CHAPTER ONE
1.1 INTRODUCTION
Stock taking is the physical verification
of the quantities and condition of items held in an inventory, as a basis for accurate
inventory audit and valuation. Stock taking is necessary to ensure that the stock
records are accurate.
Regular stock taking is an essential element of a loss
minimization strategy. The process helps you to compare actual stock levels with
the stock levels based on your ordering records.
A company is expected to maintain
adequate stock of material for a continuous supply of raw material to the
factor for an interrupted production It is not possible for a company to
procure raw material whenever it is needed, and more so the finished goods manufactured
by a company cannot be sold of the sometime, a time log exists between demand
for material and supply.
The procurement of material may be
delegated because of such factors as strike, transport , disruption, short
supply etc therefore there is a need for a firm to maintain sufficient stock of
raw material at a given time to streamline production to maintain the concept
and conservation of account. The continuity existence to adequate raw materials
for economics purpose.
The control of inventories and
management of store house in common with the other major branches of commercial
and individual work become specialist activities.
The stores should be considered as a
temporary location for materials needed for operational purpose and should be
planned, organized and operate in such a way that the period of residence of
each stock items is as short as possible consistent with economic operation.
In general, if demand is steady or
highly predictable then we should store for very short period if at all when
demand is highly unpredictable then storage for longer period may be
necessitated.
There is no standard system of store
keeping which and universally recommended or applied but in the course of me
certain principle and practices of more or less general application haven been
involved large sums of money are involved and it is essential or organic to
stock management or sores function so that the investment is kept to the
minimum from the stores point of view the most important thing is to keep the
quantities of incoming goods in their appropriate and respective position and
necessary records and transaction follows immediately shortage must be avoided
or else production line will have to stop.
At the same time for much must not be
delivered or it will clog up the ware house and perhaps also the production
area, apart from the fact that excess deliveries will be tie up more capital.
It is well known that most materials
will determined in store in the course of time and the fact that a building is
provided for storage in itself an acknowledgement that some degree of
production is required.
Large stores are generally term describing goods which
are hold in storehouses and stock yards.
The bulk of those goods usually
intended for this in connection which production or operation activities, but
the expression “stores” also course finished product waiting to suppliers.
The store plays an important role in
advisory on the quantity of items to be stocked, and disposal of obsolete
materials.
The objectives of store
function are: –
vTo
make available a balance flow of raw materials components tools equipment and
any other commodities necessary to meet operation requirements.
vTo
provide maintenance materials spares and general storage for community of
existence.
vTo
receive and issue work — in — progress and finished production. Production is
not completed until it goes to final consumers.
vTo
accept other discarded materials as it arises.
vFor
the efficient operation of the stores system and for the achievement of the
stated objectives. It is necessary for an organization to have a strong stock
control procedure.
A great attention should be focused on
the operation of the stores because of general scarcity of materials vis — a —
vis the higher cost of material and equipments.
The rationale behind stock or
inventory management or stores function involves: –
i.
What things to keepings
stock
ii.
When to order those
things
iii.
What quantities of them
to order
Most factories stock some very
expensive items as well as some very cheap one and use some perhaps once in a
year while other may be required at a rate of hundred in a day in deciding what
to stock, unit cost, rate of usage, lead time, deterioration, obsolescence,
stock facilities and capital must be carefully considered.
It is therefore follow that before a
system of storage and stock control can sensibly be desired account must be
taken of the nature and need of the organization.
1.2 STATEMENT OF PROBLEM
This study is aimed at finding out the
following problems facing manufacturing industries with particular reference to
stock taking as a control measure.
1. To
verify the accuracy of store record
2. To
compare the balance sheet records with physical verification.
3. To
disclosed the possibility of fraud (Thief /Loss)
4. To
reveal if there is any weakness in the system for the custody and control of
stocks.
1.3 OBJECTIVE OF THE STUDY
This research like any other is
carried out in order to achieve some objectives such as:
1. To
identify problems associated with carry out effective inventory management or
stock function.
2. To
ascertain the problem of ineffectively handling of stock (problem definition).
3. To
forestall the possibility of fraud occasional by theft/loss (Analyzed the
problem & prevented of loss).
4. To
resolve the level of stock to be added when inventory should be replenished.
5. Order
quantity problem i.e. colour, brand, size etc
1.4 SIGNIFICANCE/IMPORTANCE OF THE STUDY
The
study will enable the management of any organization to: –
1. Identify
any pay attention to their role in ensuring smooth stock management so as to
achieve the corporate goal and objective of the company.
2. Identify
the effectiveness and efficiently of the organization through the stock
management skills or techniques.
3. Show
how organization should carefully pay attention to receiving and issuing of
materials the level at which it is necessary to place an order and with what
quantities.
4. Give
an overview of the experience to the management and accounting students who may
like to carry out a similar research in the future.
1.5 SCOPE OF STUDY
This will cover all aspect of stock
taking as it affect manufacturing industries the survey is a case study of
Dangote Flour Mills Industries Limited Ilorin Kwara State. The study was design
to operate within the frame work of its objective to examine the impact and
effectiveness of stock taking as employed by the company.
1.6 LIMITATION OF STUDY
This study would have broader scope
but for the following factor: –
Money and time have been the major
constants on work of this nature. However the research accepts that time has
plugged the overriding factor militating against the study.
People even after proper
identification still find it difficult to part with some vital information
which will be of great help to this work as they entertain fears that such
information might be sold for industrial espionage.
1.7 HISTORICAL BACKGROUND OF CASE STUDY
Dangote Flour Mills Plc commenced
operations in 1999 as a division of Dangote Industries Limited (DIL). One of
Nigeria largest and fastest growing conglomerates following the strategic
decision of Dangote Industries Limited to unbundled if various operations,
Dangote Flour Mills was incorporate in 2006 when Federal High Court sanctioned
a scheme of arrangement in all the asset, liabilities and undertakings of the
yeast while flour division of Dangote Industries Limited was transferred to
Dangote to Dangote Flour Mills.
From an initial installed capacity of
500 MT per day at its Apapa Mill, Dangote Flour has expanded rapidly by opening
on quick successions three other flour mills are in Kano (2000), Calabar (2001)
and Ilorin (2005).
Each of the mills started with an
installed capacity of 500 MT per day but all of them have subsequently expanded
resulting in a total installed capacity of 5, 000 MT per day distributed as
follow: –
Apapa
1,000 MT Per day
kano
500 MT Per day
Calabar
1,500 MT Per day
Ilorin
1,000 MT Per day
These expansions were in response to a
growing national demand for flour and based products in addition to the
company’s drive for increased market share. Thus from a modest beginning the
company has growing to become one of the industry leaders within a six years
period. The company has 3 wholly owned subsidiaries namely: –
Dangote
Agro Sack Limited
Dangote
Pasta Limited
Dangote
Noodle Limited
In line with Dangote Industries
Limited business philosophies of establishing a dominant presence in any sector
it operate in these subsidiaries occupy leadership position in their respective
industries.
1.7.1 BUSINESS
The company is in the business of
flour milling processing and marketing of branded flour. Its product port-folio
comprises the following:
üBread
Flour
üConfectionery
Flour
üSemolina
and
üWheat
Offal (Bron)
Wheat is transformed into
high-quantity flour, by using state of the art plant and equipment backed by
renowned technical expertise Dangote Flour Mills across the country equipped
with the least flour milling technology available in the word.
1.7.2 COMPANY RAW MATERIALS
The company import its principal raw materials
wheat (the hard Red winter wheat No. 2 variety) from united state of America in
shiploads, Wheat Silo trucks (also Dangote Industries Limited Owned) there
after convey the Wheat to the inland mills to Kano and Ilorin.
Alhaji Aliko Dangote holds the
position of chairman of the board of direction at Dangote Flour Mills Plc. In
addition he occupies the post of Dangote group’s president and chief executive
officer. He also serves on the board of National Council of Nigeria Vision,
Mohammed Bello endowment for justice and jurisprudence, Kano foundation, the
Nigeria Economic submit group African Petroleum Plc, National Investment
Promotion Council and the heart of African (a management group on Nigeria Image
Project) etc Alhaji Aliko Dangote Graduated in Business from Al – Azahar
University Caire, Egypt.
NAME CURRENT
POST
Alhaji
Aliko Dangote Chairman of
the Board
A.
Samuel Legal
Advisor, secretary
Rohit
Chavdhry managing
director
Shuaibu
Idris Executive
Director
Olakule
Alake Director
Uzoma
Nwankwo Director
Sani
Dangote Director
Abdullahi
Mahmond Director
S.
Teidi Director
Abdul
Dantana Director
1.8 DEFINITION OF TERMS
There are some terms that are common
in the economic and marketing circles and the definition of such term are
enumerate below.
THE MIDDLE PERSON
The middle person can be defined as any individual or
a group of individuals or an organization that serve as a link between the
companies and its market.
The middle person to any firm
includes, the firms market, the firms suppliers and of course the firm
intermediaries.
THE MARKET
The market refers to the place where
products and services and their competitive substitutes are brought and sold,
an opportunity to sell, or the demand for goods and services. It is also a set
of potential or real buyers or a place in which there is a demand for products
or services.
THE SUPPLIERS
The suppliers are individuals or
business that provides resources needed by a company in order to produce goods
and services.
THE MARKET INTERMEDIARIES
Market intermediaries is also known as
middlemen or distribution intermediaries. It is an important part of the
product distribution channel. Intermediaries are individuals or business that
make it possible for the product to make it from the manufacturer to the end
user, essentially facilitating the sales process.