Stock Control As A Management Tools For Efficient And Effective Stores Operation
Stock control is a crucial management tool utilized to enhance the efficiency and effectiveness of store operations. By implementing robust stock control measures, businesses can optimize inventory levels, minimize stockouts, and reduce excess inventory, leading to improved cost management and resource utilization. Through techniques such as inventory tracking, demand forecasting, and just-in-time inventory management, organizations can streamline procurement processes, ensure timely replenishment of goods, and mitigate the risk of overstocking or understocking. Moreover, stock control facilitates better decision-making by providing valuable insights into consumer demand patterns, sales trends, and inventory turnover rates. By leveraging stock control as a management tool, businesses can enhance operational agility, increase customer satisfaction, and achieve sustainable growth in today’s competitive marketplace.
Stock control had been a neglected function in an organization due to the fact that most organization both public and private sectors lacks the professionals in the field who are capable of carrying out a good stock system. This work titled ‘’stock control as a management tools for effective and efficient store operation’’ shows that ineffective stock control system has a lot of on the profitability of the organization.
The major aim here is to ensure a continuous and uninterrupted flow of materials in an organization. In order to achieve this, this work was divided into five chapters. The first chapter has the introduction part of the work follow by the statement of problem, objective of the study, the scope,
and significance, limitation of the study and terms of definition. The chapter two talks about the review from contemporary literatures which encompasses the need for stock control, reasons for holding stock, factors affecting the level of stock held, cost associated with stock control etc.chapter three, talk on the research methodology and design. chapter four talk on Data presentation and analysis. Chapter five comprises of the summary, conclusion and recommendation as well as the bibliography.
Title pageI
Approval page II
DedicationIII
AcknowledgementIV
Abstract V-VI
Table of content
CHAPTER ONE1
1.0 General overview of the study1
1.1 Introduction1-4
1.2 Statement of the problem4-5
1.3 Objective of the study6-7
1.4 Scope of the study7
1.5 Significance of the study7-8
1.6 Limitation of the study9
1.7 Definition of the study9-10
CHAPTER TWO
Literature review
2.0 Introduction/Meaning of stock control11
2.1 Objective of stock control14-16
2.2 Reasons for holding stocks in an organization16-18
2.3 Factors affecting the level of stock held18-21
2.4 Stock control information source21-23
2.5 Cost associated with stock control23
2.5.1 Carrying cost24
2.5.2 Ordering cost24
2.5.3 Stock out cost 25
2.6 Effects of inefficient stock control25-26
2.7 Stock level policy and techniques26-28
2.7.1 Economic order quantity E.O.Q 28
2.7.2 Fixed order quantity29
2.7.3 Periodic review system29
2.8 Provisioning29-30
2.8.1 Method of provisioning30-31
2.8.2 Benefit of controlling stock31-33
CHAPTER THREE
3.0 Research methodology and design34
3.1 Introduction34
3.2 Research design34
3.3 Sources/methods of data collection34-36
3.4 Population and sample size36-37
3.6 Sample technique37
3.7 Validity reliability of measuring instruments37-38
3.8 method of data analysis38
CHAPTER FOUR
4.0 presentation and analysis of data39
4.1 Introduction39
4.2 Data presentation39-43
4.3 Analysis of Data43-50
CHAPTER FIVE
5.0 Summary, Recommendation and Conclusion51-52
5.1 Summary52
5.2 Conclusion53
5.3 Recommendation53-54
Bibliography55
Appendix 56
Questionnaires57
GENERAL OVERVIEW OF THE STUDY
Effective and efficient store operation is very closely linked with production and distribution and is a much neglected area of business study. Yet the store function is a vital part of all industrial organization public and private utility organization Federal, state and local Government organization, Armed services, and it must be designed to suit the particular needs of the organization it service.
1.1 INTRODUCTION
Having defined a store as any space reserved and equipped for holding materials which are awaiting dispatch to customers for further processing of final consumption in most organization, stores is a place where all types of equipment materials components and supplies needed for production,distribution,maintenance, packaging etc are received. Stored and issued to users. A stock control system needs to be adopted in order to ensure effective and efficient store operation.
In today’s business with competitive market, unstable economic condition, controlling of cost means the difference between profit and loss. The overall business objectives is to maximize profit margin and minimize cost of production, has led many executive to taking steps in all aspect of their business to reduce cost of materials or stocks from a major part of the total investments of an organization. This is mainly due to the fact that no matter the type of business an organization engages in, whether merchandizing or manufacturing, there must be clearly stock of materials to keep the enterprise going. A manufacturing business for instance, cannot exist without raw materials, purchased parts, intermediate parts, sub-assemblies and finished goods ready for shipment and sale.
Stock control concerns not only the individual business but effect the economy of the nation holding stock waiting for a time when they would be used in production. A said earlier it does not immobilize the capital resources, but could generate inventory. Inventory arising from reduction in stock due to a reduction in sale could stir-up a long chain of reaction affecting the whole system. Effective stock control therefore does not only help the enterprise per say, but even influence the whole profitability of the nations economic development.
I have made some attempt in delivery into books and research work done by others to get information on areas the stock controller or manager as the case may be, should be vigilant for him to effectively use stock control as a management tool for effective and efficient store operation.
The first chapter starts with the introduction after which a brief statement of problem, objective of the study, the scope of the study, it significance and also the limitation encountered by the research will be given. Chapter two delivers into the work of other researchers in the same issue known as literature review. chapter three discussed the research methodology, presentation and discussion of findings chapter four gives a data presentation and analysis of data. chapter five gives a summary of the work and conclusions. Then finally the recommendation and appendix, bioliogy and questionnaires. All these are intended to be carryout by the researcher in this work.
1.2 STATEMENT OF THE PROBLEM
The need for a stock control in the contribution of an effective and efficient store operation can not be swept under the carpet. As mentioned earliest, stock comprises of raw materials components, sub-assemblies, consumable stores, general stores, maintenance materials and spares, work- in- progress and finished salable products, all those items are covered and managed effectively through the use of stock control as a tool. This therefore, raises very important problems that this work is intended to peer into. The problems include identifying the essential issues involved in stock control, how stock control can be made to work out in an organization ,what the monetary contribution of stock control really is, how to avoid an absolute redundant and surplus stock even stock out and then how it can be use as a tool in attaining the organizational objectives.
These issues and many more other issues are what I intended to find solution to during the course at this study. These might be categorized thus;
MAINTENANCE PROBLEMS; what are the things needed to make stock control won-out. What and which type of stock control technique is best suited for a particular industry.
INHERENT PROBLEMS; how can absolute redundant and surplus stock be avoided, if they can be dealt with other problems that might arises from excessive stock includes;
[1] Absorption of capital which would have been utilized in other ventures.
[2] Taking up the whole space in the warehouse or store
[3] Determination of obsolescence
[4] Interruption in production and sales.
1.3 OBJECTIVE OF THE STUDY
This research project seeks to achieve the following objectives.
[A] To find out whether stock control can control to business survival.
[B] To find out or study the modalities adopted by organizations in achieving it organizational objectives.
[C] To find out the adverse effect of non-application of stock control techniques in an organization.
[D] To find out the solution as to what to do if the organization is not able to apply stock control method for effective and efficient store operation.
[E] To find out the information and advantages of stock control in the attainment of organizational objectives.
[F] To determine the various ways by which stock control can be carried out in the attainment of organization objectives.
[G] To find out the various ways, methods and system by which stock control can be used as a tool for effective and efficient store operation.
1.4 SCOPE OF THE STUDY
The scope of this study embraces all activities of the stock controller in an organization. Furthermore, t6his research project will cover how stock control as a management tool will be used in Nigeria to help the industries and organizations to attain their objectives. It will focus on ensuring that stock control is carried out as a management tool for effective and efficient store operation.
1.5 SIGNIFICANCE OF THE STUDY
A naira in the bank is worth two in the inventory and it usually cost more to stock too little than it does to stock too much. Stock control is an important and expensive activity which is often neglected and under rated in many organizations both in the public and private sectors.
It is an area where modern stores management techniques could be used to advantage in reducing cost and ensuring increased profitability for an organization.
In modern supply management stock control is the real control function; it comprises all the basic aims of the store operation. The basic concept of stock control is quite simply, the right material in the right quanlity,of the right quantity, at the right time and place and at the right price. The element of cost in relation to stock control also plays a vital role.
It also supplies a constant flow of material to the operation. It ensure correct quality of stock required.
The importance of this stock control has led the researcher to doing some work in the topic, this study will enable not only those in a more organized business environment but also the small enterprise with, little or no skill in the area of inventory control and management to enable them understand the contribution of inventory in achieving organizational objective.
1.6 LIMITATION OF THE STUDY
So many factors militate against the researcher not be able to carry out fully the research work on the subject as it should have been done. These factors include time; the time allowed for this work was considerably short to enable me cover all the area necessary.
Additionally, the researcher encountered a financial constraint. the finance required to carryout the research work in some area of the state was not much by making it unable for the researcher to accomplish much.
1.7 DEFINITION OF TERMS
Certain terms are associated with a good stock control system. They include;
STORE: it refers to the building set, aside for keeping materials regarding its safety.
LEADTIME: this refers to the time interval between when an order is placed and the period of receipt of orders.
WORK- IN- PRORESS: This refers to the semi finished goods. it is obtainable in a situation where a balance flow of production is not possible.
RAW MATERIALS: this has to do with those items which are transformed into finished goods.
STOCKS: This refers to the items held in the store.
INVENTORY: This has to do with a term which Americans use for stock that are kept or stored for use as the need arises.
OBSOLESCENCE: this refers to the left over of stocks which can not be used immediately in the operation.
REDUNDANT: this refers to the unwanted materials that are out of use in the store.
DETORIORATION: the act of worsening the situation of the goods in the store.
Stock Control As A Management Tools For Efficient And Effective Stores Operation:
Stock control, also known as inventory management, is a crucial management tool for ensuring efficient and effective store operations. It involves monitoring, managing, and optimizing the levels of goods or products a business holds in stock. Effective stock control helps businesses meet customer demand, minimize costs, and maximize profits. Here are some key points on how stock control serves as a management tool for efficient and effective store operations:
Demand Forecasting: Stock control begins with accurately forecasting demand for products. By analyzing historical sales data, market trends, and other relevant factors, businesses can estimate the quantity of each item they need to stock. This prevents overstocking or understocking, which can lead to financial losses or missed sales opportunities.
Inventory Classification: Items in a store’s inventory are often categorized based on their demand patterns, value, and criticality. The ABC analysis is a commonly used classification method, where “A” items are high-value, high-demand items, “B” items are moderately important, and “C” items are low-value or slow-moving. This helps in prioritizing attention and resources.
Reorder Point and Safety Stock: Determining the reorder point is essential. It’s the inventory level at which a new order should be placed to replenish stock before it runs out. Safety stock is an extra buffer to account for unexpected demand fluctuations or delays in supply. Calculating these levels ensures that products are consistently available to customers.
Supplier Management: Efficient stock control involves building strong relationships with suppliers. Negotiating favorable terms, monitoring supplier performance, and ensuring timely deliveries are crucial for maintaining a well-functioning supply chain.
Inventory Turnover: Inventory turnover measures how quickly a business sells its inventory and replenishes it. A high turnover rate indicates that stock is moving efficiently, reducing carrying costs and the risk of obsolete items.
Technology and Automation: Modern inventory management relies on technology such as inventory management software, barcoding, and RFID systems. These tools enable real-time tracking of inventory levels, reducing errors and the need for manual data entry.
Cost Control: Effective stock control helps in minimizing costs associated with carrying inventory. These costs include storage, insurance, handling, and the risk of obsolescence. By optimizing stock levels, a business can reduce these expenses.
Waste Reduction: Efficient stock control helps in minimizing waste. It prevents products from becoming obsolete or spoiled, leading to reduced waste and increased sustainability.
Customer Satisfaction: Maintaining appropriate stock levels ensures that products are readily available when customers need them. This enhances customer satisfaction and loyalty, contributing to the overall success of the business.
Data Analysis: Stock control generates valuable data that can be analyzed to identify trends, optimize stocking strategies, and make informed decisions about product lines, promotions, and pricing.
Continuous Improvement: Stock control is an ongoing process. Regularly reviewing and refining stock control strategies based on performance metrics and market changes is essential for achieving long-term efficiency and effectiveness.
In summary, stock control is a vital management tool for ensuring that a store operates efficiently and effectively. By accurately forecasting demand, optimizing inventory levels, and leveraging technology, businesses can reduce costs, enhance customer satisfaction, and ultimately improve their bottom line.