Importance Of Effective Stock Control In An Organisation

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Importance Of Effective Stock Control In An Organisation


Importance of effective stock control is the activities of receipts and issues of the materials to be controlled. The study therefore started by introducing the theme of the project work, “importance of effective stock control in an organization” (A case study of eastern shop supermarket, Enugu).

The researcher discussed the purpose, significance and limitations of the study in chapter one. In chapter two, the researcher discussed fully the historical background of the company in question and had an indebt review of various contributions made by several authors on the subject matter in question. Chapter three brought the researcher to the research methodology. In chapter four, questionnaires were analyzed and interpreted using statistical data of percentages (%) method.

Finally, the researcher stated the summary, recommendation and conclusions in chapter five.

Chapter One


1.1 Background of the Study

The study of importance of effective stock control in an organization is being confined to the operation of Eastern shop supermarket Enugu which deals in selling of drinks, kiddies, beverages, gift items e.t.c and even a section of fast food joint. The company was established in 1978 with it’s headquarter at No 92 Ogui road Enugu. It has its branches at Ontisha, Awka and some part of Enugu metropolis. The staff of Eastern shop supermarket is made up of both skilled and unskilled excluding disabled. The owner of this supermarket is Chief Okoye Isaac from Enuguu-ukwu in Anambra State. This supermarket is one of the oldest and best Supermarket in Enugu.

This being the case, it is therefore assumed that any fact derived or gotten from eastern shop supermarket will be a true representation of importance of effective stock control in an organization.

1.2 Statement of the Problems

This study entitled “Importance of effective stock control in an organization” in Enugu State, A case study o eastern shop supermarket Enugu attempts to examine and understand the major problems involved in stock control and relate these problems to importance of effective stock control in the organization. These problems are:

  1. To know the present importance of effective stock control measurement using eastern shop supermarket Enugu as a case study.
  2. Examination of reasons for carrying stock
  3. To study and understand the internal and external factor which influences stock policies and stock control
  4. Correct determination of the value of stock
  5. To consider and analyze the various system of importance of effective stock control for maintaining stock enterprises.
  6. The problems that affect the effective implementation of the stock control methods

1.3 Objective of the Study

Stocks form up to 60% of the total resources of an organization. Since the need for proper importance of effective stock control over the years, importance of effective stock control have advance greatly and the use of the most up-to-date, time and cost savings procedure will go long way in enhancing stores service. Specifically, the researcher has the following aims:

  1. To determine the system/method of importance of effective stock controls in operation and its impact in the enterprises
  2. To find out the contribution of adequate stores control procedures to the profitability of the enterprises.

1.4 Research Question

One importance thing a research of this nature needs to achieve is to prove the subject matter of the study. It therefore becomes necessary to formulate research questions on which the answer would be passed and are as follows:

  1. Does your organization achieve any advantage as a result of effective and efficient importance of effective stock control?
  2. Does alternative substitute result to lack of stocks?
  3. Does efficient and effective stock control reduces costs?
  4. Does high lead time lead to stock out situations?
  5. Does the percentage of total company expenditure represents investment in stock?

1.5 Research Hypothesis

In a bid to give this project the quality it deserves, the following hypothesis are hereby formulated and which will be tested in chapter four to ascertain their reasonableness.

Hypothesis One
  • Ho: Stock level carried does not depend on the total cost
  • Hi: Stock level carried depends on the total cost
Hypothesis Two
  • Ho: Re-order level is not essential for making purchase decision
  • Hi: Re-order level is essential for making purchase decision.

1.6 Significance of the Study

This is important because it will bring the knowledge of organization the numerous solutions to the problems being encountered by various stock managers within the organization. The study will also help to produce reliable costing information as regards to records of stock issues and receipts.

If production and delivery of goods were instantaneous, there would be no need for stock except as a ledger against price charges. Therefore, stock must be maintained so that the customers may be served immediately or at least quickly enough so that he or she does not turn to another source.

1.7 Scope of Study

The project writer intends to focus the attention of this study specifically on stock control function as practiced in an organization. The study will cover the standard used in evaluating stocks.

Finally, the project writer intends to make recommendations to help improve stock control and also to carry out some explicit activities like reviewing of the past relevance literatures and the testing of the hypothesis formed in order to determine its validity.

1.8 Limitation of the Study

Infact, there cannot be any successful research of this magnitude without encountering some difficulties. This project work is surrounded by some limitations, which indicated that it was not hitch free. The following are some problems that was encountered in carrying out this research work:

  1. Difficulties in securing some of the vital documents containing some valid information relating to the subject matter in the research.
  2. The lukewarm attitude of some officers who were supposed to attend and give reasonable response, some failed to give information.
  3. The degree of time consumed
  4. Finance was another constraint for the research

1.9 Definition of Terms

1. Bin Card:

This is the card used by the storekeeper to record the movement of stock. It shows the description code number, re-order level, re-order quantity and balance of stocks on hand.

2. Credit:

A bookkeeping entry recording the reduction or elimination of an assets or an expenses or the creation of addition to a liability or item of net work or revenue account, amount so recorded.

3. Goods Received Note (GRN):

This shows the date, name, purchase order number quantity and description of the goods, their condition on arrival and details of returnable packing material and it is signed by the checker.

4. Idle Time:

Lost time of men or machine arising from lack of business or of material, breakdown of equipment, faulty supervision, or other similar cause whether or not other avoidable. In the distribution of labour and production centre cost, it is often accounted for in a separate operating expenses account and regarded as an item of overhead.

5. Order:

To request for something to be bought made in return for payment.

6. Queue Time:

The amount of time that the job spends waiting to be worked on

7. Supervisor:

A person who keeps watch over the work and workers of a company

8. Top Management:

This includes the executive directors, departmental managers and so on.

9. Stock Control:

This is a means by which material of the correct quantity and quality is made available as and when required with due regard to economy in storage and ordering costs, purchase prices and working capital.

10. Stores:

This is an area in an organization where various kinds of materials needed for production, distribution, maintenance, packaging and general administration etc are received in, stored and issued out.

11. Economic Order Quantity (EOQ):

This is the optimal order or batch quantity for an item of stock which will minimize inventory total costs.

Chapter Five

Summary, Conclusion and Recommendation

5.1 Summary

The broad of this research is to examine the importance Stock Control In a manufacturing company using Eastern shop supermarket, Enugu as a case study. It stressed on the importance of stock control in an organization, thereby motivating the management to develop interest on the stock control function. It investigated the need efficient and effective stock control in the organization.

Survey research design was employed for the study and with the aid of convenience sampling method, 120 staff of Eastern shop supermarket, Enugu was selected as the participant for the study. Well structure questionnaire was issued to the enrolled participants of which 100 of the instrument were retrieved and validated for the study. Data was analyzed in simple percentage using frequencies and tables.

5.2 Conclusion

Findings from the study revealed that stock management is practical in Eastern shop supermarket, Enugu as staff of the company showed core knowledge about stock control. Findings from the study further reveals that the tools organizations use for stock management such as: Barcode data collection,

The use of Tags and stacks, Cycle counting to improve accuracy, ABC analysis for prioritization, Lot tracking and traceability and Integrated planning and execution viz ERP. Findings from the study also revealed that different procedures of stock management includes: Economic order quantity, Minimum order quantity, Just-in-time inventory management., Safety stock inventory, FIFO and LIFO, Reorder point formula and Batch tracking of which Consolidated breweries plc uses some of them in their inventory management and control. The study concluded that inventory management is essential in the operation of any business as this will enhance effective stock usage, minimize wastage and ensure business efficiency.

5.3 Recommendation

From the findings of the study, the following recommendations are made:

  1. Top management should emphasis on the proper stock control techniques and measuring of efficiency deviation to identify weaknesses in the process of organizational performance.
  2. Manufacturing firm develop a policy framework to facilitate faster implementation of the best stock control practices such as JIT and MRP.
  3. The firm should strength the supplier relations to the power of partnerships and not only concentrate on one supplier so that the failure of one supplier will not mar the production system.
  4. Organizations should train their personnel in the area of stock control practices that will empower them to be in charge of smooth running of the stock control activities or program.

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