THE IMPORTANCE OF STOCK CONTROL IN A MANUFACTURING COMPANY
ABSTRACT
This project/research work introduces the reader to the background of the study of the importance of stock control in a manufacturing company both in Nigeria and other countries with similar system of Government as Nigeria. It also reveal the methods used in connecting information, data, analysis etc. much emphasis was laid on the contributions of the importance of the stock control in a manufacturing company as applies in a Nations. Finally, some suggestion / recommendations were put forward by the writer, which is put in action by the Government through the appropriate agencies will make for better and faster development in the Nation.
CHAPTER ONE
1.1 BACKGROUND OF THE STUDY
According to Morrison (1982) stock control is the means by which materials of the correct quality and quantity are made available in the right time. With due regard to economy in storage and ordering costs, purchase price and working capital. It conveys the following functions:
Ensuring that material needed for manufacturing or operational and quality and quantity at required time and place.
Ensuring that the levels of stock is kept as low as possible in order to keep capital invested in it, to a practical minimum and to avoid occupying excessive factory space, with consequent high overheads.
It also ensures that necessary information for financial control is readily and accurately provided. One of the most pressing tests of business management is that of inventory valuation. This question of placing value on stock is very important considering that it has a direct relationship with the profit ability and liabilities of the firm.
The importance of accurate stock value cannot be over emphasized since financial statements can be materials mis-recorded its errors are made in the valuation of inventory. To make cost account system to fully effective, there must be a proper system for the control of materials from the time of requisition to the times the materials is issued to production. It must be stated here that material pilferage, deterioration of materials and careless handling of stores head to reduced profits or even losses.
It must also be noted that where materials are not systematically controlled excess stocks of some items are likely to occur resulting to unnecessary lying up of capital and losses through obsolescence’s and time, shortage of other materials urgently needed and production deterioration. At the same may arise when they are will be delayed. Hazard buying and lack of control on purchasing of materials may equally affect the organization.
However, in the effect of a manufacturing company to achieve its objectives, the various measures of stock control must be fully adopted and implemented. This study is therefore, intended to show the importance of stock control in a manufacturing company.
1.2 STATEMENT OF PROBLEMS
Many companies suffer because of some problem they encountered in purchasing of materials. The following are examples of such problems:
A good number of time mostly manufacturing firm firm are not maximizing profit due to fraudulent practices and occurrences of errors among the purchasing managers and storekeepers.
A good number of manufacturing firms do not take stock regularly; some stock monthly, quarterly and yearly, these regulations of stock count gives chances to dishonest and dubious worker the opportunity to defraud the company.
Also many manufacturing firms today have unqualified purchasing/stores personnel, materials are not purchasing as at when required and necessary measures are not adopted in reducing cost associated with material requisition. Hence these destroy the zeal for a growing and dynamics business enterprise.
1.3 OBJECTIVE OF THE STUDY
The objective of the study on stock control helps the buyers or purchasing official on the procedure and timing of stocks. Apart from the above, the following objecting can be included.
To know when the organization can effectively go for their new materials for the store.
To know why some manufacturing companies choose to buy / store their stock, why some still buy at the scarce period.
They assist the organization know when minimum / maximum level of stock a manufacturing company would always like to maintain so as not to run into excess of out of stock in the production of said products and also the management of stock to a better result.
1.4 SIGNIFICANCE OF THE STUDY
It is the aim of the research to awaken all conceded in taking decision on material or stock control about the importance of stock control in a manufacturing company. The study also enables the government to take the stock of production in most government and private firms in order to help them know the tax tare of such firms. The study also helps the management of the firms for easy accountability of their expense and credit level at the end of year account so as to know their performance.
This will also help the worker to know the wise way of controlling their stock in case they were not trained on the effectiveness and effectiveness and efficient of stock control.
Finally, the study will also be of immense help to the future researchers on this topic or order related topic based on stock control.
1.5 SCOPE OF STUDY
The research conveys the general principle and professionals in the field and other recognized business bodies. This will provide basic for application in some of the manufacturing firms.
It will also examine the organization, ranging from formation through its objectives, area of operating, structure, storage system, receipts and payment.
1.6 LIMITATIONS OF STUDY
The researcher would had enough materials from other firm in the same line of production, but a lot of abstracts were encountered in the conduct of research. Many factors worked together and made this research a pronged.
TIME CONSTRAINT: The study was done under lecture and in tense academic condition. As at the time of the research, there were no enough time to enable deeper and more through work to be carried out on the study. This project was written within lecture period under relatively short academic session.
FINANCE: This is one of the major instruments for successful research work. The researcher needed to travel to neighboring institutions and other firms in the same line of production to data from libraries of other schools and solving some other problem associated with this study. As it were, the researcher did not have sufficient instrument (money) and this greatly delayed the production of this work.
1.7. DEFINITION OF TERMS
In this research, there are some terms used and the researcher find it necessary to give their definitions.
STOCK: This is a collection of items held at the organization at a particular time for resale or stored for use by the organization in the process of carrying out its production of goods and services.
ETHICAL CONDUCT: This involves conduct either exploited consciously or in a purposeful manner aimed at achieving an end result.
BIN CARD: This cards are attached to bin, drawer or self which individual materials is stocked and it provides a running record or receipts and issues in the simplest possible form.
RE-ORDER LEVEL: Is a level to which a minimum stock is normally allowed to fall before order for supplies are placed.
MAXIMUM STOCK LEVEL: is the upper level of stocks and at these level stocks are not allowed to use further.
MINIMUM STOCK LEVEL: This is lowest levels to which the inventory should not be allowed to fall.
THE IMPORTANCE OF STOCK CONTROL IN A MANUFACTURING COMPANY