NEED FOR EFFECTIVE STOCK CONTROL IN A MANUFACTURING ORGANIZATION
Production operation will highly be hampered if the stores functions are not properly and effectively carried out. The basic stores functions is that of holding stock, thus, the need for proper stock control an becomes imperative.Stock control in an organization involves activities designed towards the effective management and control of all inventory items held in stock. Stock control can be further defined as “a means by which materials of the correct quantity and quality is made available as and when required, with due regard to economy in storage and ordering costs, purchase prices and working capital” from the above definition, it could be deduced that stock control is a system aimed at maintaining a balance flow of materials by properly arranging, in a continuous basis, receipts and issues so that at any given time, the stock balances are adequate to meet current operational requirement. Stock control, however, involves the actual implementation and carrying out policies which management has established to regulate and maintain adequate stock balance without excess or deficiencies.
1.1 BACKGROUND TO THE STUDY
It an exaggeration to say that stock control is an important exercise in which every organization that wants to be successful must embark on. This issue stock control is not restricted only to business sectors and is no longer a new exercise for it has been as old as mankind. As life is important to mankind, so also stock is important to every organization. More so, materials or item are life-blood of any organization. With regards to this Obuseh (2006), noted that the manage materials is to manager the life of an organization. There is no adequate management of stock to have this; there must be a need for proper stock control in every organization. Due to the fact that a wide ranger of materials are held in the storehouse, the store keeper must be conversant with and have a good working knowledge of a great number of materials kept under his control.
The process of stock control involves a careful study of the materials that could be held in stock and the establishment of adequate stock levels for the materials. It also involves monitoring the inflow and outflow of materials into and out from the storehouse, setting the re-order quantities with due regard to lead time, the consumption rate, the acquisition and holding cost so that minimum investment in inventory is ensured. Therefore, it is important for every organization to establish a good stock control system if success is their target.
1.2 STATEMENT OF THE PROBLEM
The need for effective stock control in an organization is so vital in booth large and small firm, upon the need for effective stock control, the researcher in carrying out this research work, where It can be to identify some problems that hinders the progress or smooth control of stock in an organization. Some of these problems are identify below.
(1) Professionals are not engaged in the handling of stock control in most organization.
(2) Most staff currently employed to handle stock control do not have the necessary skills and experience required.
(3) Most organization does not see stock control as very important.
(4) In most cases the functions of stock control is placed in a section outside the materials oriented functions.
(5) Finally there is no willingness on the part of material people to fully take charge of these important functions.
1.3 THE OBJECTIVES OF THE STUDY
The objectives of this study are as follows:
(1) To investigate whether professionals are used or not in the handling of stock control function.
(2) To examine the skills and experience of those who are engaged in handling of stock control so as to determine how experienced they are and their ability to meet the challenges of modern stock control.
(3) To find out whether all organizations realized the importance of stock control in the management o their inventory.
(4) To examine the position of stock control in firms organizational structure, so as to determine whether the current position effect the performance of stock control positively or negatively.
(5) To find out the readiness or otherwise of materials people to carry out their functions independently
(6) Finally, to suggest ways of improving stock control in organizations.
1.4 RESEARCH QUESTIONS
(1) What are the costs involved in holding stock?
(2) Why do the organizations hold stock?
(3a) if holding stock is so expensive, why –do it?
(b) Why not simply rely on a delivery of stock?
(4a) what do you understand by stocks?
(b) Why do films maintain them?
(5) Before materials are received into stock, such must be inspected and necessary quality test are carried out. Of what importance is this inspection/quality test to organizations?
(6) Explain the basic concept of stock control.
(7) What are the characteristics of a good stock control system?
(8) To what extent does stock control affects the profitability of the organizations?
1.5 THE SIGNIFICANCE OF THE STUDY
The study is essential to basically thee groups of people viz:
(1) You the researcher because it is a requirement for the award of National Diploma in purchasing and supply, without it researcher will not be awarded with the certificate. Aga in it has served as a learning process because it has enabled you to acquire skills on how to carry out similar study in the future.
(2) To other students this work when completed will serve as a reference material for those who may be faced with similar work in the future.
(3) The industry, this work when completed will help to create the required awareness that results to positive steps with regards to the subject mater of this study. Also it will serve as a standard to measure that the performance of firms with regards to the subject matter of this work which will cause firms to take corrective measures.
1.6 THE SCOPE OF THE STUDY
This study would be take the researcher to all firm that buy and stock items in the country, but for the fact that the researcher us a student with so many assignment and examinations go take/ he decided to concentrate on full firm in Owerri and whatever findings made will be seen as the general situation in all firms in the country.
1.7 THE LIMITATION OF THE STUDY
The limitations of the study are as follows:
(1) Financial problems: Financing this project has been a difficult experience, because of the preventing economic condition in the society. So the researcher’s unable to travel and cover many companies or places in other gather comparable data or information for this researcher work.
(2) Limited time factor: The schedule academic activity for every final year students both ND and HND of the Polytechnic is limited. The researcher needs to attend classes, read other courses etc. This makes the researcher unable to collect responses from many companies as he would have to do.
(3) Natural factors: This is also a hindrance to the study. The project is disturbed from effects of regular rainfall and hot weather, wind hinders the researcher’s movement in his bid to collect data, information and distribution of questionnaire to respondents.
(4) Transportation problems: The researcher also spent much time n the road or in the vehicle boarded and hereby making him to reach his place of interviews late, some times he misses such interviews.
(5) Even some problems in the organization do not give reliable data/information to be researched, the problems associated with unreliable poor audience by respondents is a big imitation to this project.
1.8 DEFINITION OF TERMS
(a) Ethical conduct: According to Lyons (1981:198) ethics is defined as a science of conduct. Conduct in this context means conscious and purposeful action or action directed to an end.
(b) Bin Card: This is only form of written record kept in the store room, and usually fastened to front of each bin or rack. It contains relevant information about items for easy identification such as part number, names. The body of the card carries space for recording addition and withdrawals of items.
(c) Maximum stock level: Maximum stock level is that level of stock whereby stocks are not allowed to rise above. In facing this level, certain factors should be put into consideration. These are
1. Rate of consumption of materials
2. risk of obsolescence
3. reliability of supplier
4. time of new deliveries
5. Storage space available.
(d) Minimum stock level: The minimum stock level is the level below which stocks should not normally allowed to fall. Stocks out may result if stocks go below this level and this may result in turn in description of production. (e) The reorder level: This is the level between maximum and minimum stock level. It is a level whereby fresh orders are placed. The factors that affect the ordering level include.
i. The consumption rate
ii. The lead time
iii. The minimum level and
iv. The reliability suppliers
(f) Buffer or safety stock: This is not a stock level of the store manager take cognizance of this so as to completely avoid a situation of stock out. It serves as an insurance against late delivery and shortage of materials.
(g) Hastening stock level: Most organization finds it necessary to fix this level, which is between the re-order level and minimum level. When this level is reached, it signal that hastening action is necessary to cause suppliers to make delivery on the agreed date bearing in mind the danger of running out of stock. It is the level at which the store keeper informs the progress clerks or expedition of the need for early delivery of ordered materials.
(h) Review of stock levels: After the stock levels have been established, there is always the need for proper periodic review of these levels because of changes in both internal and external environment within which business is operated. This review could be done at such intervals as weekly, quarterly etc. and adjustments made to be in line with prevailing circumstances. A stock level held for a long period of time without review might become out of place and not relevant or rather misleading in terms using its decision.
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