively without having stock of different materials work in progress (WIP) finished parts and supplier functions.
Research questions
This study will centre its findings in the following questions.
a. What is the role and place of stores department in the organization?
b. Is stock well managed in the organization?
c. Are professionals employed to handle is store?
d. Is stock control important in manufacturing organizations?
e. What system of stock control is adopted?
f. How are scraps, waste, obsolete and reluctant materials are managed?
1.5 HYPOTHESES
In order to achieve the objective, of the study research hypothesis will be developed and used in analysis of data collected. The research hypotheses are
1. Ho: the stock control in the organization is not effective
Ha: the stock control in the organization is effective
2. Ho: the stock control has no significant impact in purchasing performance in consolidated breweries plc. Imo.
3. Ha: the stock control has significant impact in purchasing performance in consolidated Breweries Plc. Imo.
1.6 SCOPE OF STUDY
The project writer intends to adequately focus the attention of the study specifically on the role of stock control in a manufacturing company using consolidated Breweries Plc Awo-Omama. The study will also intend to control the work in progress (W.I.P.) items.
Furthermore, the study will cover the standard methods used in carrying or holding stock.
Finally, we use seek to make recommendations that will assist in improving the stock control and carry out some activities, like reviewing the past relevant literature and test of hypothesis formed in order to determine the validity.
1.7 LIMITATION OF THE STUDY
Stock controls like other managerial function ha its peculiar problems. It can be internal or external problems which can originate when the manager fails to understand the role of stock holding in the production process. If the work of the store manager is specified, there are unspecified roles; it then means that the job of the store keeper may be assigned to another department. It may lead to mismanagement due to inadequate knowledge in both quantity and quality.
Meanwhile, the internal problems may appear inform of customer attitude to product produced by the firms in consolidated breweries plc, quality control is based on customer’s demand for example, the quantity demanded in a week if the storekeeper will order for more materials with the hope of that more product will be demanded in the upper week and where such is not ordered as expected, it will lead to over stocking of material items which may deteriorate before they are used. it is been regarded as a limitation to stock control management.
More so, the problems faced by the research during the research work are:-
a. inadequate fund to make research
b. bad road to access the access the areas the researcher was restricted
c. poor manner of responding to the questionnaire
d. short time to amount this project research work
e. Stress and other factors to mention but few.
1.8 OPERATIONAL DEFINITIONS OF TERMS:
1. INVENTORY: all the tangible assets of an organization other than fixed assets.
2. PRE-PRODUCTION INVENTORY: this comprises parts and materials purchased from outside the organization to manufacture into products
3. STOCK CHECKING: this represents any other check on physical qualities which may be applied either regularly or otherwise
4. STOCK TAKING: This means the complete process of varying the quantity balance of the entire range of items held in stock
5. LEAD TIME: This represents a time between an orders is placed to the time it is finally delivered or accomplished.
6. STOCK-OUT: A situation where one cannot boost of any stock in the store.
7. CODIFICATION: This is the allocation of number or alphabets to store items for easy identification.
8. FIFO: Simply means first in first out.
9. LIFO: Last in first out.
10. SCRAP: It means materials which has lost their original value due to faulty works or other causes.
11. Obsolescence: This can be machine or equipment which and going out of use for operational reasons but not completely phased out.
Role Of Stock Control In A Manufacturing Company:
Stock control, also known as inventory control, plays a crucial role in the operations of a manufacturing company. It involves managing the company’s inventory of raw materials, work-in-progress (WIP), and finished goods. Effective stock control is essential for several reasons:
Cost Management: One of the primary roles of stock control is to minimize holding costs. These costs include warehousing expenses, insurance, and the opportunity cost of tying up capital in inventory. By optimizing stock levels, a manufacturing company can reduce these costs and improve profitability.
Production Planning: Stock control helps in production planning and scheduling. It ensures that raw materials are available when needed, preventing production delays. This, in turn, helps meet customer demand and maintain production efficiency.
Preventing Stockouts: Maintaining adequate stock levels prevents stockouts, ensuring that the company can fulfill customer orders on time. Stockouts can lead to lost sales, dissatisfied customers, and damage to the company’s reputation.
Reducing Overstock: On the flip side, stock control helps avoid overstocking. Excess inventory ties up capital and can lead to obsolescence, spoilage, or increased holding costs. By monitoring inventory levels and demand, a manufacturing company can reduce the risk of overstocking.
Quality Control: Stock control also involves monitoring the quality of raw materials and finished goods. Ensuring that only high-quality materials are used in production and that finished products meet quality standards is vital for customer satisfaction and brand reputation.
Demand Forecasting: Accurate stock control data can be used for demand forecasting. By analyzing historical inventory data and sales trends, a manufacturing company can make informed decisions about future production and procurement needs.
Supplier Relationships: Effective stock control can improve relationships with suppliers. Timely and accurate orders can lead to better terms, discounts, and more reliable supply chains.
Working Capital Management: Proper stock control helps manage working capital efficiently. It ensures that the company doesn’t tie up excessive capital in inventory, leaving more resources available for other investments or operational needs.
Compliance and Reporting: Many manufacturing companies need to comply with industry regulations and report on their inventory levels. Stock control systems help in maintaining accurate records and meeting compliance requirements.
Risk Management: Managing inventory also involves assessing and mitigating risks associated with supply chain disruptions, such as natural disasters, strikes, or geopolitical issues. Having contingency plans in place is essential to minimize these risks.
In summary, stock control in a manufacturing company is a multifaceted process that directly impacts the company’s profitability, production efficiency, customer satisfaction, and overall competitiveness. Effective stock control systems and practices are essential for maintaining a balance between having enough inventory to meet demand and avoiding the costs and risks associated with excessive or insufficient stock levels.