The Effects Of Inventory Management On The Continuity Of Operation Of Business Organization (A Case Study Of Flour Mill Nigeria Plc, Apapa, Lagos)

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The Effects Of Inventory Management On The Continuity Of Operation Of Business Organization (A Case Study Of Flour Mill Nigeria Plc, Apapa, Lagos)


This project work examine the effects or inventory management on the continuity of operation buyers organization inventory management. The need for sound inventory management is thus vital to continue operation of business organization. The research work will consist five chapters in order to ensure easy understanding of the research work. Chapter one; this will contain introduction, historical background background of the case study problems, objectives of the study, significance of the study, scope of the study, limitations and constraints and definition of terms. Chapter two; contain literature review. Chapter three; will highlight research methodology introduction, research design, sources of data, data collection tools, administration of data collection tools, research population and sample size, sampling procedure employed and method of data analysis. Chapter fourl; contains presentation and analysis of data. Chapter five; will shield light on summary of findings, conclusion, recommendation and references.

Chapter One

1.0 Introduction

Store/inventory management is an important function in the management of an organization

Inventory management is not related to manufacturing concern but it is also important in non-manufacturing organizations.

This point to the fact that these firms have substantial amount of working capital locked up in inventory. The level of inventory is important to the efficient operation of those firms, investment is important in inventories should be at the optimum level.

Inventory management is an important aspect to cost reduction schemes. It involves determining the degree of materials required for the best results, planning and designing of materials organization system.

Thus for the purpose of this research, inventory covers;

  1. Raw materials
  2. Work-in-progress
  3. Finished goods

Inventory usually forms a large population of many firms operations and effective management is therefore required for proper functioning of the normal production, selling operations of the business and for keeping the cost of holding and ordering stock to beeriest minimum

Excessive inventories vary for a long period are as loss or liquidity. Raw materials are generally difficult to sell as the holding period increases. Therefore exceptional circumstances where it may pay company to hold stock of raw materials. This is possible under the condition of inflation and scarcity.

Work-in-progress is for more difficult to sell. Similarly, difficulties may be faced when disposes of the finished goods inventories at time, another danger of carrying excess inventory is the physical determination of inventories deterioration occurs with the passage of time this could be due to mishandling and improper storage facilities.

These factors are within the management and the necessary investment in inventories are not sufficient to meet the demands of customers regularly, the customers may shift to other competitors this as to loss of market to this common relevant.

1.2 Historical Background of the Study

Alhaji aliko dangote, MFR,GCON, a northerner from kano state Nigeria, was born on10th april 1957 in to a wealthy Muslim family. Who owns the Dangote group, which has interest in commodities. The company operates in Nigeria and other several countries in Africa, including Benin, Cameron, Togo, Ghana, South Africa, and Zambia. As of march 2014, he has an estimated net worth of $25 billion USD. Dangote is ranked by forbes magazines as the 23th richest person in the world and the richest in Africa. He surpassed Saudi Ethiopia billionaire Mohammed Hussein al Amoudi in 2013 by over $2.6 billion to become the world richest person in African origin.

ALHAJI ALIKO DANGOTE (born on 10 April 1957 in Kano Nigeria) is a business magnate in Nigeria. From the time he was young Dangote has an eye on business. Ha said “I can remember when I was in primary school, I would go and buy cartons of sweet (sugar boxes) and I will go start selling them just to make money.. I was so interested in business, even at that time”. He studied business at the al-Azhra university in Cairo Egypt and there after returned to Nigeria to borrow from his uncle SANUSI ABDULKADIR DANTATA, who provided him a loan of #500,000 when ALIKO was 21 years old, in order to start a business.

The Dangote group was established as a trading firm in 1977; today it is a multi-trillion naira conglomerate with many of it operator in Benin, Ghana, Nigeria, and Togo, at present Dangote has enlarge his line of business to also cover food processing, cement, manufacturing and freight. The Dangote group also dominates the sugar market in Nigeria and is a major sugar supplier to the country’s, soft drink companies, breweries and confectioners.
The Dangote has moved a trading company to being the largest industrial group in Nigeria and these includes; Dangote sugar refinery, Dangote cement and Dangote flour, just to mention a few.

In July 2012, Dangote approach the Nigeria Ports Authority (NPA) with the idea of leasing on abandoned piece of land at the Apapa port, which was welcomed and approved. He later built facilities for his flour company there. In the 1990s he approach the central bank to allow his transport company to manage their fleet of staff buses, a proposal which was also approved.

In Nigeria today, Dangote group with his dominance in the sugar market and refinery business is the main supplier (70% of the market) to the country’s soft drinks companies, breweries and confectioners and confectioners, it is the largest refinery in African and the third largest in the world, producing 800,000 tones of sugar annually. Apart from this Dangote group owns salt factories and flour mills and is a major importer of rice, fish, pasta, cement and fertilizer, the company export cotton, cashew nuts, cocoa, sesame seed and ginger to several countries. It also has real estate, banking, transport, textile and oil and gas. The company employs over 11,000 people and is the largest industrial conglomerate in the whole of west Africa.

Dangote has diversified in to telecommunication and its building 14,000 kilometers of fiber optic cables to supply the whole of Nigeria. As a result Dangote was honored in January 2009 as the leading provider of employment in the Nigeria consultant industry.

1.3 Statement of the Problem.

The previewing economic pressure has led to general shortage or fall in supply of raw materials. This has lead many organization embracing various management techniques to collapse. This ranges from down sizing restricting repositioning, re-engineering and so on. Most organization that cannot survive on this terrain resulted into resentment and possible total close down or collapse (chiquidations).

Many organization engages in one business or the other either to produce good or render services to customers, in doing this, they have to contented with inventory manage problems. The objectives of the research study certificate on the reprints for the award of national diploma (ND) in purchasing and supply department institute of finance and management studies (IFMS) kwara state polytechnic, Ilorin.

One of the objectives of this study is to critically evaluates and review the significance of management as practiced in Nigeria flour mills plc with a view of appraised the cost effectiveness or otherwise of such techniques that are employed.

1.4 Objectives of the Study

The major objective of this study is to examine the importance of negotiation and its contribution in an organization as a case study of Dangote Group of Company Lagos. The primary observation of this project is to satisfy one of the basic certificates for the award Higher National Diploma (HND) in Business Administration.

Moreover, the objective of the study is to:

  1. Helps develop appropriate negotiation system to improve production capability
  2. To show how purchasing really contribute to the quality in an organization through their department
  3. To show its impact, to the accomplishment of the organizational goods.
  4. Negotiation helps organization to have flow in production system and production continuity.

1.5 Significance of the Study

This project is significant because it will educate the management of the case study in the need for sound inventory management in an attempt to accomplish the organizational objectives.

The study is also significant to the researcher is that it will broader her knowledge of the subject matter
Lastly the project will be very useful to other researcher now and in the future may be writing on the similar subjects.

1.6 scope of the Study

This study is restricted to the Dangote flour mill Nigeria plc Apapa owing to certain limitations which will be explained in the next heading.

1.7 Limitation and Constrains

In the course of this research project, the researcher encountered the following problems.

  • Financial problems
  • Attitude of the respondents
  • Time constrains
Financial Problem:

This constitutes only the major challenges encountered in the course of the study. The researcher as a student has limited financial resources as therefore could not afford to undertake a comprehensive study at the subject matter

Altitude of the Respondent:

The altitude of the company’s officials towards getting certain information was very discouraging they refused to give any comments in certain areas which relating to the company on the firm ground of confiderality.

Time Constraint:

The time allowed for writing and submission of the research project was strictly limited for any in-dept study on the subject.

1.8 Definition of Terms


Consist of usable but idle resources. These resources may be any kind; it may include for example raw material, money or machine

Inventory Management:

This is the act of controlling amount of stock held in various forms with a business to ensure smooth operate materials leads in the store.

Stock Levels:

The basic method of controlling stock by quantity is by means of fixing for each commodity, stock levels which are noted on the stock records and subsequently used as a means of indicating when some action is necessary.

There are various kinds of stock levels, but the fundamental controls are minimum according and maximum level.

Lead Time:

Lead time is the time interval between when the need for stock are recognized till the time when good are sent to the delivered by the supplier.

  • Stock level
  • Maximum
  • Minimum
  • Order stock level
  • Stock yard
  • Stock-taking
Stock Level:

The basic method of controlling stock by quantity is by a means of fixing for each commodity stock levels which are noted on the stock records and subsequently used as a means of indicting when some action is necessary.

Maximum Stock Level:

Maximum stock level is the level above which stock should not normally be allowed to rise. Before it is fixed take into accounts.

  1. Rate consumption
  2. Leadtime necessary to obtain new delivery
  3. Amount of capital involved and available
  4. Risk of deterioration or evaporation
  5. Storage space available e.t.c
Minimum Stock Level:

Minimum stock level is below which stock should not normally be allowed to fall. If stock go below or fall below this level, there is a danger of shortage of supply which may result in shortage of production or operation.

In fixing minimum level, the main factor is the effect which a run-out of stock would have upon the whole operation of the company or organization. This factor is very important in a manufacturing industry

Re-Order Level:

This is between the maximum and the minimum stock level at which time is essential to initiate purchase requisites for fresh supplies of materials. This point will usually be strictly higher than the minimum stock to cover emergencies

Chapter Five

5.0 Summary of Findings, Conclusion and Recommendation

5.1 Introduction

This chapter deals with summary of observations made during the course of investigation and drawing logical conclusions from the summary of finding and recommendations,

5.2 Summary of Findings:

The finding reveals that inventory is a key factor in production. What begin with a humble beginning during the industrial revolution of the early 19th century in Europe has become a major factors scheme of things in any organization be it profit or non profit making and it has come to stay as an important aspect of management.
It was ascertained that inventory central system lie in the application the fix order size, quality inventory system, the cyclical ordering system, the imprested system of stock management, the two ‘system and the just in time system are among various inventory management techniques used by organization in ensuring and qualitative production.

5.3 Conclusion

Inventory Management is an indispensable variable in smooth running of organisation. It is used to ensure a balance and continued existence and prime performance of an organization. In essence inventory management when understood and used optimally will lead to lower cost of production which will ultimately increase organizational performance.


The other findings made include:

  1. Large percentage of the company’s work force were holder’ of ND/NCE and HND/BSC
  2. Majority of the respondents were senior management staff
  3. It was also gathered that the performance of inventory management system was very impressive
  4. That inventory control is vital to the attachment of the company’s objectives.

5.4 Recommendations

At this juncture, the researcher would like to make the fallings recommendations to improve the company’s existing inventory management system.

Organizations should ensure that raly a qualified diligently towards the realization of the organizational goal.

Organization should emphazised great importance to an training and make sure that all staff and adequately trained and developed.

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