An Assessment Of The Impact Of Efficient Inventory Management On The Performance Of Manufacturing Companies (A Case Study Of Guinness Brewery Nigeria Plc)

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An Assessment Of The Impact Of Efficient Inventory Management On The Performance Of Manufacturing Companies (A Case Study Of Guinness Brewery Nigeria Plc)


The objective of this study was to examine the trend in inventory management in Guinness Nigeria, Plc investment. Relevant literature was reviewed.

In this study, we specified a model which we estimated using Guinness Nigeria conceptually covering (1995 – 2010) period. This was done using ordinary least squares regression techniques and error correction mechanism. The result obtained from the estimation exercise were generally satisfactory and encouraging for Nigerian.

However, there were expected in a few cases generally, in conformity with apriori expectation, for example, it was found that inventory management in Guinness Nigeria had a positive e impact on Guinness investment and exchange rate has a negative and significant impact on Guinness investment.

The findings have policy implication, that the management of Guinness Benin plant should ensure that issues stakeholders in the organization, especially the workers; ensuring quality in the company’s product are maintained; and ensure a strong exchange rate control in order to check floatation in exchange rate that will increase economic performance.

Chapter One


1.1 Background of the Study

The main objective of establishing most manufacturing business is to maximize profit in enterprises which deals on stock, it is the major determinant of profit to be realized. There is therefore, the need for efficient and effective inventory management and control in manufacturing industries cannot be over emphasized as it the pivot on which business organization rest.

Collins English Dictionary (1985) defines inventory as a detailed list of articles, goods properties and so on.

Garet and Silver (1973) define inventory as an idle resources of any kind that possesses economic value.

The following important questions are important in stock management:

  1. What goods should be included in inventory?
  2. Why is inventory turnover important?
  3. How is the amount for ending inventory determined
  4. What metrics or standards are most important for inventory management?
  5. Why is records management important in an inventory management.
  6. How do we prevent loss of stock from fraud, fire, thief etc?

1.2 Statement of Research Problems

The core problem of this research work is to critically examine the management of inventory in manufacturing industries with a particular reference to Guinness Nigeria Plc.

This study is specifically designed to provide answer to the following questions:

  1. What is the relationship between average stock and inventory management of Guinness Nigeria plc?
  2. What is the relationship between annual demand, interest paid and inventory management of Guinness Nigeria plc?
  3. Is there relationship between annual turnover and inventory management in Guinness Nigeria plc?
Briefs On Guinness Brewery Nigeria Plc

Guinness Nigeria, a subsidiary of the Prestigious Diages plc of the United Kingdom, was incorporated in 1962 with the building of brewery in Ikeja, the heart of Lagos. The brewery is the first outside of Ireland and Great Britain. Other breweries have been opened overtime – Benin City brewery in 1974 and Ogba brewery in 1982, Guinness Nigeria produces the following brand:

Foreign Extra Stout (1962) Guinness Extra Smooth (2005) Malta (Guinness 1990), Harp lager Beer (1974), Gordon’s Spark (2001) Smirnoffice is a company that believes in enriching its communities.

This it has achieved by embarking on laudable corporate social responsibility project in several communities in Nigeria. These Projects are Water of Life Initative, which currently provides potable to 500,000 Nigerians spread across several rural communities from Northern to Southern Nigeria; Scholarship and Guinness Eye Hospitals in three cities in Nigeria.

Business Of Guinness Brewery Plc

On the death of Benjamin, Guinness in 1868 the business was worth over EIM, and the brewery site had grown from Arthur Guinness established the st James Gate Brewery Dublin in 1759. He died in 1303, the business being herited by three of his sons, and subsequently in 1985. the Distiller Company plc in 19 1986, and Buckley’s Brewery plc.


Board Of Directors
  • Chairman of the Board
  • Managing Directors
  • Finance Sector or Division
  • Directors: Relation & Legal Division
  • Supply Chain Sectors
  • Human Resource Planning of Division
  • Marketing Directors Division
  • Sales Directors Sectors

One of the most powerful technique for understanding industries and competitive environment is the concept called strategic group or tools for management control in Guinness Organizational Structure, under which budgets and performance. Level can be determined for appropriate function and analysis of porter, 1980, strategic group analysing and display all the names accordingly which include the following:

  • Chairman of the Board
  • Managing Director
  • Finance Sector or Division
  • Human Resources Planning of Division
  • Marketing Director Division
  • Sales Directors Sector
  • Director: Relation & Legal Division
  • Supply Chain Sector.
Success Of Guinness Brewery

Guinness is one of the most popular and well recognized beers in the world. It was first brewed in Ireland in the 1750s and since become the unofficial beer of that nation. It has made more money in Ireland than any other alcoholic beverage.

Aficionado or due to worldwide instantly recognized the distinct harp logo on the bottle. Because of its world wide success , it is no longer brewed exclusively in Ireland, Brewery limited.

How cost associated with inventory can be Guinness Breweries Limited.

Failure / Problem Of Guinness Brewery

Guinness’s huge brewery dates back to the end of eighteen century. The atmosphere of sharp controversy and bitter, almost savage said to have been occupied by silken Thomas alter this of his rash insurrection.

Also including the following:

Guinness brewery, reliability faults, Guinness Nigeria plc load required, maintenance on the auto starting problem of Generator set 2 was carried Rotory Isolator failure.

The problem pf project communication and information technology. A case of Guinness Nigeria plc). An Evaluation of the nation operation. A case study of Nigeria Breweries.

One of the problem for Guinness Brewering Worldwide is that its divisions are all pulling in different unit.

1.3 Objectives of Study

According to Agbonifoh and Yomere (1999) the objectives of a research investigation refers what the study seeks to achieve.

This study therefore seeks to achieve the following:

  1. To examine the relationship between average stock and the inventory management of Guinness Nigeria plc.
  2. To ascertain the relationship between annual demand and interest paid and inventory management of Guinness Nigeria plc.
  3. To determine the relationship between annual turnover and inventory management of Guinness Nigeria plc.

1.4 Research Question

The researcher poses the following question for this research work.

  1. To what extent does error from procurement staff affect profitability.
  2. How does lack of effective inventory management procedure affect sales turnover.
  3. How does holding cost affect the companies profitability.
  4. To what extent does ordering cost affect the sales turnover.

1.5 Research Hypothesis

In this research work the research intends to depict that:

  1. Ho: There is no relationship between average stock and inventory management of Guinness Nigeria plc.
    Hi: There is a relationship between average stock and inventory management of Guinness Nigeria plc.
  2. Ho: There is no relationship between annual demand and interest paid and inventory management of Guinness Nigeria plc.
    Hi: There is a relationship between annual demand and interest paid and inventory management of Guinness Nigeria plc.
  3. Ho: There is no relationship between annual turnover and inventory management in Guinness Nigeria plc.
    Hi: There is relationship between annual turnover and inventory management in Guinness Nigeria plc.

1.6 Significance of the Study

The researcher believes that at the end of this research, the management of the study organization will be helped to develop a greater insight into inventory management and control and so appreciate all the challenge that militate against it. The study will equally serve as motivation for further study in the area of inventory management vis-à-vis corporate outcomes. It is hoped that this study will benefit students, researcher and other interested public and the academia inclusive

1.7 Scope of the Study

The scope of the study is inventory management as it affects outcome of the study organization. Dangote Nigeria Ltd. Lagos sews as the geographical scope of the study. the researcher chose the unity and content scope is mentioned above to assess the topic on a macro level.

1.8 Definition of Terms

(i) Carrying Cost:

These are cost incurred for holding a given level of inventory, they includes taxes insurance storage etc.

(ii) Controllable Asset:

These are asset that the company can increase or reduce at will without hitches.

(iii) Inventories:

It can be defined as all the stocks of materials and items carried in store which can be used in the production process or for giving service. It includes unsold goods in store.

(iv) Ordering Cost:

This is used in terms of materials and includes the entire cost of acquire raw materials. It includes storing, transportation receiving etc.

(v) Work-in-progress:

It is a period of temporary storage of work due may be Lapses in production.

Chapter Five

Summary, Conclusion and Recommendation

5.1 Summary Findings

The study shed light and explained the importance of inventory especially as regards to Guinness Nigeria PLC Lagos. Everybody involved in the organization admitted that inventory is the life blood of an organization.
Inventory is also the firms investment in stock or capital tied up in stock for the facilitation of the activities of the organization as at and when needed. This study found out the following:

  1. That error from inventory procurement staff affects the company’s profitability
  2. It found out also that lack of effective inventory management procedure affects sales turnover negatively
  3. Holding cost affects the company’s profitability.
  4. Ordering cost affect sales turnover.

In this study, an opportunity has been created for existing and prospective business men, employers and employee to benefit from the use of modern inventory control techniques and also enhance the theoretical and practical knowledge of inventory management and control evaluation to the users.

5.2 Conclusion

Inventories are maintained to reduce uncertainties and also to reduce total inventory cost. Inventories also contribute substantially to the turnover and profits of an organization.

5.3 Recommendation

Those responsible for the management of inventory in any organization should determine the inventory level at which money invested will give the optimal rate of return good inventory management and control help in achieving an organization corporate objectives. It helps to determine when to order, how much to order and how such to maintain as a buffer or safety stock.

To determine the unique attribute and requirement of inventory management and control, a proper analysis of inventory control and management is directly related to profitability and the research is of the view that if the recommendation added in this study is accepted by Guinness Nigeria PLC limited Lagos, efficiency and effectiveness of its operations will be such enhanced.

In view of the analysis and summary of the inventory control and management procedure as practiced at Guinness Nigeria PLC Lagos, and in furtherance of it objectives for keeping the stock which are to satisfy its customers demand in order to achieve the company’s goals and objective of profitably and survival the following recommendation are made:

  1. Firstly, the hotel should redesign its inventory control system in such a way that some holding and ordering cost items like insurance, opportunity cost per order can be included while calculating its economic Quantity, this will go a long way in determining the real optimum inventory to order. It will also help in determining when to make the order and what minimum and maximum stock levels, the stock should hold in storage the stock control procedures should take into consideration on the irregular supply of stock due to transport problems and delays associated with the supply of inventories. This is a minimum amount of inventory required to prevent dislocation in the production process, to avoid panic buying which could led losses and customer good will.
  2. Secondly, there are sometimes cases of material lost, store and staff stealing. This can be controlled introducing a better system of checking staff when leaving the warehouse premises after work. At present security men at the gate do not search staff members and cars going out of the warehouse premises. So security need to be tightened up and uniform closing hours introduced for the different shifts.
  3. And finally, the firm’s accounting system of inventory does not help the firm to improve on efficient stock level.

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