Benefits And Challenges Of Store Management In Organization
The study examines benefits and challenges of store management in Alibert Product Nigeria limited, Lagos.
Data used in this study were obtained from primary sources. A structured questionnaire was the instrument used to collect primary data for the study. The questionnaire was sectionalized into four parts.
The Taro Yamane formula was applied to determine the appropriate sample size for the study based on the population at 90% confidence interval and 10% error of tolerance. The simple random sampling technique was used to select 63 staff of the organization across all departments.
The descriptive statistics technique was employed to analyze the data collected from the respondents and the chi-square technique was used to test the two operational hypotheses developed in the study.
The research revealed that; The appropriate store management techniques that fit the operations of Alibert Product Nigeria Limited are follow; material requirement planning, first-in; first out (FIFO), economic order quantity, forecasting approach and strategic supplier partnership method; The benefits and challenges of store management significantly impact on the operational performance of Alibert Product Nigeria Limited.
The study concluded that store management is very instrumental to the operations of any manufacturing firms.
The study suggested that; Alibert Product Nigeria Limited should adopt scientific techniques of store management; All staff of the organization should be trained to have thorough knowledge of store management as this will enable them to work towards stock protection and cost minimization; The organization should strengthen the supplier relation to the level of partnership and also stop the habit of transacting business with only one supplier in order for the failure of one supplier to slow down production process; The management should prioritize on the proper inventory techniques and measuring of efficiency deviations to expose the weaknesses in the process of managing stocks.
1.1 Background to the Study
Onuoha (1991) defines management as the process of combining, utilizing and allocating organization’s input such as men, money and materials by planning, organizing, directing and controlling for the purpose of producing goods and services desired by customers so that organizational goals are accomplished.
In furtherance, stock refers to pile of goods a firm is producing for sale and the components that make up the goods (Ama, 2001). Stock is an itemized list of goods and valuables with their estimated worth, specifically, the annual accounted goods taken in any business (Ogbu, 2014). From the above mentioned definitions, stock is the totality of goods, which include raw materials, work in progress and finished goods that enable an organization to produce. It also refers to the amount of goods and materials contained in a store or factory at any given time. There are ways of handling these stocks for the purpose of achieving the best from them. These stocks must be managed and controlled in order to achieve their usefulness. To do this, the production manager, purchasing manager and sales manager of the organization always put their heads together to plan appropriate ways of managing the level of stock purchases, production stock requirement and sales using some feedbacks to exercise controls in order to achieve standardized results.
According to Lucey (2007), stock management is the system used in a firm to control the firms’ investment in the production of goods and services. The system involves recording and monitoring of stock levels, forecasting future demands and deciding when and how to order with the overall objective of minimizing the cost associated with stock. Store management or stock management refers to the ability of an organization to use all techniques at its disposal to hold the quantity of stock that will be sufficient to produce the required number of goods needed by customers at the appropriate time and at least cost to the organization with the view to maximize profit.
Managing stock is a crucial issue to every organization. Without effective stock management, there is great likelihood for such organization to dissolve. Stock represents the largest single investment in assets for most organizations. Employees in virtually every organization have become conversant with high level of commodity availability resulting in higher stock level holdings. The basic reason why stock is held is to avoid stock out and its resultant problems. The extent of stock is influenced by the operational needs of the organization, time required to obtain the delivery of stock, availability of capital, cost of storage and the need for detailed records in the form of stock issues which should be kept through the use of store records (Osei, 2015). Other factors that need to be considered are funds available, availability of storage facilities, rate of consumption of materials, lead time, margin of safety and the stock level can then be set for each material.
The unpredictability and volatility of timing and content of information flow on usage of stocks lead to uncertainty in planning, increased stocks, stock out and delays. Therefore, it is pertinent to take appropriate steps especially on stock to deal with the volatility and dynamics on the operational level of the business. In order for this to be effective, there is need to apply strategies that will stimulate the supply chain strategy to achieve competitive advantage and excellence.
Many organizations in developing economies usually leave stock decisions as well as store management to departments concerned. Due to this, some problems are inherent and they include high cost of stock, selection of suppliers, problem of delivery, stock out, stock obsolescence. To mitigate these challenges, the Federal Ministry of Trade and Investment promulgated the store regulation act. This act governs the acquisition / receipt, custody, control, issue and disposal of every registered organization. Government stores are to be procured from the Value Added registered persons except where there is an exemption based on the request of waiver. Intermittent and emergent purchases are common procurement practices in most organizations which negate public procurement laws as proper procurement not well followed.
Organizational resources are always limited in supply and resources must be well used to avoid wastage. It is therefore important to explore how manufacturing firms using a case study of Alibert Product Nigeria Limited have been avoiding wastage by using efficient store management techniques among others to render efficient services to their customers, maximize profitability, avoid stock out and reduce the cost of doing business.
1.2 Statement of Problem
The smooth running of any organization needs an organized flow of materials to service its activities. This can work out when the organization manages its stock materials effectively. Many manufacturing outfits in Nigeria often encounter some challenges managing their stores. Some of the problems are the cost of obtaining and holding stock is always high and this affects the price of the finished goods thereby making it relatively unaffordable for customers to buy them.
Poor transportation system and unreliable delivery services in Nigeria have made it difficult for them to forecast the workable lead time and stock levels that can enable them place order at the right time and get replenishment. Also players in the manufacturing industry have been finding it difficult to determine the quantity of stock to order which is economical due to variations in environmental factors such as price changes, exchange rate volatility et al that affect other aspects of their production.
The concern is to investigate how Alibert Product Nigeria Limited has been managing their stores inspite of the above listed challenges, the effectiveness of their store management techniques and how this has affected their performance.
1.3 Objectives of the Study
The main objective of this study is to investigate the benefits and challenges of store management in Alibert Product Nigeria Limited, Lagos.
The specific objectives are to:
- Examine the store management techniques that effectively suits the operations of Alibert Product Nigeria Limited, Lagos.
- Ascertain the extent to which the benefits inherent in store management have impacted on the operational performance of Alibert Product Nigeria Limited, Lagos.
- Determine the extent to which the challenges inherent in store management have impacted on the operational performance of Alibert Product Nigeria Limited, Lagos.
1.4 Research Questions
The questions of interest in the study are:
- What are the benefits of store management to Alibert Product Nigeria Limited, Lagos?
- What are the challenges of store management experienced by Alibert Product Nigeria Limited, Lagos?
- What are the store management techniques that effectively suit the operations of Alibert Product Nigeria Limited, Lagos?
- Have the benefits of store management impacted on the operational performance of Alibert Product Nigeria Limited, Lagos?
- Have the challenges of store management impacted on the operational performance of Alibert Product Nigeria Limited, Lagos?
1.5 Significance of the Study
The significance of this study is multidimensional. It will enable manufacturing firms to discover and maintain optimum level of investment in stock. It will inform store managers to know the ideal quantity of stock to order that is economical to organization and the most appropriate time to order for it. Organizations will be assisted to maximize their profits and minimize their risk of liquidity.
Furthermore, the study will enable manufacturing firms to obtain the right size of stock that will always support their smooth and hitch free production and sales operation. Organizational managers will be assisted to know the level of stock that will be kept to cover errors in forecasting the lead time or demand during the lead time. The study will also provide a base for other research works that might be carried out on store management in other organizations. Lastly, the study will help reduce business failures in the country as stock is a major factor of business operations.
1.6 Justification for the Study
Although several studies have been conducted in the aspect of stock, store or inventory management, however, most of them only concentrated on the impact of store management on organizational performance. This study made a step further by attempting to determine the benefits and challenges related to store management by prioritizing on Alibert Product Nigeria Limited.
The study was necessitated with the fact that most firms in the manufacturing sector have been performing below their optimum capacity. This poor performance is not unconnected to poor store management practice of these firms. It is therefore urgent to carry out studies in this respect to minimize organizational failure in manufacturing sector.
1.7 Scope of the Study
This research work is intended to evaluate the benefits and challenges of store management in Alibert Product Nigeria Limited. Alibert Product has several branches within and outside Nigeria but only the Lagos branch was considered in the study.
1.8 Definition of Terms
The key terms of the study are defined as follows:
This refers to the amount of good or materials contained in a store or factory at any given time.
A place where raw-materials, work-in-progress and finished goods are kept before converting and selling them out to customers
This refers to the coordination of an organization’s resources for the purpose of achieving its predetermined objectives.
This refers to the system used in a firm to control the firm’s investment in stock.
Summary of Findings Conclusions and Recommendations
5.1 Summary of Findings
It was revealed that, the stores personnel are old, and do not have the requisite qualifications to manage the stores effectively and efficiently. It was also found out that, the number of staff under the stores function is few and then making the store operation so tedious to handle.
The researcher discovered that, requisitions are not always issued when issuing items to the user departments. It was realized that verbal requisition is still practiced in store Department of Alibert Product Nigeria Limited. This can cause discrepancies in the storehouse. Without the requisition form, items are not being recorded, thereby leading to conflict between the physical items and that on record.
The researcher discovered that, an appropriate criterion of classification is used in the store. Items are classified according to their nature and characteristics.
It was observed that the manual system is totally used in operation of store without any knowledge in computerized system. And so for that matter it has result lot of paper work and makes work cumbersome, ineffective and inefficient.
The researchers revealed that, keys to locks in the various sections are handled by store manager. Also it was discovered that the stock items are insured against theft, fire etc.
The study revealed that, incoming consignments are inspected by the storekeeper for quality and quantity against standards or specifications.
It was discovered that, store departments in the Department of Alibert Product Nigeria Limited take stock randomly, quarterly and annually to detect discrepancies.
The main objective of every stores management system in every organization is to ensure effective and speedy issues of materials, effective receipt of materials, good organization of stock, adequate storage facilities and constant check of stock levels. However, in achieving the above, cost/benefit analysis needs to be made. It has been confirmed that stores management system of Alibert Product Nigeria Limited has met the above qualities, except some few problems which are not any fault of theirs. Therefore, in conclusion, it has had an impact on the operation of Alibert Product Nigeria Limited.
The researchers would like to conclude that the role of stores is of a prime importance to every organization.
However to ensure efficient and effective output of the stores department, it needs to be given the recognition that it deserves so that it can work effectively without unnecessary interference of its duties.
The Department should pay attention to the issue of professionalism and employ such people to run the store and by so doing the sector can enjoy large returns and will grow faster than it is doing how.
Finally, seminars and courses that involve stock management should be organized to encourage staff to upgrade their skills.
The researchers made the following recommendation based on their findings. Qualified personnel should be employed to handle the stores since stock represents huge amount of capital and therefore great care must be taken to reduce unnecessary cost and wastage in operations.
Store records should be computerized to make store operations effectively and efficiently.
Store-taking should be done regularly without giving stores personnel prior notice. This will help prevent staff from pilferage and theft.
The researchers recommend that there should be an effective coordination between the stores department and the user departments. This will enhance high service, better flow of information and a cordial relationship.
Stock items must be issued to the user department after providing a signed requisition form.
Inspection of stock must continue to be practiced and must be done regularly. This will prevent storekeepers from issuing expired and deteriorated items to customers or consumers.
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Frequently Asked Questions
What are the advantages and disadvantages of stores?
Advantages of Stores: (a) It is economical because there is economy in floor space, office overheads, stationery etc. (b) It ensures better control and supervision because of availability of specialised knowledge and experience of stores staff. (c) Better lay-out is possible.
What is the importance of store-keeping?
Importance of Store-Keeping: The cost of materials is one of the largest elements of cost. Proper storing of materials is very important to prevent losses from damage, pilferage and deterioration in quality of materials. The stores must, therefore, be properly organised and equipped for the handling of raw materials.
What are the challenges of data management in healthcare?
Data discovery challenges and poor data quality make it much more difficult to perform the required audits and meet regulatory requirements and limits the diversity of data healthcare providers can use for the benefit of patients.
What is the importance of store layout?
Store Layout: As we have seen in our previous discussion that store plays an important role in the efficient and effective management of factory, the layout of store should be carefully and judiciously planned to ensure maximum efficiency.
What are the disadvantages of departmental store?
Heavy amount of capital is required to be invested in a Departmental Store. Therefore, it cannot be started by a person of Limited financial resources. 2. Lack of the Facility of Credit Departmental Stores sell goods only on cash or online payment.
What are the disadvantages of physical stores compared to eCommerce?
One of the major disadvantages of physical stores compared to eCommerce is the opening hours. In online trading there are no holidays or weekends, your business runs 365 days a year, 24 hours a day. Advantages of physical transactions over online trading.
What are the disadvantages of chain stores?
Chain stores are a large scale retail organization. Large scale operations create the problem of supervision, control, and coordination. It increases the costs of operation considerably. Related: 14 Principles of Planning – Explained with Examples. 6. Heavy Loss on Change in Demand
What are the disadvantages of a convenience store?
List of the Disadvantages of Convenience Stores 1. Long operational hours are often required. 2. They are often targeted by the local criminal element. 3. Cleaning and maintenance are frequent requirements. 4. Convenience stores experience inventory losses. 5. These stores sell what people want more than what they need.
Why managed EDI is necessary for healthcare data management?
With EDI, processes are automated, and documents are transferred through a secure connection, eliminating costly errors. Additionally, EDI makes it easier to track and store data for auditing purposes, ensuring that your company is ready to meet industry compliance standards.
Why does healthcare need data governance?
Simply stated, data governance in healthcare is important, because it is vital for caregivers and leadership to have access to the right information at the right time and in the right format so that proper clinical and business decisions can be made.
Why are layouts so important to retailers?
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Why are storage options important in a store layout design?
Storage options are essential to the overall store layout design because it impacts how much merchandise you will feature on the sales floor where customers navigate. Ebster recommends keeping the customer in a flow state and focused on shopping.
What is the importance of store design?
One reason for the importance of store design is that the flow of a store’s layout determines how customers shop. The longer a customer is in a store, the more likely she is to buy — therefore, the goal is to keep her shopping longer.
What are the components of interior retail store layout?
The interior retail store layout has two important components: Store Design: The use of strategic floor plans and space management, including furniture, displays, fixtures, lighting, and signage. Customer Flow: This is the pattern of behavior and way that a customer navigates through a store.