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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
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
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
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
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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