Effect Of Inventory Management On Organizational Productivity. (A Case Study Of Unilever Nigeria Plc)
TABLE OF CONTENT
TITLE PAGE
CERTIFICATION
DEDICATION
ACKNOWLEDGEMENT
ABSTRACT
CHAPTER ONE
1.0 INTRODUCTION
1.1 BACKGROUND OF THE STUDY
1.2 STATEMENT OF THE PROBLEM
1.3 OBJECTIVE OF THE STUDY
1.4 RESEARCH QUESTIONS
1.5 FORMULATION OF HYPOTHESIS
1.6 SIGNIFICANCE OF THE STUDY
1.7 SCOPE OF THE STUDY
1.8 LIMITATION OF THE STUDY
1.9 OPERATIONAL DEFINITION OF TERMS
CHAPTER TWO
LITERATURE REVIEW
2.0 INTRODUCTION
2.1 CONCEPTUAL FRAMEWORK
2.2 THEORETICAL FRAMEWORK
2.3 EMPIRICAL FRAMEWORK
CHAPTER THREE
RESEARCH METHODOLOGY
3.0 INTRODUCTION
3.1 RESEARCH DESIGN
3.2 POPULATION OF THE STUDY
3.3 DETERMINATION OF SAMPLE SIZE
3.4 SAMPLING TECHNIQUES
3.5 METHODS OF DATA ANALYSIS
CHAPTER FOUR
DATA ANALYSIS AND PRESENTATION OF RESULT
4.0 INTRODUCTION
4.1 DISTRIBURTION AND COLLECTION OF QUESTIONNAIRE
4.2 TEST OF HYPOTHESIS
CHAPTER FIVE
SUMMARY OF THE FINDINGS CONCLUSION AND RECOMMENDATION INTRODUCTION
5.1 SUMMARY OF FINDINGS
5.2 CONCLUSIONS
5.3 RECOMMENDATIONS
REFERENCES
QUESTIONNAIRE
ABSTRACT
This study will examine the effect of inventory management on organizational productivity [a case study of Unilever Nigeria plc].
The purpose of the study is to examine whether adequate arrangement are made for the purchase of inventory in an organization and critically appraise the effect of internal control system, inventory control system which is capable of preventing pilferage, obsolesce and waste among others.
Research questions will be selected for the study and research hypotheses will also be formulated to guide the study. They are inventory management in an organization does not result to minimum control materials, reduction of inventory in stock does not disrupt the production, distribution cycles, inventory control does not affect the effectiveness and efficiency of the organization, inventory management does not guarantee availability of materials in the store and inventory control does not ensure that only relevant materials are kept in the store.
A sample of thirty (30) respondents will be selected among the staff UNILEVER NIGERIA PLC, AGBARA. Questionnaire will be admin elicit responses from them about their knowledge on the effect of inventory control on profit maximization. Data will be use and using simple percentage and CHI-square (x2) at 0.05 levels significant.
CHAPTER ONE
INTRODUCTION
1.1 BACKGROUND TO THE STUDY
The effective and efficient functioning of a productive system requires the regular demand and supply of inventory at the input transformation and output phases of the production process. Management is also seen as the effective and efficient utilization of resource for the achievement of organization objective to ensure the achievement of the objective there must be free flow of material, unencumbered at every stage of the production process.
In Nigeria today, there are many drugs production companies in the industry and they all source their raw materials from few of not the same market. With the present economic meltdown, organization is after theses scare resources to produce their product. Therefore the urgency for the effective and efficient management of inventory in form of raw material, work in progress and finished good constitute significant proportion of asset of most organization. But why is it pertinent to keep an eye on these items on other words, why do we engage in inventory management?
Inventory items cot money to acquire, they cost many to store and to look after which means storage facilities hat to be provided so as to make sure that these materials for items do not get spoilt until they are turned into see able goods, they do not produce money. When stocks are held, it means typing down capital that would have been used in other areas, so it all represent cost and should be manage properly to acquire efficiently. We must however, hold stocks to meet production needs and sales needs. This is because if we do not hold stocks in sufficient quantities west and the risk of running out of stock. Similarly, if the short of finished goods, we may disappoint our customers and money for the organization not to have above problem they should strike a balance between too much stock (over inventory) and carrying too little stock (under inventory).
This is essentially the importance of inventory management, managing asset of all kinds is basically an inventory problem, the same method of analysis applied to cash and fixed asset as to inventories themselves.
First of all a basic stock must be on hand to hand balance in flow and out flow of items, the size stocks depend on pattern of flow whether fast moving or regular items.
Secondly the unexpected may occur, it is necessary to have safety stock on hand presenting extra stock to and the cost of not having enough to met current needs.
Thirdly additional amount may be require to meet future growth needs, these are called anti cultivation stock is the recognition that these are optimum purchase size define as economic order quantity (EOQ). In borrowing money for buying raw materials for production or purchasing plants and equipment, it is cheaper or more economical to buy more than just enough to meet immediate needs manufacturing firms have three kinds of inventories:
1.2 STATEMENT OF THE PROBLEM
An efficient inventory policy is always an important requirement for the successful management of manufacturing and distributing company and as such, this project shall look into the problems associated with inventory management such as over stocking obsolesce high insurance risk and other vital problem in that shortage, costs be reduced with for sight in planning process
- The research has therefore taken the pains to highlight dome of the problem like.
- Inadequate provision of storage facilities to minimize the level of obsolesces and pilferage being experience.
- Total neglect of internal control procedure.
- Excess holding of inventories.
- Poor staffing which include shortage of trained personal.
1.3 OBJECTIVES OF THIS STUDY
The objective of the study is to examine the following:
- To ascertain whether adequate arrangement are made for purchase of inventories in an organization.
- To critically appraise the effect of internal control system on inventory control which is capable of preventing pilferage, obsolesces and waste.
- To identify some of the factors military against a through installation of an effective inventory control system and proofer suggestion and recommendations as to how to approach this problem.
- To examine whether inventory control as practice in the private organization stock control technique.
1.4 RESEARCH QUESTIONS
The research work is expected to give answer to the following questions:-
- Does inventory control in an organization result to minimum cost of materials?
- Does inventory control affect the effectiveness and efficiency of product in the organization?
1.5 RESEARCH HYPOTHESIS
This research work has the following hypothesis:-
HO: Inventory management in organization does not result to minimum cost of materials.
HI: Inventory management in an organization result to minimum cost of materials.
HO: Inventory management does not affect the effectiveness and efficiency of the organization.
HI: Inventory management affects the effectiveness and efficiency of the organization
1.6 SCOPE OF THE STUDY
The study will be carried out to focus on inventory management in Nigeria manufacturing industry. In view of the large number of manufacturing industries in large metropolis time constraints and the cost implication that is involve in reaching many manufacturing organizations. The study has been restricted to a manufacturing company that spread across the nation (that also specialized in the pharmaceutical and health care, therefore the Unilever Nigeria PLC.) Will be used as the case study.
1.7 SIGNIFICANCE OF THE STUDY
The study will help management in manufacturing industries by providing information relation to inventory management and control. It will also shed light into reason for the management hierarchy of the company to embrace inventory technique and management as being discussed during the stuy. The important restrictions and unparallel high rate of exchange in obtaining and utilizing raw materials which the government has made inventory form every industrial sector, in the light of this manufacturing industry concerns an not but take full advantages of rare benefit associated with product control of inventory.
1.8 DEFINITION OF THE TERM USED
- FINISHED PRODUCTS: These refer to the inventories of completed manufacturing product or goods, which are ready for sale or distribution.
- INVENTORY CONTROL: Inventory or stock control is a quantities control techniques with strong financial implication. It a means by which a materials of correct quality are made available as when require economizing its shortage and order in cost purchase price and working capitals.
- INVENTORY RE-ORDER LEVEL: The re-order level is the point at which a new set of order is placed by way of inventory control, such that the new order you receive within the normal load time.
- LEAD TIME: This is the period between the time an order is raise on a supplier and when the order is delivered to the buyer bay.
- MAXIMUM LEVEL: This is stock level at which stock will not be allowed to rise over at all time of stocking materials.
- MINIMUM LEVEL: This is stock level at which stock should not fall below at all time before request for stocking.
- RAW MATERIALS: These referred to the factor to productions which are meant to be consumed in the production process by converting them to finished goods or product. Raw materials are in form of items which are produce to be stored in anticipation of future use.
- RE-ORDER QUANTITY: This often referred to as the economic order quantity (EOQ) which is the quantity of stock or material to be ordered at any time or normal circumstances.
- SAFETY STOCK: This refers to an additional inventory or stock over above normal level to prevent possible stock out.
- STOCK OUT COSTS: These are the cost of running out of stock when a customer is turned back to non-availability of goods.
- ORDERING COST: These are the cost incurred in the process of obtaining or purchasing raw materials component or part form the suppliers, It include cost of typing out an order, postage cost of sending telexed to supplier.
- WORK-IN-PROGRESS (W.I.P): These are inventory which have been partly processed and held between manufacturing stages. To become a saleable product, additional work would be require as the name implies W.I.P.
1.9 HISTORICAL BACKGROUND OF THE CASE STUDY
Unilever Nigeria Plc, was described as the pioneer is soap making industry in the century, it was establish and incorporated on 11th of April, 1923. The corporate mission, which is to add vitality to life, is the very best heart of Unilever, they seek to ensure that when people choose their brands they are choosing vitality. The journey of achieving this began in the 19th century.
Unilever Nigeria Plc, was incorporated as level brothers (West Africa) Ltd on 11th of April 1923, by Lord Lever Hulme, but the company’s antecedents have to be traced back to his existing trading interest in Nigeria and West Africa generally, and to the fact that he had since the 19th century been greatly involved with the soap business in Britain. Unilever Nigeria Plc started as a soap manufacturing company, and is today one of the oldest surviving manufacturing organization in Nigeria.
After series of merger/acquisition, the company diversified into manufacturing and marketing of food, non soapy detergent and personal care products. These acquisition brought in Lipton Nigeria Ltd in 1985, cheese brought ponds industries Ltd in 1988. The company changed its name to Unlived Nigeria Plc in 2001.Unliever Nigeria Plc is a public liability company quoted in Nigeria stock exchange since 1973 with Nigeria currently having 49% of equity holdings.
The long term success of this business stems from the strong relationship with the consumers based on the deep roots in the local culture and markets, creating more products that help them to ‘’feel good, look good and get more out of life’ and the total commitment to exceptional standards of corporate behavior towards their employers, consumers, communities and operating environment.
The brands are household futurities and this is because they are so deeply committed to meet the everyday needs of people everywhere in Nigeria their deep roots here combined with international experience and support, enable then to consistently develop brands, which raise the quality of life. It is therefore no surprise that one would find that all over Nigeria, people are at home with their brands.
Unilever as a company has embarked on a progamme of restructuring in a bid to re-energize itself, code – named the journey to Greatness: the vision is re-inventing them so that they can deliver fully on their promises to their consumers, customers and investors.
In addition, the company has sharpened its focus by introducing the vitality mission, which stands to ensure that in all they do, they are adding vitality to life for everyone.
Over the years, Unilever Nigeria Plc has been a socially responsible and responsive organization that takes strategic actions for the improvement of the communities and environment in which it operates.
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