THE IMPORTANCE OF ACCURATE STOCK CONTROL IN AN ORGANIZATION (A CASE STUDY OF NIGERIA STOCK EXCHANGE)
The importance of accurate stock control in an Organization cannot be over emphasized no matter how diligent the job of control (computerized or manual). Some discrepancies are bound to occur. The system is operated by people, and people sometimes make mistakes.
Every inventory item should be physically counted and checked against its balance at least once a year. This verification of the quality balance is subsequently adjusted to match the actual count, for this reason, most companies created on inventory short hand over account to cater for such discrepancies, this account is eventually close into the manufacturing overhead account. The researchers will also highlight some of the ways of conducting the stock control in one of this ways of conducting the stock control exercise.
The physical inventory can be conducted in one of these ways:
i. Fixed annual inventory: many companies take physical inventory every year at the close of the financial period.
ii. Continuous Inventory: at the beginning of each year, some firms divide the inventory period into fifty two equal groups to be physically counted without interrupting the production operation or up setting store room activities.
iii. Low point Inventory: some companies take physical inventory regulatory. i.e. whenever the stock level of an item reaches lowest point.
All these three methods are widely used in the selection of the most appropriate that one depends largely upon conditions in each individual business. The fixed annual inventory can be troublesome because it is a major task which must be accomplished in a short period of time. However, it is ideal seasonal business or business that completely closes down for an annual rotation.
The continuous inventory approaches possess two major advantages. It can be planned and worked into scheduled activities without a shut down. It can be conducted in an orderly manner, this approach also facilitate efficient utilization of store personnel. The low point approach minimizes the required inventory work because of the small quantities of materials involved allied product which meet the changing need of it’s customers through the employment of highly trained personnel’s and the utilization of up to date technology while ensuring optimum returns to its shareholders.
A five man board of director whose wealth of experience and expertise span various factors of the Nigeria economy shapes of the policy frame work of the company. Lubcon is endowed with highly talented and technically proficient personnel’s who have in the best tradition equipped and exposed to the demands of both local and global lubricant market. This was achieving through the company human resources policy and programmes.
1.1 STATEMENT OF THE PROBLEM
The problem facing the stock control is as follows:
i. Poor layout: The layout without the store area, create difficulties in location and identification of materials in the store.
ii. The attitudes of the checkers are not reporting to appropriate quarters in case of any fraudulent act discovered that affects the stock control exercise.
iii. Records: there are no proper recording issues and balances.
iv. Accountability: there is no proper report on the receiving and issuing of stock as well as proper documentation on movement of stock within Organization, thus, proper account for stock cannot be maintained.
1.2 OBJECTIVES OF THE STUDY
The following are the objectives for carrying out this work:
1. To find out companies (using Lubcon Oil) can control the level of the stock, preservation materials handling and the other stock operations.
2. To find out how the function of the store related to the other departments of the company (Lubcon Oil).
3. To find out how the nature and various types of materials handling equipment employed by store and relative effect on work efficiency.
1.3 SIGNIFICANCE OF THE STUDY
The primary significance of this research work is to fulfill one of the Obligations which serve as one of the pre-requisites for the partial fulfillment of the Award of National Diploma in all Business Administration awarded by the Purchasing and Supply Department, Kwara State Polytechnic, Institute of Finance and Management studies (IFMS), Kwara State Polytechnic, Ilorin.
1.4 SCOPE AND COVERAGE
This research work is to cover broad area as in State operation with regard to the control aspect of stock in the Organization.
It entails the following specific area which the researcher would like to emphasized upon, special attention will be paid to the various documents that is being used in the stores department different categories of items hold in the store, through the scope will be limited to Lubcon Oil limited owing to financial and times constraints.
1.5 LIMITATIONS AND CONSTRAINTS
The limitation and constraints encountered during the course of writing this project work are as follows: one of the major problems faces by the researcher was of transportation, distribution of questionnaires, conducting personal interview and to collect back the questionnaire from respondents.
Another factor encountered was the problem of obtaining necessary research materials which include text books, journals or magazines on stock control and record aspect, some of the library visited did not haves enough information materials hence this only scarcity information was available.
1.6 HYPOTHESIS FORMULATION
These are the strong assumption which comprises null (Ho) and alterative hypothesis (H1) which are set to examine the validity of the objectives and ideas generated in the research work.
A. H1: effective stock control and supplier quality improvement of the practice contributed to the profit margin in a manufacturing industry.
H0: effective stock control and supplier quality improvement of the practical does not contribute to profit margin in a manufacturing industry.
B. H1: poor management of materials within the store creates difficulties in location and identifications of materials in the stores and thus affects the control of materials.
H0: Poor managements of materials within the store creates difficulties in location of materials but do not affect identification.
1.7 DEFINITION OF TERMS
i. Stock control: represents the clerical control of movement of materials into and out of the stores and of the level of the stock in the store as all times with due regard to the economy in storage as well as on ordering of cost, purchasing price agreed and the level of the Organization working capital.
ii. Store: is any space reserved and equipped for holding stock waiting for dispatch to other departments or customers for further processing or future use.
iii. Obsolescent: this is the term used to describe the stock that will soon be out of use or valueless to the organization that has it in store.
iv. Obsolete: this is the stage of which in the stock becomes completely worthless to the Organization.
v. Scrap: at this stage is sold off for any value in its own right.
vi. Redundant: this is when the stock is completely useless to both the owner and any other Organization.
vii. Maximum stock level: this is the level above which stock should not normally allowed rising.
viii. Minimum stock level: this is the level below which the stock should not normally to fall. If stock goes below or falls below the level, there is a danger of storage or supply which may result into stoppage of production or operation.
ix. Re-order level: this point between the maximum and minimum stock level at which time is essential to initiate purchase requisition for fresh suppliers of materials.
x. Economic order quantity: this is the order size (Quantity) that can be brought at which both the cost of holding stock and the costs of ordering stock are giving a minimum total cost.
xi. Stock taking: is the complete process verifying the quantity balances of the entire range items hold in stock.
xii. Blind stock taking: This is the name giving to the system where by the person taking stock is given no prior information abdouts the vocabulary numbers, description, stock records balance etc and is not allowed or given access to stock record cards or bin cards.
xiii. Counting Scales: to avoid the needs for counting individual large numbers of small items such as nuts and bolts. Use may be made of country scales. The scale are so design that one article placed in one pan will balance several times its own weight in the other pan.
xiv. Stock Certificate: irrespective of whether stock taking is carried out by the period or by the continuous method at the end of the financial year. The stock certificate is signed by senior member of the management..