BENEFITS AND CHALLENGES OF STORE MANAGEMENT IN ORGANIZATION

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Introduction

1.1 Introduction

Onuoha (1991) defines management as the process of combining, utilizing and allocating organization’s input such as men, money and materials by planning, organizing, directing and controlling for the purpose of producing goods and services desired by customers so that organizational goals are accomplished.

In furtherance, stock refers to pile of goods a firm is producing for sale and the components that make up the goods (Ama, 2001). Stock is an itemized list of goods and valuables with their estimated worth, specifically, the annual accounted goods taken in any business (Ogbu, 2014). From the above mentioned definitions, stock is the totality of goods, which include raw materials, work in progress and finished goods that enable an organization to produce. It also refers to the amount of goods and materials contained in a store or factory at any given time. There are ways of handling these stocks for the purpose of achieving the best from them. These stocks must be managed and controlled in order to achieve their usefulness. To do this, the production manager, purchasing manager and sales manager of the organization always put their heads together to plan appropriate ways of managing the level of stock purchases, production stock requirement and sales using some feedbacks to exercise controls in order to achieve standardized results.

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1.2 Background to the Study

According to Lucey (2007), stock management is the system used in a firm to control the firms’ investment in the production of goods and services. The system involves recording and monitoring of stock levels, forecasting future demands and deciding when and how to order with the overall objective of minimizing the cost associated with stock. Store management or stock management refers to the ability of an organization to use all techniques at its disposal to hold the quantity of stock that will be sufficient to produce the required number of goods needed by customers at the appropriate time and at least cost to the organization with the view to maximize profit.

Managing stock is a crucial issue to every organization. Without effective stock management, there is great likelihood for such organization to dissolve. Stock represents the largest single investment in assets for most organizations. Employees in virtually every organization have become conversant with high level of commodity availability resulting in higher stock level holdings. The basic reason why stock is held is to avoid stock out and its resultant problems. The extent of stock is influenced by the operational needs of the organization, time required to obtain the delivery of stock, availability of capital, cost of storage and the need for detailed records in the form of stock issues which should be kept through the use of store records (Osei, 2015). Other factors that need to be considered are funds available, availability of storage facilities, rate of consumption of materials, lead time, margin of safety and the stock level can then be set for each material.

The unpredictability and volatility of timing and content of information flow on usage of stocks lead to uncertainty in planning, increased stocks, stock out and delays. Therefore, it is pertinent to take appropriate steps especially on stock to deal with the volatility and dynamics on the operational level of the business. In order for this to be effective, there is need to apply strategies that will stimulate the supply chain strategy to achieve competitive advantage and excellence.

Many organizations in developing economies usually leave stock decisions as well as store management to departments concerned. Due to this, some problems are inherent and they include high cost of stock, selection of suppliers, problem of delivery, stock out, stock obsolescence. To mitigate these challenges, the Federal Ministry of Trade and Investment promulgated the store regulation act. This act governs the acquisition / receipt, custody, control, issue and disposal of every registered organization. Government stores are to be procured from the Value Added registered persons except where there is an exemption based on the request of waiver. Intermittent and emergent purchases are common procurement practices in most organizations which negate public procurement laws as proper procurement not well followed.

Organizational resources are always limited in supply and resources must be well used to avoid wastage. It is therefore important to explore how manufacturing firms using a case study of Alibert Product Nigeria Limited have been avoiding wastage by using efficient store management techniques among others to render efficient services to their customers, maximize profitability, avoid stock out and reduce the cost of doing business.

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1.3 Statement of Problem

The smooth running of any organization needs an organized flow of materials to service its activities. This can work out when the organization manages its stock materials effectively. Many manufacturing outfits in Nigeria often encounter some challenges managing their stores. Some of the problems are the cost of obtaining and holding stock is always high and this affects the price of the finished goods thereby making it relatively unaffordable for customers to buy them.

Poor transportation system and unreliable delivery services in Nigeria have made it difficult for them to forecast the workable lead time and stock levels that can enable them place order at the right time and get replenishment. Also players in the manufacturing industry have been finding it difficult to determine the quantity of stock to order which is economical due to variations in environmental factors such as price changes, exchange rate volatility et al that affect other aspects of their production.

The concern is to investigate how Alibert Product Nigeria Limited has been managing their stores inspite of the above listed challenges, the effectiveness of their store management techniques and how this has affected their performance.

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1.4 Objectives of the Study

The main objective of this study is to investigate the benefits and challenges of store management in Alibert Product Nigeria Limited, Lagos.

The specific objectives are to:

1. Examine the store management techniques that effectively suits the operations of Alibert Product Nigeria Limited, Lagos.
2. Ascertain the extent to which the benefits inherent in store management have impacted on the operational performance of Alibert Product Nigeria Limited, Lagos.
3. Determine the extent to which the challenges inherent in store management have impacted on the operational performance of Alibert Product Nigeria Limited, Lagos.

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1.5 Research Questions

The questions of interest in the study are:

1. What are the benefits of store management to Alibert Product Nigeria Limited, Lagos?
2. What are the challenges of store management experienced by Alibert Product Nigeria Limited, Lagos?
3. What are the store management techniques that effectively suit the operations of Alibert Product Nigeria Limited, Lagos?
4. Have the benefits of store management impacted on the operational performance of Alibert Product Nigeria Limited, Lagos?
5. Have the challenges of store management impacted on the operational performance of Alibert Product Nigeria Limited, Lagos?

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1.6 Statement of Hypotheses

Two hypotheses are developed in order to make some valid conclusions on the subject matter and they are stated as follow:

H01: The benefits of store management have no significant impact on the operational performance of Alibert Product Nigeria Limited, Lagos.

H02: The challenges of store management have no significant impact on the operational performance of Alibert Product Nigeria Limited, Lagos.

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1.7 Significance of the Study

The significance of this study is multidimensional. It will enable manufacturing firms to discover and maintain optimum level of investment in stock. It will inform store managers to know the ideal quantity of stock to order that is economical to organization and the most appropriate time to order for it. Organizations will be assisted to maximize their profits and minimize their risk of liquidity.

Furthermore, the study will enable manufacturing firms to obtain the right size of stock that will always support their smooth and hitch free production and sales operation. Organizational managers will be assisted to know the level of stock that will be kept to cover errors in forecasting the lead time or demand during the lead time. The study will also provide a base for other research works that might be carried out on store management in other organizations. Lastly, the study will help reduce business failures in the country as stock is a major factor of business operations.

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1.8 Justification for the Study

Although several studies have been conducted in the aspect of stock, store or inventory management, however, most of them only concentrated on the impact of store management on organizational performance. This study made a step further by attempting to determine the benefits and challenges related to store management by prioritizing on Alibert Product Nigeria Limited.

The study was necessitated with the fact that most firms in the manufacturing sector have been performing below their optimum capacity. This poor performance is not unconnected to poor store management practice of these firms. It is therefore urgent to carry out studies in this respect to minimize organizational failure in manufacturing sector.

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1.9 Scope of the Study

This research work is intended to evaluate the benefits and challenges of store management in Alibert Product Nigeria Limited. Alibert Product has several branches within and outside Nigeria but only the Lagos branch was considered in the study.

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1.10 Definition of Terms

The key terms of the study are defined as follows:

Stock

This refers to the amount of good or materials contained in a store or factory at any given time.

Store

A place where raw-materials, work-in-progress and finished goods are kept before converting and selling them out to customers

Management

This refers to the coordination of an organization’s resources for the purpose of achieving its predetermined objectives.

Store Management

This refers to the system used in a firm to control the firm’s investment in stock.