1.1 BACKGROUND OF THE STUDY
Inventory constitutes the most significant part of current assets a larger majority of Nigerian manufacturing industries. Because of the relative largeness of inventories maintained by most firms, a considerable sum of an organization’s fund is being committed to them. It thus becomes absolutely imperative to manage inventories efficiently so as to avoid the costs of changing production rates, overtime, sub-contracting, unnecessary costs of sales and lack order penalties during periods of peaks demand.
According to Redhakrishman et al, (2009), manufacturing enterprises (companies) are compelled to supply their best in order to survive because remarkable changes in the market scenario frequently occur because of global competition, shorter product life cycles, dynamic changes of demand pattern and product varieties and environmental standards. Pandey, 2008 says it is possible for a company to reduce its levels of inventories to a considerable degree without any adverse effect on production and sales, by using simple inventory planning and control techniques. The reduction in excessive inventories carries a favourable impact on a company’s profitability.
Nowadays, understanding of the significance of inventory control throughout the various links in a supply chain is further increased by the awareness in supply chain management. In recent years, management decisions are supported by lots of newly constructed supply chain and inventory control models. A sufficient supply without too much oversupply of items are assured by monitory supply, storage and availability is known as inventory control. Total inventory costs can be minimized by optional order quantity in an inventory system in which an order is considered slowly, as inventory continues to be used up. Improving company management at the same time as improving custom services, maximizing return of investment, improving production performance and minimizing investment on inventories is the major objective in implementing an inventory system.
1.2 STATEMENT OF THE PROBLEM
The problem of this study is how to maintain a large size of inventories of raw material and work in progress (process) for efficient and smooth production and of finished goods for interrupted sales operators.
This study argues in its statement of the problem that inability to maintain a minimum investment in inventories to maximize profitability and also maintaining an inadequate level of inventories is also dangerous in the manufacturing company.
1.3 OBJECTIVES OF THE STUDY
The objective of the study is to find out the following:
(i) To find out the inventory management procedures in Champion Breweries Plc, Uyo.
(ii) To examine the inventory and control management in Champion Breweries Plc, Uyo.
(iii) To identify the problems associated with evaluating inventory management and control in manufacturing company.
(iv) To proffer solution to the problems associated with evaluating inventory management in Champion Breweries Plc, Uyo.
(v) To make useful recommendation based on research findings.
1.4 SIGNIFICANCE OF THE STUDY
The ultimate goal of any industry or organization is to maximize profit. The goal can be achieve in the manufacturing company like Champion Breweries Plc, Uyo through inventory management and control in manufacturing firm.
This study is necessary because it would enable the employer and employee of Champion Breweries Plc, Uyo to improve ethnical behavior and code of conduct in the management of the company.
It would be of immense benefit to investors who want to invest in the company and the shareholders of the company to earn more profit. It will also serve as a reference source to researchers (students) who might want to further studies in the similar topic.
1.5 SCOPE/LIMITATION OF THE STUDY
The study concerns about evaluating inventory management and control in manufacturing firm with specific focus on Champion Breweries Plc, Uyo. Significantly, the study seeks to investigate the inventory management procedures in the company and control man in the manufacturing firm. However, the findings and recommendations will be generalized to cover other similar company’s.
Besides, the study is limited to Champion Breweries Plc, Uyo and its limitation in scope caused by the time constraint. The period within which the study is conducted is short for a thorough research study, hence, gathering adequate information becomes very difficult.
Also, finance is one of the limitations to the scope of this study. The researcher is facing financial constraint to meet all the needed educational requirements including this research work. This caused the researcher to restrict this research to one company for possible completion of the study.
Finally, lack of materials on the topic. This area is totally new in the Nigeria companies, and schools, hence the researcher resolved to seek friendly approach in order to obtain the needed materials or information from the establishment or organization under study through the administration of questionnaire and oral interview.
1.6 RESEARCH QUESTIONS
(1) Does inventory management increase profitability in Champion Breweries Plc, Uyo?
(2) Does inventories help Champion Breweries Plc to make effective and efficient production?
(3) What is the benefit of inventory management to the shareholders of Champion Breweries Plc?
(4) What are the problems associated with inventory management and control in Champion Breweries?
1.7 RESEARCH HYPOTHESES
The following research hypotheses were formulation to guide this study.
H0: Inventory management does not increase profitability in Champion Breweries Plc.
H1: Inventory management increase profitability in Champion Breweries Plc.
H0: There is no significant relationship between inventory management and the benefits to shareholders of Champion Breweries Plc, Uyo.
H1: There is a significant relationship between inventory management and the benefits to shareholders of Champion Breweries Plc, Uyo.
1.8 DEFINITION OF TERMS
(a) INVENTORY MANAGEMENT: This refers to all the activities involved in developing and managing the inventory levels of raw materials, semi-finished materials (work-in-progress) and finished goods so that adequate supplies are available and the costs of over or under stocks are low (Chiktriki and Ravindranuaath, 2010).
(b) RAW MATERIALS: These are those basic inputs that are converted into finished product through the manufacturing process (Pandey, 2008).
(c) WORK–IN-PROGRESS: These are inventories that are semi-manufactured products (Pandey, 2008).
(d) FINISHED GOODS: These are inventories completely manufactured products which are ready for sale (Pandey, 2008).
(e) PROFITABILITY: This means the ratio of profit to capital or the profit after taxes but before dividends divided by total assets and expressed as a percentage (Fijo, 2004).
(f) PRODUCTIVITY: This is the relationship between a given output and the means used to produce it. It is the goods and services produced per unit of labour, capital or both (Banjoko, 2000).