CHAPTER ONE 1.0 INTRODUCTION 1.1 BACKGROUND OF THE STUDY It is pertinent to identity the two concepts “comparative analysis and inventory management in manufacturing companies. Before analyzing and inventory management let’s look closely, at the meaning of it. Comparative is an adjective of compare meaning having to do with comparism. While analysis means detail view of such comparism. Lawal (1993) describes as inventory detailed list of stock kept for future use in companies warehouse or stores. The reason for this study is to keep records and effectively compare the amount of stock kept that will keep the company with steady supply, as can be compares with other companies to enable it meet standard of performance; now and in future. With this proper inventory vat wit ion, it will keep the company in business for a long time, even at times of scarcity and low production of raw material. Also this gave opportunity for the firms to train skilled personals that can keep records of goods, that is needed for administrative consultations. It also brought management into another important aspect of inventory that made it possible to allocate, co-ordinate and future production rates, there by keeping the organization at a better standard, if valued economically. It also aids in the development of economic activities, thereby keeping the market steady with supplies of goods and services. Making it possible evaluate the in come and expenditures in the Companies accounts records this is to improved the image of the company due to its consistency in supplies, it also made it easier to promote the companies products. Unyimadu (1996) say’s that Inventory management in the company keep wastage of goods and services at a minimum rate, it moves effective when they compare their internal management procedures, with that of other firms and make corrections especially in valuations of inventories (inflows and out flows of goods). Increased productivity is encouraged through proper stock keeping. Historical events in inventory made ii possible to make correction as when due, this history can also be used by new companies in starting their mode of stock keeping. Cadbury P.L.C which serves as a case study has a lot developed ware houses all over the country, and as such deals with stock keeping as a whole, both in manufacturing storage and distributive purposes. They developed in stock keeping and stores management thereby increasing production. A company founded in England, (Inc to its expansion notions spread to Nigeria in 1940’s /50’s. With its headquarter in Lagos. The company proficiency at work made it possible to increase the strength of its staffs the outcome of such development in other wards will be regarded as an “Improvement” in the industry and it’s development till date it has been able to create awareness on the staffs and the public in general, increase employee moral, enhance promotion prospects, and increases employees job satisfaction etc. this have resulted in developing effective and efficiency business atmosphere which have created a lot of impact on productivity in everyday life.
1.2 STATEMENT OF PROBLEM This study focus on the needs and nature of inventory and stock taking administration problems and the likely solutions to ensure effective stock taking and inventory analysis, looking at its effect on production development. The purpose of this study is to consider the issue associated with inventory and stock takings as compared to other organizations ways of doing things. This investigation sets out to ascertain and clarify the notion by most managers that stock management and inventory control, to some people is waste of money and time on the part of the company. So does not actually regulate inflow, and outflow of goods due to the person in charge may not record and properly inspect the goods coming and going out:, this and many other things make the whole idea a misconstrued one. This research work also attempt to Find out the reasons why inventory control can not stop unnecessary waste in company resources, incorrect accounting of goods stock taking and reduce theft noticed in the company. This study also identifies and make vital contribution to solving some of the problems of stores management development and productivity in the food and beverage industries. 1.3 OBJECTIVE OF THE STUDY The objectives of the study as determined by the researcher are: 1. To explore all areas of stock and inventory management and its effectiveness in the company and its branches as well as other companies activities so as to be more proficient in growth in the competitive industry. 2. To demonstrate how inventory control, have help growing companies succeed in checking activities of theft, wastage and unwanted spoilage of goods. 3. To highlight various impediments against inventory and stock keeping management control in food manufacturing companies. 4. To prove that effective store management control and stock takings can result in profit oriented company and necessitate expansion processes.
1.4 SIGNIFICANCE OF THE STUDY
The significance of a proper and efficient inventory control and management cannot be over emphasized. Its effect is not only on the individual company but on the economy as a whole.
This study is meant to find solutions to the itching problems of Cadbury plc Nigeria limited Lagos in inventory management and control.
The study will also be of immense benefit to the owners and management of the company under study, their creditors and prospective shareholders who might wish to invest in the company. This is so because managing inventories efficiently and effectively will help the company to avoid unnecessary investment. It helps the management in quick and accurate decision making. It will also help to build-up the goodwill of the current asset of many companies.
Finally, the knowledge required from this study will broaden the existing knowledge in this field and aid researcher in applying it to other companies or organizations.
1.5 RESEARCH QUESTION
With reference to the statement of the problem highlighted above and considering the scope and limitations of this study the following research questions are formulated.
1. How does the company determine the optimal level of stock to be maintain?
2. How appropriate is the valuation method given the present inflationary situation?
3. What determine the level of control to be maintain on various types of stock?
4. What practical problems are in the ways of progress of inventory management and control in the area under study?
5. How does the effect of large investment inventory affect the management (holding cost).
1.6 SCOPE OF THE STUDY
This research work is focused on inventory management and control in Cadbury Product Nigeria limited, Lagos during the year 2001-2006 as it affects the full implementation of the basic concepts of inventory management. Associated issues like inventory procurements, storage and physical distribution policy of the company will also be examined.
1.7 LIMITATIONS OF THE STUDY
1. Lack of corporation from subjects leading to the use of smaller than the anticipated number this can affect the quality and the generalization of the findings.
2. Inability to use correct data gathering instrument due to ignorance about their availability
3. Low return rate of questionnaires
4. Using less then fair representative sample due to inability to research subjects.
1.8 DEFINITION OF TERMS
- Inventory: This is the list of items held in stock by a company at any particular time.
- Stock: This consists of all goods and materials stored by an organization. It is a supply of items which are kept for future used.
NB for the purpose of this research work, stock and inventory are sometimes used interchangeably
- Lead time: This is also known as reorder period or delivery. It is the period of time between ordering and reception of goods ordered for.
- Re-order level: This is the point at which it is necessary to initiate purchase requisition for new supply of materials.
- Minimum stock level: This is the level below which stocks should not normally be allowed to fall. It can be said to be buffer or safety stock which makes allowances to cover for error in forecasting the lead time or the demand during the lead time.
- Maximum stock level: This is the level above which stock should not normally be allowed to rise.
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