The Impact Of Stock Taking In Manufacturing Company (A Case Study Of Soap And Detergent Industry Ltd Ilorin)
1.1 Background of the Study
A company is expected to maintain adequate stock of materials for a continuousness supply of raw materials to the factory for an interrupted production. It is not possible for accompany to procedures raw materials wherever it is needed and more so, finished goods manufactured by the company be sold at the same time. A time log exists between demand for materials and it supply.
The procurement of materials may be delayed because of some factor such as strike, transport, description and short supply e.t.c. Therefore, there is a need for a firm to maintain sufficient stock of raw materials at a given time to stream-line production. To maintain the concept and conservation of accounts the continuity of existence to adequate raw materials supply and materiality conservation in raw materials for economic purpose.
In managing inventory the firm objective should be constant with wealth maximum principle. To obtain or achieve this, the firm should be determining it optimum level of inventory. Sufficient inventory should be maintained neither excessive or in adequate.
The control of inventory and management of stock house in common with the other major branches of commercials and industrial work become specialist activities.
The store should be considered as a temporary location for materials needed for operation purpose and should be planed, organized and operate in such a way that the period of residence of each stock items is as short as possible, consist once with economic operational the only good. Reason for caring materials simply money sitting on a shelf, requiring pure money to be sent on its custody.
In general, if demand is steady or highly predictable we should store for very shorts period if at all when demand is highly unpredictable them storage for longer periods may be necessitated. There is no standard system of store keeping which can be universally recommended or applied but in the course of time, certain principle and practice of move less general application have been involve large sum of money of involved and it is essential to organized the stock management function so that the investment is kept to the maximum. From the stores points of view the most important thing is to keep quantities of economy goods in the appropriate and respective position and necessary record and transportation follows immediately shortage must be avoided or else production line will have to stop. At the same time too much must not be delivered or it will close up the warehouse and perhaps also the production areas, apart from the fact excess delivers will tie up move capital.
It is well known that most materials will deteriorate in store in the course of time and the fact that a building is provided for storage is in itself and acknowledge that some degree or production is required.
Stock are general term describing goods, which are held in storehouse and stockyards. The bulk of those goods is usually needed for these in connection with production or operating activity but the expression “Stock” also course finished product awaiting dispash to customers, scraps and package held sending to suppliers. The store an important role in advisory on the quality of items to be stocked, provisioning and disposal of obsolete materials.
The store objectives of store function are:-
- To make available a balance flow of raw materials, component tools equipment and any other commodities necessary to meet operation requirements.
- To provide maintenance materials, spares and general storage of commodities in existence.
- To receive and issue work-in progress and finished product. Production is not completed until it reach final consumers.
- To accept and store scrap and other discarded materials as it arises.
For the efficient operation of the store system and for the achievement of the stated objectives. It is necessary for organization to have story stock control procedures. A great attention should be focused on the operation of the stores because of the general scarcity of materials, the higher cost of materials and equipments.
The rationable behind stock or inventory management or store function involved:-
- What to keep in store
- When to order those things
- What quality of them to order
Inmost factories store some very expensive items as well as some very cheap one, and use some perhaps once in a year. (In deciding what to store) while order may be required at a rate of nudged in a day. In deciding what to store, unit cost, rate of usage, lead-time deterioration obsolesce, stock facilities and capital must be taken the nature and needs of the organization it’s intended to save.
1.2 Statement of the Study
The study is aimed at finding out the following problem 3m facing manufacturing industries with particular reference to stock taking.
- Have industry effectively verify the accuracy of store record.
- Have the industry compare the balance sheet record with physical verification.
- Have the industry median attempt to disclose the possibility of fraud.
According to the cook and Campbell (1979) statistical conclusion validity refer to about whether it is reasonable to presume conversation given a specific alpha level and the obtained variance.
(2) Internal Validity
Once it has been determined that the two variable (A and B) are related, the next issue to be determined is of causality. Does a cause B? if a study is lacking internal validity, one can not make cause and effect statement based on the research.
(3) Construct Validity
A good construct validity means the we will be relatively sure that construct A is related to construct B and that this is possible to construct a casual relationship.
(4) External Validity
External validity addresses the issue of being able to generalized the result of your study to other times, place, and person. For example if you conduct a study looking at heart disease in men, can the result be generalized to women? Therefore, one need to ask and “yes” therefore the external validity of the study is threatened.
1.3 objective of the Study
The research like others is carried out in order to achieve some objective such as:-
- The identify problem associated with caring out effective inventory management or store functions.
- To ascertain the problem of effective and efficiently handling of stock.
- To forecast all the possibility of fraud occasional by thief/loss (analysed the problem and prevent loss).
- To resolve the level of stock to be added when inventory should be replenished.
- Order quality problem i.e. colour, brand, size etc.
1.4 Research Methodology
The research methodology is when a described the how it can be gathered the information method of the processing of collection of terms for research the data may be collected for either theoretical or practical, and the research methodology is that of the validity.
An a validity is like when a individual ask is this valid? It is the questioning the latest once aspect of the study. There are four types of validity that can be discoursed in relation of research and statistics. Once must be specific as to which type of validity is under discussion.
- Statistical conclusion validity without a background of basic statistics.
- Identify the effectiveness and efficiency of the stock through the stock management skill or techniques.
1.5 Significance of the Study
This study will enable the management of an organization to the following.
- Identify and pay attention to their role in ensuring smooth stick management so as to achieve the corporation goal and objective of the company.
- Have they revealed any weakness in the system for the custody and control of stock.
1.6 Scope of the Study
This study will cover all aspect of stock taking as it’s affect manufacturing industries. The survey is a case of global Soap and Detergent Industries Limited, Ilorin, Kwara State. The study was designed to operate within the frame work of its objective to examine the impact and effectiveness of stock taking by the company.
1.7 Plan of the Study
The research examines the impact of stock taking in manufacturing company using a case study of Global and Detergent Industries Ilorin.
Furthermore, stock taking is said to have been in existence and vital part of activities of any manufacturing company.
For clarity of the research context, the research work was divided into (5) chapters.
- The chapter one introduce the research topic and state the statement of the research problem, objective of the study, research hypothesis, significant of the study definition of the key and plan of the study.
- Chapter two contains the literature review
- While chapter three has the research methodology.
- Chapter four deal with data presentation and analysis.
- Finally, chapter five based on summarized of the study with some policy recommendation.
In other to achieve the above stated chapters 25 questionnaires were administered in all and adequate research finding and conclusions was drawn to make the relevant recommendation for the research.
5.0 Summary, Conclusion and Recommendation
By and large, there are two types of stock taking normally periodic and continuous stock taking period stock taking involves and exercise the entire inventory at the same time at the end of given period usually the end of the financially year. Theoretically, stock should be examined at the close of business on the balance sheet at data, but in a large business concern, it might be volumes and impossible in a day hence the operation extends to several days.
Inventory examination need to be periodic or once in an year. A well done stock taking require a good deal of preparation which include a draw up programming complete by all stockholders. Adequate preparation should be put in place including stock shoot and card, which should by prepared ahead and all personnel concerned about what are expected of them.
Continuous stock taking as the name implies involves a process of stock taking throughout the years as the need arises and this done with the aid of a program so that each item is physical verified and more frequently, if need be sometimes, the program should be designed so that certain stock item should be verified either daily or weekly depending on the importance of stock items.
This method of physical check is similar as the one employed for periodic stock taking expect one or two significant difference in their mode of operation.
The findings show that most firm have multiple goals rather than a single goals and there are little resources to obtains their goals and they encounter many problems in achieving these goals and objectives. In view of above ascertain, the researchers now thinks for the organization to achieve all the productivity goals and objectives then must be place since stock is current asset that is easily convertible to cash. The implication on this is that the organization apart from the enormous task of taking care of some external factors. In addition to its primary function in order for the external factors not to hinder stock management.
Among other measure to be taken care security stand and operation procedure as well as incentive for employers stock house should be of solid construction and food proof in all sense of the word i.e. adequate doors gate and anti burglary materials should be provided. The internal layout should be comfortable and provide good working environment with table, chairs, scale work counter and various store and officers. Stockyards should be surrounded and various store and fenced with strong fates, appropriate locks and other security apparatus that the firm can afford to allow fro effective working environment taking cognizance of large delivery struck and receiving bag for quick and comfortable delivery. Therefore, an organization is out of maximum goals accomplishment must put all the above measure in place for effective inventory managements.
If the stock management system involves stock control with is to determined the range and quaintly of materials which should be stocked, in one place to another, adequate store control that is to determined the range and quality of materials which should be stocked and regulation of receipt and issue of these materials or another. Adequate store accounts should be kept to achieve some important goals, which include the following.
- To indicate the value of stock in the stores
- To provide a basis for materials costing
- To provide the means of operating stock control by via.
As earlier highlighted every firm has various for choosing stock management technique but these researchs having gone through all the techniques of the firm under study which seem to be working for the company within their horizon (management). We hereby come out with some suggestion and having deliberated on it, we recovered for the management of Global Soap and detergent Industries Limited, Ilorin and other users of this text thus:
- In as much as the inventory management of procedure is yielding results, the company can fair better with the engagement of skilled manpower and encourage the incumbent employee through in house and off job training to greater heights in the company sense of belonging.
- Adequate human, financial and materials recourse should made available on in time in accordance with the plans.
- 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 enhances with the provision of adequate efficient sources of power in order to achieve set goals.
- Improved communication system from lope enhelon to the lower part, it will enhance industrial harmony and erase the present animosity between the difference status of the managements.
- Having critical examined the various stock valuation method a standard pricing method should be put in place as this might have arrived at having put all Global factor into consideration and this should be rejected to review down at periodic interval depending on the state of the economy. Among other recommendation is that the form should combine the use of periodic and continuous stock taking as the use of formal will detect whatever lapse the letter cannot ascertain as the letter will not make periodic stock taking to be voluminous but certain things must be done the line in making sure there is no difference between the book and physical result but where resource is the case the physical result super code the book balance.
Moreover, when using period style must be an arrow ahead on person to control the operation, this should be done probably outside the operation period, as the stock house must be closed any form of business activities.
One person with full authority to human and sign all worksheet without duplicates, all of which must be collected immediately after the excess, should be centrally control the operation.
The records of damaged, determined and expired items should be kept separately since is usually affairs it can be made easier by the use of continuous stock taking earlier in the year and in this case there is no need close down stores as it can be done simultaneously with other stores activities in progress. Specially skilled and experienced employees can do this mostly from the audit. In a situation where book balance and physical value does not agree, conclusion should be made but the physical value is authentic but discrepancies should be investigated and sometimes on the spot checking is undertaking to ascertain there had not been any error.
Finally, periodic and continuous stock taking exercise should be maintained to effectively yield good inventory management result, the management should learn how to involve all category of employees in stock management as this serve as incentive because it makes staff have sense of belonging and want to be part of the goals accomplishment.
All said and done, the company in order to achieve all set goals must have a stable continuous stock management procedure and to achieve the certain measure one recommended among which are:-
- Periodic and surprise checking should be done a well as changing the employee that perform the ask from time to time during which appropriate documents with authorized signature should be used to carryout the exercise.
- Every manufactory concern should have in place an effective internal control unit which should be authorized to do it’s words and there should be no score screw.
- The present channel of distribution is used by the company under study is good enough the use of depots and warehouse at geographical zone. In addition internal and external auditing of the operation of all deport should be carried out periodically and should apply to distribution who enjoyed credit facilities within the Kwara State Catchment area and other part of the country (throughout the state federation).
The Impact Of Stock Taking In Manufacturing Company (A Case Study Of Soap And Detergent Industry Ltd Ilorin)
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