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IMPORTANCE OF STOCK
CONTROL TO BUSINESS ORGANIZATIONS
CHAPTER ONE
INTRODUCTION
1.0 HISTORICAL
BACKGROUND OF THE STUDY
For many years now a
lot of manufacturing company does not know
the important of stock methods and even
when they know, it is not consciously
handle or put in the care of
professional. Infact, they belief that the stock control methods is not the
ultimate things the organization desire this means the contribution on
effective stock control can make to the
success of an organization still not very widely appreciated and hence it is of
great significant to reflect the impact
and effective and efficient stock
control would have on an organization as
well as the profitability level of the company.
The fundamental point about stock control is that by the very
nature of it’s operation, every items of the store receives individual
attention. The stock is the key element of working capital which has the power
to influence the future of the company either positively or negatively and the
effect is said to prevail over the other when it is not highly controlled.
Where an organization materials are not systematically controlled, it can
result to unnecessary trying up capital in stock and losses through breakage,
pilferage, deterioration, theft, obsolesce etc. Beside, any organization which
of stock out control stock is always faced with the problem of stock out in
which may cause hold up in production service and sales, the staff become idle
mean while salaries still have to be paid. Effective and efficient stock
control will go along way in preventing loses and waste as such increase the
point level of the organization.
Infact a slide percentages increase in efficiency a stock
control will amplifies the profitability level. Since stock is often regarded
as a life wire or life given element of an organization, the control of stock
therefore is highly significant and should start right from the time the need is identified
to purchase order expediting. Receipt and inspecting storage and issue so that
services will be rendered in the most effective manner and at the lower possible cost. The achievement
of the potential benefits that are there in an efficient stock control system
will only be possible if any one when store personal are well trained in their
profession make available necessary material handling equipment and above all ensure an effective secure o the
stock card, store house, store
personnel as well as the keys to every
entrance.
In September, 1969 the federal military government decided to
merge the (ECN) Electricity Corporation of Nigeria and (NDA) Nigeria Dams
Authority into a single body to avoid duplication for resources in the two
organizations.
A year later, a Canadian firm of consultants (Shansimont Ltd)
was appointed to look into the technical detail of the merger. The report was
submitted in 1974.consequently a decree merging the two organizations in the
National Electric power authority (NEPA) is to develop in efficient,
coordinated and economical system of electricity for all parts of the
federation.
The national grib connected the facilities resulting from the
merger, the grib interconnection includes generating at Kainji, Lagos (Ijora)
Ughali (Delta) Afarm and Oji River.
In addition there were
diesel generator installation at Ibadan, Benin,Warri, Aba, Enugu, Zaria,
Kaduna, Owerri, Abeokuta and Oshogbo further, diesel generation supplied
system in population centers isolated from the grib include Gusau,
Sokoto, Bauchi, Yola, Maidugari, Potiskum and Mubi. The grib was fact two major
sub-system since the connection between the western system and Onitsa and was
yet to be effected, a 330Kva transmission was in operation in the western
system between Kainji and Lagos.
March 2005, witnessed major milestone in the electricity power sector reform process with the
signing into law of
the (EPSR) act in March, 2005 and the mergence of Power Holding Company of
Nigeria Plc in place of National Electric Power Authority as well as the
subsequent Electricity Regulatory Commission (NERC) on 31st
October, 2005. The visible results of the ongoing transformation of the
company include staff re-orientation anchored on customer service delivery. The
new focus in the unbundled units has
resulted in improved revenue collection
and customer services delivery with a
land mark collection of seven
billion Naira (N7,000,000,000) in October 2005.
In the last three months we have consistently on a daily basis
achieved pack generation of over
3000- mw
to the national grid we are
optimistic that with this improvement in
generation availability and the federal government commitment to built it new power station that
will add 6000 Mw new capacity there
quest to meet the 10,00 Mw target by 2010 was not reality. The National Electric Power
Authority central Kaduna was established in 1976 now Power Holding Company of
Nigeria (PHCN) made up of the following.
1. Administration
2. receipt and
packaging
3. issue and storage
4. Account
5. stock control
At inception, there were about twenty (20) staff but since
then, there has been an increased manpower section namely inspection and audit
section the principal objective of establishing a central issue to fifteen (15)
states at the Northern state.
Since national electric power authority has three central
store which the country made up of central store Oshodi, Issuing material to
western states of the country and central store port-Harcourt for eastern
states of the country.
Organizational structure
1.1 STATEMENT OF
GENERAL PROBLEM
Every organization is it big or small keeps stock to order to
provide necessary basic raw materials for daily operation and also to provide a
reservoir for absorbing the effect of variation in delivering and consumption
also to maintain ready availability of supplies within the organization which
may be required at short notice. But most organization does not consider the
necessity of some basis consideration for keeping such items.
When good are held in stock there is great deal of
administrative work involved i.e. control of receipt issues and the general
custody of all the stock items in order to prevent theft and pilferage and
sometimes equipment for loading and off loading such materials have to be
bought all these costs must be taken into consideration. Otherwise the
organization may end up tiring down it’s working capital when could be invested
elsewhere and generate more profits for the organization concern.
In PHCN control store Kaduna the store is responsible for
providing the standard material such as transformers, underground cable copper
wires, fuses etc to the sixteen Northern states PHCN districts.
Sometimes one has to consider the genial problems associated
with unreliable deliveries of stock by supplier
it is impossible to rely8 total on supplies to deliver every order
on schedules this is obvious for
the fact that supplier may be held
up by weather transport delay etc.
Stock in the store represent solid cash and as such, it must
be carefully protected and checked to similar ways as cash. Must be protected
against fraud, theft and also high storage costs because stock have
to be stored in certain conditions depending on the items involved e.g.
warm, dry and cool these must be taken into account in order to prevent trust or evaporation
deterioration which can lead to reduction in
value of the materials concerned. While there is no standard system. In
stock control which can be universally recommend every stock control system
must be designed to meet the particular needs of the organization concerned.
In Nigeria and indeed in many of the developing countries of
the world, co-operative have not been accorded a complete management function.
Clerk have carried out stock control as on element of this noble profession in
a routine manager and business are facing a continuity of sequence of profits, it is on this note that
topic for this project work, has been chosen to critically examine stock
control to PHCN Kaduna central store.
Many people have the believe even among the elite that store
managers or controlled only stay in the store, without any contribution to the
overall company’s objective the function of stock control include receiving,
inspection and proper storage of equipment, issue material to user department
at the right time and place notifying the procurement department of stock
mentioned function are properly co-ordinated and carried out the cost involved
in operating the store will be surpassed. Stock control or management made use
of techniques. Modern methods and equipment to increase the efficiency and
reduce most of the cost associated with material storage cost involved in
running a store numerous some of them are; operation expenses of store house, wages, depreciation, rates,
repairs, insurance stock checking,
recording and interest in value of
stores in stock etc the need to reduce these cost bearest minimum to achieve
store objective by contributing to
company profit makes it worthwhile for the reach work to be embarked upon.
1.2 RESEARCH
QUESTION
Those question opposed by the researcher are made to help the
organization in other to find solution to the problems.
- Are stock
control importance to the profitability of organization?
- To what extent
can stock control reduce cost in an organization?
- Who control the
stock?
OBJECTIVES OF THE STUDY
1. A good and
effective store keeping to minimize wastages deterioration, obsolescence and
guard against pilferage.
2. proper authorization and recording of stock
issue for cost centre absorption
3. Constant
checking by its store keeper of all documents and ensure correct completion and
authorization before issuing, receiving or up dating stores.
4. Carryout
periodic and annual taking to check all physical quantities of materials for
control proposes.
5. Carryout
continuous/perpetual inventory system more regularly on daily, weekly or
monthly to correct the discrepancies of periodic stock taking.
6. Material
in store should be correctly positioned with the appropriates store card
properly maintained.
1.5 RATIONALE FOR
THE STUDY
The rationale behind the research work includes first
fulfilling one of the requirement for the work of National Diploma in
Department of cooperative, economic and management, the study will make the
researcher to have an insight into the practice aspect of stock control or
management in a public utility agency such as PHCN central Kaduna research is
usually made to identify problems and come up with solution to problem on the
area of study or prove upon what has been in essence. This project therefore,
is to carryout assessment on stock control system with it’s application and the
necessary solution to such problems.
The researcher also can provide valuable suggestion and
advice on problems facing the store department. This will help the organization
to obtain the benefit of adoption of recommend stock control method and
technique to improve service and profit level of the organization.
1.4 DEFINITION OF
TERMS
1. Stock: materials or good kept in the
store
2. Control: Checking to see that accurate quantity and
quality is maintained.
3. Stock control:
this is means by which materials of the right quality and quantity is made
available as at when required with due regards to economy in stooge and
ordering cost purchases price and working capital.
4. Stock taking:
This is a complete process of verifying the quantity balance of the entire
range of items held in stock.
5. Stock
checking: is any others checking on
physical quantity balance of the entire range of items held in stock.
6. Storage: It is
a means of holding and protecting commodities for future use and the system by
which such commodity are held and controlled for efficient retrieval.
7. Store: Is the
place where all goods produced or brought
by the organization are kept and issued out needed in some organization
the store house is collected where.
8. Stock
levels: are the level employed that
stock are not allowed to raise or fall between the level e.g. maximum and
researcher levels.
9. Maximum Stock
Level: is the amount expressed in unit of issues above which other stock should
not be allow to raises.
10. Redundant: when
the quantity of an item in stocks more than necessary to provide an adequate
service to production or operational activities the excess over the normal
holding is said to be redundant.
11. Obsolescent: An
items is said to be obsolescent when it is going out and use but not just
completely un-usable.
12. Obsolete: an
item is regarded as being obsolete when it is no longer usable by the
organization concern because of a charge
in operation practice or method of production.
13.
Discrepancy: Is the different
between stock records and physical quantity offer stock taking.
14. Storage: It is
a means of holding and protecting commodities for future use, and system by
which such commodities are handled and controlled for efficient retrieval.
15. Material: Are
components, spare parts, raw materials, that are kept in
store house.
16. Minimum stock
level: Is the amount expressed in units of issue below when of any given
commodity should not be allow to fail.
17. Buffer stock: A
situation where stock is held to meet unexpected demand.
18. Stock out: A
situation where the store house is temporarily of stock.
19. Salvaging: this
is a process of saving materials for advantageous use or disposal of a
company’s property which is no longer economically useful to it’s owner in it
present condition.
20. Lend time: is a
period of time between ordering and replenishment when the goods are available
for use.
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