Impact Of Stock Taking As A Control Measure In Manufacturing Company (A Case Study Of Dangote Flower Mills Ilorin)

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Impact Of Stock Taking As A Control Measure In Manufacturing Company (A Case Study Of Dangote Flower Mills Ilorin)


Abstract


Attempt has been made in this project to discuss generally and analyze the impact of stock taking as a control measure in manufacturing company in Nigeria today, Dangote Flower Mills Ilorin is being chosen as a case study. Stock taking is an act of verifying inventory in the store while purchasing could be defined as the function which is responsible for the procurement of equipment, materials, suppliers and services required in an organization for the use of production in accordance with the standards perforation, in the most efficient and economical manner. This project is divided into five chapters, the chapter one present introduction of the topic, statement of problems, objective of study, significant of the study, scope of the study, limitation of study, historical background of case study and definition of terms. Chapter two deals with the literature review. Chapter three contains research design and methodology, area of the study, sample frame/population, instrument for the data collection, and methods of data research question. Chapter four presents presentation analysis of data, data interpretations, and analysis of data. Chapter five shows the summary of the findings, conclusion of the findings and recommendation. References.


Chapter One


Introduction

1.1 Background of the Study

Stock taking is the physical verification of the quantities and condition of items held in an inventory, as a basis for accurate inventory audit and valuation. Stock taking is necessary to ensure that the stock records are accurate.
Regular stock taking is an essential element of a loss minimization strategy. The process helps you to compare actual stock levels with the stock levels based on your ordering records.

A company is expected to maintain adequate stock of material for a continuous supply of raw material to the factor for an interrupted production It is not possible for a company to procure raw material whenever it is needed, and more so the finished goods manufactured by a company cannot be sold of the sometime, a time log exists between demand for material and supply.

The procurement of material may be delegated because of such factors as strike, transport , disruption, short supply etc therefore there is a need for a firm to maintain sufficient stock of raw material at a given time to streamline production to maintain the concept and conservation of account. The continuity existence to adequate raw materials for economics purpose.

The control of inventories and management of store house in common with the other major branches of commercial and individual work become specialist activities.

The stores should be considered as a temporary location for materials needed for operational purpose and should be planned, organized and operate in such a way that the period of residence of each stock items is as short as possible consistent with economic operation.

In general, if demand is steady or highly predictable then we should store for very short period if at all when demand is highly unpredictable then storage for longer period may be necessitated.

There is no standard system of store keeping which and universally recommended or applied but in the course of me certain principle and practices of more or less general application haven been involved large sums of money are involved and it is essential or organic to stock management or sores function so that the investment is kept to the minimum from the stores point of view the most important thing is to keep the quantities of incoming goods in their appropriate and respective position and necessary records and transaction follows immediately shortage must be avoided or else production line will have to stop.

At the same time for much must not be delivered or it will clog up the ware house and perhaps also the production area, apart from the fact that excess deliveries will be tie up more capital.

It is well known that most materials will determined in store in the course of time and the fact that a building is provided for storage in itself an acknowledgement that some degree of production is required.

Large stores are generally term describing goods which are hold in storehouses and stock yards.

The bulk of those goods usually intended for this in connection which production or operation activities, but the expression “stores” also course finished product waiting to suppliers.

The store plays an important role in advisory on the quantity of items to be stocked, and disposal of obsolete materials.

The objectives of store function are: –

  1. To make available a balance flow of raw materials components tools equipment and any other commodities necessary to meet operation requirements.
  2. To provide maintenance materials spares and general storage for community of existence.
  3. To receive and issue work — in — progress and finished production. Production is not completed until it goes to final consumers.
  4. To accept other discarded materials as it arises.
  5. For the efficient operation of the stores system and for the achievement of the stated objectives. It is necessary for an organization to have a strong stock control procedure.

A great attention should be focused on the operation of the stores because of general scarcity of materials vis — a — vis the higher cost of material and equipments.

The rationale behind stock or inventory management or stores function involves: –

  1. What things to keepings stock
  2. When to order those things
  3. What quantities of them to order

Most factories stock some very expensive items as well as some very cheap one and use some perhaps once in a year while other may be required at a rate of hundred in a day in deciding what to stock, unit cost, rate of usage, lead time, deterioration, obsolescence, stock facilities and capital must be carefully considered.

It is therefore follow that before a system of storage and stock control can sensibly be desired account must be taken of the nature and need of the organization.


1.2 Statement of Problem

This study is aimed at finding out the following problems facing manufacturing industries with particular reference to stock taking as a control measure.

  1. To verify the accuracy of store record
  2. To compare the balance sheet records with physical verification.
  3. To disclosed the possibility of fraud (Thief /Loss)
  4. To reveal if there is any weakness in the system for the custody and control of stocks.

1.3 Objective of the Study

This research like any other is carried out in order to achieve some objectives such as:

  1. To identify problems associated with carry out effective inventory management or stock function.
  2. To ascertain the problem of ineffectively handling of stock (problem definition).
  3. To forestall the possibility of fraud occasional by theft/loss (Analyzed the problem & prevented of loss).
  4. To resolve the level of stock to be added when inventory should be replenished.
  5. Order quantity problem i.e. colour, brand, size etc

1.4 Significance / Importance of the Study

The study will enable the management of any organization to: –

  1. Identify any pay attention to their role in ensuring smooth stock management so as to achieve the corporate goal and objective of the company.
  2. Identify the effectiveness and efficiently of the organization through the stock management skills or techniques.
  3. Show how organization should carefully pay attention to receiving and issuing of materials the level at which it is necessary to place an order and with what quantities.
  4. Give an overview of the experience to the management and accounting students who may like to carry out a similar research in the future.

1.5 Scope of Study

This will cover all aspect of stock taking as it affect manufacturing industries the survey is a case study of Dangote Flour Mills Industries Limited Ilorin Kwara State. The study was design to operate within the frame work of its objective to examine the impact and effectiveness of stock taking as employed by the company.


1.6 Limitation of Study

This study would have broader scope but for the following factor: –

Money and time have been the major constants on work of this nature. However the research accepts that time has plugged the overriding factor militating against the study.

People even after proper identification still find it difficult to part with some vital information which will be of great help to this work as they entertain fears that such information might be sold for industrial espionage.


1.7 Historical Background of Case Study

Dangote Flour Mills Plc commenced operations in 1999 as a division of Dangote Industries Limited (DIL). One of Nigeria largest and fastest growing conglomerates following the strategic decision of Dangote Industries Limited to unbundled if various operations, Dangote Flour Mills was incorporate in 2006 when Federal High Court sanctioned a scheme of arrangement in all the asset, liabilities and undertakings of the yeast while flour division of Dangote Industries Limited was transferred to Dangote to Dangote Flour Mills.

From an initial installed capacity of 500 MT per day at its Apapa Mill, Dangote Flour has expanded rapidly by opening on quick successions three other flour mills are in Kano (2000), Calabar (2001) and Ilorin (2005).

Each of the mills started with an installed capacity of 500 MT per day but all of them have subsequently expanded resulting in a total installed capacity of 5, 000 MT per day distributed as follow: –

  • Apapa 1,000 MT Per day
  • kano 500 MT Per day
  • Calabar 1,500 MT Per day
  • Ilorin 1,000 MT Per day

These expansions were in response to a growing national demand for flour and based products in addition to the company’s drive for increased market share. Thus from a modest beginning the company has growing to become one of the industry leaders within a six years period. The company has 3 wholly owned subsidiaries namely: –

  • Dangote Agro Sack Limited
  • Dangote Pasta Limited
  • Dangote Noodle Limited

In line with Dangote Industries Limited business philosophies of establishing a dominant presence in any sector it operate in these subsidiaries occupy leadership position in their respective industries.

1.7.1 Business

The company is in the business of flour milling processing and marketing of branded flour. Its product port-folio comprises the following:

  • Bread Flour
  • Confectionery Flour
  • Semolina and
  • Wheat Offal (Bron)

Wheat is transformed into high-quantity flour, by using state of the art plant and equipment backed by renowned technical expertise Dangote Flour Mills across the country equipped with the least flour milling technology available in the word.

1.7.2 Company Raw Materials

The company import its principal raw materials wheat (the hard Red winter wheat No. 2 variety) from united state of America in shiploads, Wheat Silo trucks (also Dangote Industries Limited Owned) there after convey the Wheat to the inland mills to Kano and Ilorin.

Alhaji Aliko Dangote holds the position of chairman of the board of direction at Dangote Flour Mills Plc. In addition he occupies the post of Dangote group’s president and chief executive officer. He also serves on the board of National Council of Nigeria Vision, Mohammed Bello endowment for justice and jurisprudence, Kano foundation, the Nigeria Economic submit group African Petroleum Plc, National Investment Promotion Council and the heart of African (a management group on Nigeria Image Project) etc Alhaji Aliko Dangote Graduated in Business from Al – Azahar University Caire, Egypt.

Name with Current Post

  • Alhaji Aliko Dangote Chairman of the Board
  • A. Samuel Legal Advisor, secretary
  • Rohit Chavdhry Managing Director
  • Shuaibu Idris Executive Director
  • Olakule Alake Director
  • Uzoma Nwankwo Director
  • Sani Dangote Director
  • Abdullahi Mahmond Director
  • S. Teidi Director
  • Abdul Dantana Director

1.8 Definition of Terms

There are some terms that are common in the economic and marketing circles and the definition of such term are enumerate below.

The Middle Person

The middle person can be defined as any individual or a group of individuals or an organization that serve as a link between the companies and its market.

The middle person to any firm includes, the firms market, the firms suppliers and of course the firm intermediaries.

The Market

The market refers to the place where products and services and their competitive substitutes are brought and sold, an opportunity to sell, or the demand for goods and services. It is also a set of potential or real buyers or a place in which there is a demand for products or services.

The Suppliers

The suppliers are individuals or business that provides resources needed by a company in order to produce goods and services.

The Market Intermediaries

Market intermediaries is also known as middlemen or distribution intermediaries. It is an important part of the product distribution channel. Intermediaries are individuals or business that make it possible for the product to make it from the manufacturer to the end user, essentially facilitating the sales process.


Chapter Five


Summary, Conclusion and Recommendation

5.1 Summary

There are two types of stock taking normally periodic and continuous stock taking periodic stock taking involves an exercise that cover all the inventory at the same time, at the end of a given periodic usually the end of the financial year. Theoretically, stock should be example at the close of business on the balance sheet detail. In a large concern, it may be volumes and impossible in a day hence, the operation extend to several days. Inventory examination need to be periodic or once in a year.

A well done stock taking require a good deal of preparation which include a drawn up programming complied by all stock holder. Adequate preparation should be put in place including stock shoot and card which should be prepared ahead and all personal concerned, briefed about what are expected of them.

Continuous stock as the name implies involves a process of stock taking throughout the years as the need arises and his done with the aid of a programme so that each item is physical verified and more frequently, if need be some time, the programme should be designed so that certain stock items should be verified either daily or weekly depending on the important of such stock item. This method of physical check is similar as the one employed for period stock taking except one or two significant difference in their made of operation.


5.2 Conclusion

The findings show that most firms have multiple goals little resource to obtain these goals. And they encounter many problems in achieving these goals and objectives.

In view of the above assertion, the researcher now thinks for the organization to achieve all the productivity goals and objectives. Standard stock management tools and right personal to operate them must be in place since stock is a current asset that is easily convertible. The organization apart from the enormous task of taking care of some external factors in addition to its primary function in order for the minutes external factor not to hinder stock management.

Amongst other measures to be taken are security standard operation producers as well as incentive for employees. Stock house should be of solid construction and fool proof in all sense of the word i.e. adequate doors, gates and anti — burglary materials should be provided. The internal layout should be comfortable and provide good working environment with tables, chairs, state work counters and various store and offices. Stockyards should be surrounded and fenced with strong gates, appropriate locks and other security apparatuses that the firm can afford to allow for effective working environment for quick and comfortable delivery. Therefore are organization is out for maximum goals accomplishment must put all the above measure in place for effective inventory management.


5.3 Recommendations

If the stock is management system involved stock control that is to determine the range and quantity/quality of materials which should be stocked and the regulation of receipt and issues of these materials, reasons vary from one firm to another stocking one materials or another. Adequate store accounts should be kept to achieve some important goals, which include the following: –

  1. To indicate the value of stock in the stores
  2. To provide a basis for material costing
  3. Provide the means of operating stock control by value.

As earlier highlighted every has various reason for choosing stock management techniques but these researchers having gone through all the techniques of the firm under study which seen to be working for the company with some suggestion and having deliberated on it we recommend for the management of Dangote Flour Mills Industries Limited Ilorin and others users of this text thus: –

  1. In as much as the inventory management producer is yielding results, the company can fair better with the incumbent employees through in — house and off the job training together heights in the company and better welfare package which will give them sense of belonging.
  2. Adequate human, financial and materials should be made available and in time in accordance with the plans.
  3. The management should provide a bigger and new robot machine so as to curb the delay in the event of machine breakdown; moreover, uninterrupted production should be enhanced with the provision of adequate efficient alternative source, of power in order to achieve set goals.
  4. Improved communication system from top each Len to the lower part will enhance industrial harmony and erase the present animosity between the different status of management. As easier mentioned, the researcher will recommend that procurement of material should be done to meet production at anytime should production be stalled of shortage of raw materials in addition in as much as finance play a major role here, maximization profit should be a watch word hence, price stability of raw materials availability and finance of the company will be equally important. The researcher will recommend that all the three levels of stock should play a very good role in determining what quality to acquire at a point in turn, this include minimum, maximum and re-order levels.
  5. Having critically examine the various stock valuation methods, a standard pricing method should be put all Dangote factors into consideration and this should be subjected to review up/down at periodic interval depending on the state of the economy.

Moreover, when using periodic style there must be an arrow ahead probably outside the operation period, as the stock house must be closed any form of business activities.

One person with full authority to umber and sign all worksheet without duplicates, all of which must be collected immediately after the exercise, should centrally control the operation.

Finally, periodic and continuous stock taking exercise should be maintained to effectively yield good inventory management result. The management should learn now to involve all category of employee in stock management as this serve as incentive because it makes staff have sense of belonging and want to be part of the goal accomplishment.

All said and done the company in order to achieve all set goals must have a stable and continued stock management. Procedure and to achieve this certain measure are recommended amongst which are: –

  1. Periodic and surprise checking should be done as well as changing the employees that perform the tasks from time to time during which appropriate documents with authorized signature should be used to carry out the exercise:
  2. Every manufacturing concern should be have in place on effective internal control unit which should, be authorized to do its word and there should be no score screw.
  3. The present channel of distribution is used by the company under study is good enough the use of depots and external auditing of the ‘operation of all depots should be carried out periodically and should apply to distributors who enjoyed credit, facilities. Within the Kwara State catchments area and other parts of the country (throughout the state of Federation).

Impact Of Stock Taking As A Control Measure In Manufacturing Company (A Case Study Of Dangote Flower Mills Ilorin)


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Impact Of Stock Taking As A Control Measure In Manufacturing Company (A Case Study Of Dangote Flower Mills Ilorin)


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