CHAPTER ONE
1.0 INTRODUCTION
1.1 BACKGROUND OF THE STUDY
The company Aba Star paper mill limited, Aba where the researcher get
here enquires and also where she took the establishment as her case study on
the important of stock control in an organization is a commercial firm charged
with the responsibility of producing item such as books, tissues paper etc. in
the aspect of the functions of production and the importance of stock control
in the organization. The organization highly recognized the need for proper
care and control of stock materials, appointed this stores personnel and stock
materials, appointed this stores personnel and stores manager and also
established purchasing unit charged with the responsibility of super selection.
Procuring these materials, while the stores manager including his personnel are
charged with the responsibilities of storing inspection and developing systems
for effective identification, coding and classification for identifications.
The study of purchasing and supply management cannot be complete
without proper and importance of stock, control. The researcher took Aba star
paper mills limited Aba where she found out how the company makes sure of
proper control of stock in this establishment, it is the responsibility of the
store manager to control the stock that comes in but rather it is the duty of
all managers like purchasing manager, general manager, system manager and many
departmental managers.
The purpose of all these manager is to ensure that the importance of
stock control in a firm is properly taken care of, so as to minimize loss/waste
of materials
1.2 STATEMENT OF THE PROBLEM
The importance of stock control in an organization is so vital in both
large and small firm upon the importance of the stock control, the researcher
in carrying out this research work where it can be to identify some problems
that hinders the progress or smooth control of stock in an organization. Some
of these problems are identified below.
1.
Professionals are not engaged in the handling of
stock control in most organizations.
2.
Most staff currently employed to handle stock
control do not have the necessary skills and experience required.
3.
Most organizations do not see stock control as
very important.
4.
In most cases the functions of stock control is
placed in a section outside the materials oriented functions.
5.
Finally, there is not willingness on the part of
materials people to fully take charge of these important functions.
1.3 THE OBJECTIVE OF THE STUDY
The objectives
of the study are as follows:
1.
To investigate whether professionals are used or
not I the handling of stock control function.
2.
To examine the skills and experiences of those
who are engaged in handling of stock control so as to determine how experience
they are and ability to meet the challenges of modern stock control.
3.
To find out whether all organizations realized
the importance of stock control in the management of their inventory.
4.
To examine the position of stock control in firms
organizational structure, so as to determine whether the current position
effect the performance of stock control positively or negatively.
5.
To find out the readiness or otherwise of
materials people to carry out there functions independently.
6.
Finally, to suggest ways of improving stock
control in organization.
1.4 THE SIGNIFICANCE OF THE STUDY
The study is
essential to basically three groups of people viz:
1.
You the researcher because it is a requirement
for the award of National Diploma in Purchasing and Supply. Without it
researcher will not be awarded with the certificate. Again it has served as a
learning process because it has enabled you the acquires skills on how to carry
out similar study in the future.
2.
To other students, this work when completed will
serve as a reference material for those who may be faced with similar work in
the future.
3.
The industry, this work when completed will help
to create the required awareness that results to positive steps with regards to
the subject matter of this study. Also, it will serve as a standard to measure
the performances of firms with regards to the subject matter of this work,
which will cause firm to take corrective measures.
1.5 THE SCOPE OF THE STUDY
This study would have taking the researcher to all firms that buy and
stock items in the country, but for the fact that the researcher is a student
with so many assignments and examination to take, she decided to concentrate on
full firm in Owerri and whatever findings made will be seen as the general
situation in all firms in the country.
1.6 THE LIMITAION OF THE STUDY
The limitations of the study are as follows:
1.
Financial problems: Financing this project has been a trying experience, because of the
preventing economic condition in the society. So the researcher’s unable to
travel and cover many companies or place in order to gather comparable data or
information for this research work.
2.
Limited time factor: The schedule of academic activity for every final year students both
ND and HND of the polytechnic is lactic. The researcher needs to attend
classes, read other course etc. This makes the researcher unable to collect
responses from many company as she would have loved to do.
3.
Natural factors: This is also a hindrance to the study. The project work is disturbed
from effects of regular rainfalls and hot weather, wind hereby hinders are
researcher’s movement in her bid to collect data information and distribution
of questionnaire to respondents.
4.
Transportation problems: The researcher was also to spend much time on the road or on the
vehicle boarded and thereby making her
to research her place of interviews late, some time she misses such interviews.
5.
Even some problems in the
organizations do not give a reliable data/inflation to be researched the
problems associated with unreliable data/information, poor audience by
respondents is a big limitation to this project
1.7 DEFINITION OF TERMS
a. Ethical conduct: This is involved either exhibited consciously or in a purposeful
manner, the aim is to achieve and end result.
b. Bin-card:
This is the only form of written record kept in the store room, and usually
fastened to the front of each bin or rack. It contains relevant information
about items for easy identification, such as part number, name. The body of the
card carries space for recording additions and withdrawals of items.
c. Maximum
stock level: Maximum stock level is that level of stock whereby stocks are
not allowed to rise above this level. This is mainly o bring investment in
inventory to a level just enough for the organization. In facing this level,
certain factors should be put into consideration. These are:
1. Rate of consumption of
materials
2. Risk of obsolescence
3. Reliability of the supplier
4. Time of new deliveries
5. Storage of space available
d. Minimum stock level:
This stock level ensures that inventory is not allowed to fall below this
level. In other words, it simply means the minimum amount of stock that should
be allowed in the store. As soon as the stock levels reached this state, the
store controller triggers off action to bring delivery of the next order.
e. The
reorder level: This is the level between the maximum and minimum stock
levels. It is a level whereby fresh orders are placed.
The factors that affect the ordering level includes
i.
The consumption rate
ii.
The lead time
iii.
The minimum level and
iv.
The reliability of suppliers
f. Buffer
or safety stock: This is not a stock level of the store manager take
cognizance of this so as to completely avoid a situation of stock out. It
serves as an insurance again late delivery and shortages of materials.
g. Hastening
stock level: Most organizations find it necessary to fix this level, which
is between the re-order level and minimum level. When this level is reached, it
signals that hastening action is necessary to cause suppliers to make delivery
on the agreed date bearing in mind the danger of running out of stock. It is
the level at which the storekeeper informs the progress clerks or expedition of
the need for expediting for early delivery of ordered materials.
REVIEW OF STOCK LEVELS
After the stock levels have been established, there is always the need
for proper periodic review of these levels because of changes in both internal
and external environments within which business is operated. This review could
be done at such intervals as weekly, monthly, quarterly etc and adjustments
made to be in line with the prevailing circumstances. A stock level held for a
long period of time without review might become out of place and not relevant
or rather misleading in terms of using it for decision.
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