CHAPTER ONE
1.0 Introduction
Store/inventory management is an
important function in the management of an organization
Inventory
management is not related to manufacturing concern but it is also important in
non-manufacturing organizations.
This
point to the fact that these firms have substantial amount of working capital
locked up in inventory. The level of inventory is important to the efficient
operation of those firms, investment is important in inventories should be at
the optimum level.
Inventory
management is an important aspect to cost reduction schemes. It involves
determining the degree of materials required for the best results, planning and
designing of materials organization system.
Thus
for the purpose of this research, inventory covers;
i.
Raw materials
ii.
Work-in-progress
iii.
Finished goods
Inventory usually forms a large
population of many firms operations and effective management is therefore
required for proper functioning of the normal production, selling operations of
the business and for keeping the cost of holding and ordering stock to beeriest
minimum
Excessive
inventories vary for a long period are as loss or liquidity. Raw materials are
generally difficult to sell as the holding period increases. Therefore
exceptional circumstances where it may pay company to hold stock of raw
materials. This is possible under the condition of inflation and scarcity.
Work-in-progress
is for more difficult to sell. Similarly, difficulties may be faced when
disposes of the finished goods inventories at time, another danger of carrying
excess inventory is the physical determination of inventories deterioration
occurs with the passage of time this could be due to mishandling and improper
storage facilities. These factors are within the management and the necessary
investment in inventories are not sufficient to meet the demands of customers
regularly, the customers may shift to other competitors this as to loss of
market to this common relevant.
1.2 Historical Background of the Study
Alhaji aliko dangote, MFR,GCON, a
northerner from kano state Nigeria, was born on10th april 1957 in to
a wealthy Muslim family. Who owns the Dangote group, which has interest in
commodities. The company operates in Nigeria and other several countries in
Africa, including Benin, Cameron, Togo, Ghana, South Africa, and Zambia. As of
march 2014, he has an estimated net worth of $25 billion USD. Dangote is ranked
by forbes magazines as the 23th richest person in the world and the
richest in Africa. He surpassed Saudi Ethiopia billionaire Mohammed Hussein al
Amoudi in 2013 by over $2.6 billion to become the world richest person in
African origin.
ALHAJI ALIKO DANGOTE (born on 10 April
1957 in Kano Nigeria) is a business magnate in Nigeria. From the time he was
young Dangote has an eye on business. Ha said “I can remember when I was in
primary school, I would go and buy cartons of sweet (sugar boxes) and I will go
start selling them just to make money.. I was so interested in business, even
at that time”. He studied business at the al-Azhra university in Cairo Egypt and
there after returned to Nigeria to borrow from his uncle SANUSI ABDULKADIR DANTATA, who provided him a loan of #500,000 when
ALIKO was 21 years old, in order to
start a business.
The Dangote
group was established as a trading firm in 1977; today it is a multi-trillion
naira conglomerate with many of it operator in Benin, Ghana, Nigeria, and Togo,
at present Dangote has enlarge his line of business to also cover food
processing, cement, manufacturing and freight. The Dangote group also dominates
the sugar market in Nigeria and is a major sugar supplier to the country’s,
soft drink companies, breweries and confectioners.
The Dangote
has moved a trading company to being the largest industrial group in Nigeria and these includes; Dangote sugar
refinery, Dangote cement and Dangote flour, just to mention a few.
In July 2012,
Dangote approach the Nigeria Ports Authority (NPA) with the idea of leasing on
abandoned piece of land at the Apapa port, which was welcomed and approved. He
later built facilities for his flour company there. In the 1990s he approach
the central bank to allow his transport company to manage their fleet of staff
buses, a proposal which was also approved.
In Nigeria
today, Dangote group with his dominance in the sugar market and refinery business
is the main supplier (70% of the market) to the country’s soft drinks
companies, breweries and confectioners and confectioners, it is the largest
refinery in African and the third largest in the world, producing 800,000 tones
of sugar annually. Apart from this Dangote group owns salt factories and flour
mills and is a major importer of rice, fish, pasta, cement and fertilizer, the
company export cotton, cashew nuts, cocoa, sesame seed and ginger to several
countries. It also has real estate, banking, transport, textile and oil and
gas. The company employs over 11,000 people and is the largest industrial
conglomerate in the whole of west Africa.
Dangote has
diversified in to telecommunication and its building 14,000 kilometers of fiber
optic cables to supply the whole of Nigeria. As a result Dangote was honored in
January 2009 as the leading provider of employment in the Nigeria consultant
industry.
1.3 Statement of the problem.
The previewing economic pressure has
led to general shortage or fall in supply of raw materials. This has lead many
organization embracing various management techniques to collapse. This ranges
from down sizing restricting repositioning, re-engineering and so on. Most
organization that cannot survive on this terrain resulted into resentment and
possible total close down or collapse (chiquidations).
Many
organization engages in one business or the other either to produce good or
render services to customers, in doing this, they have to contented with
inventory manage problems. The objectives of the research study certificate on
the reprints for the award of national diploma (ND) in purchasing and supply
department institute of finance and management studies (IFMS) kwara state
polytechnic, Ilorin.
One
of the objectives of this study is to critically evaluates and review the
significance of management as practiced in Nigeria flour mills plc with a view
of appraised the cost effectiveness or otherwise of such techniques that are
employed.
1.4 OBJECTIVES OF THE STUDY
The major
objective of this study is to examine the importance of negotiation and its
contribution in an organization as a case study of Dangote Group of Company
Lagos. The primary observation of this project is to satisfy one of the basic
certificates for the award Higher National Diploma (HND) in Business
Administration. Moreover, the objective of the study is to:
i. Helps develop appropriate
negotiation system to improve production capability
ii. To show how purchasing really
contribute to the quality in an organization through their department
iii. To show its impact, to the
accomplishment of the organizational goods.
iv. Negotiation helps organization to
have flow in production system and production continuity.
1.5 Significance of
the study
This
project is significant because it will educate the management of the case study
in the need for sound inventory management in an attempt to accomplish the
organizational objectives.
The
study is also significant to the researcher is that it will broader her
knowledge of the subject matter
Lastly
the project will be very useful to other researcher now and in the future may
be writing on the similar subjects.
1.6 scope of the
study
This study is restricted to the Dangote
flour mill Nigeria plc Apapa owing to certain limitations which will be
explained in the next heading.
1.7 limitation and
constrains
In the course of this research project,
the researcher encountered the following problems.
–
Financial problems
–
Attitude of the respondents
–
Time constrains
Financial problem:- this constitutes only the major
challenges encountered in the course of the study. The researcher as a student
has limited financial resources as therefore could not afford to undertake a
comprehensive study at the subject matter
Altitude of the respondent:- the altitude of the company’s officials
towards getting certain information was very discouraging they refused to give
any comments in certain areas which relating to the company on the firm ground
of confiderality.
Time constraint:- the time allowed for writing and
submission of the research project was strictly limited for any in-dept study
on the subject.
1.8 DEFINITION OF
TERMS
Inventory:- consist of usable but idle resources. These resources may be
any kind; it may include for example raw material, money or machine
Inventory management: this is the act of controlling amount
of stock held in various forms with a business to ensure smooth operate
materials leads in the store.
Stock levels: the basic method of controlling stock by quantity is by
means of fixing for each commodity, stock levels which are noted on the stock
records and subsequently used as a means of indicating when some action is
necessary.
There
are various kinds of stock levels, but the fundamental controls are minimum
according and maximum level.
Lead time:- lead time is the time interval between when the need for
stock are recognized till the time when good are sent to the delivered by the
supplier.
Stock level
Maximum
Minimum
Order
stock level
Stock
yard
Stock-taking
Stock level:- the basic method
of controlling stock by quantity is by a means of fixing for each commodity
stock levels which are noted on the stock records and subsequently used as a
means of indicting when some action is necessary.
Maximum stock level:- maximum stock level is the level above
which stock should not normally be allowed to rise. Before it is fixed take
into accounts.
Rate consumption
Leadtime necessary to obtain new
delivery
Amount of capital involved and
available
Risk of deterioration or evaporation
Storage space available e.t.c
Minimum stock level:- minimum stock level is below which stock
should not normally be allowed to fall. If stock go below or fall below this
level, there is a danger of shortage of supply which may result in shortage of
production or operation.
In
fixing minimum level, the main factor is the effect which a run-out of stock
would have upon the whole operation of the company or organization. This factor
is very important in a manufacturing industry
Re-order level:- this is between the maximum and the
minimum stock level at which time is essential to initiate purchase requisites
for fresh supplies of materials. This point will usually be strictly higher
than the minimum stock to cover emergencies