Efficient Management Of Stocks Of Manufacturing Companies

EFFICIENT MANAGEMENT OF STOCKS OF MANUFACTURING COMPANIES

Abstract

Stocks, often known as inventories by businesses, typically consist of finished goods, raw materials, and supplies utilized in production. Animals that are awaiting safe supplies to be consumed in the creation of goods or the provision of services are likewise included in stocks. The goal of the study project is to understand the importance of effective stock management in a manufacturing organization. The management of diverse businesses must decide at what level stocks should be retained in order to maintain a healthy, optimal operation that will reduce stock expenses (ordering and holding costs). As a result, the choice of an optional firm is crucial to the stock management issues. The ideal stock level depends on the company’s size and operational volume and differs from one to another. Anambra Motor Manufacturing Company Limited (ANAMMCO) Emene is used as a case study to help the research achieve its goal.

Chapiter 1

Introduction

Background of the Study, paragraph 1.1

Inventories are the holdings of a corporation or organization at any given time of resources with economic value. These resource stocks may consist of labor, equipment, capital goods, or materials in various stages of development.

Raw materials, commodities under production, and finished items are some of the components of stocks. Raw materials are these fundamental components and input materials that are intended to be used in the production of a product. Materials that are still under development into final products are products that are ready for sale. Products that are finished can be sold to customers. While raw material and work-in-progress inventories aid in production, inventories of finished goods are necessary for efficient marketing operations. All three types of inventories will be present in quite high levels in the manufacturing form. While the amount of finished goods in wholesale and retail forms will be very high.

“Inventory supplies” are a type of inventory. These include things like fuel, lightbulbs, and cleaning supplies; while not directly involved in the production process, they are still required for it. Because not enough money was invested in it, a sophisticated inventory system was not kept for it.

Given the significant investment made in these equities, care must be taken to manage it effectively to prevent risking its long-term profitability or failure. The organization needs to put in place a reliable stock management system to reduce this risk.

In order to establish a manufacturing facility for the assembly of Mercedes vehicles using completely knocked-down parts (CKPs), Anambra Motor Manufacturing Company Ltd. was established in 1978 as a joint venture between the federal government of Nigeria and Daimler Benz AG of Germany. The factory is located in Emene, Enugu State. 35% of the company’s equity was held by the Nigerian federal government, 40% by Damiler Benz AG, and the remaining 25% by other Nigerian investors, mostly the state government of the former East Central State and a small number of other investors.

On May 12, 1978, Col. John Atomkpera, the military governor of Anambra State, laid the cornerstone for Anammco. On April 26, 1982, the federal minister of education, Hon. Sylvester Ugoh, officially opened the ANAMMCO Training Center. The central spare parts facility for ANAMMCO was inaugurated in October 1985.The business started running at full capacity in January 1986. For a whole year, this installed production capacity on shift was 7,500 commercial vehicles.

The federal government of Nigeria and Daimler-Benz AG of Germany collaborated to build this multimillion-dollar plant at Emene, close to Enugu, to construct Mercedes trucks to meet the country’s rising need for commercial vehicles. Therefore, Anammco is a natural progression of that lengthy, innovative history of Mercedes Benz sales and services through Nigeria.

On January 17, 1997, Anammco was established as a limited liability company. In 2007, the Nigerian federal government sold 24% of its shares to G.U. Okeke & Sons Limited. While DAMILER-BENZ AG sold AFFREECAL LIMITED 40% of its shares, ATFREECAL LTD today holds 40–45% of the company’s shares, followed by G.U. Okeke and Sons Limited, which holds the remaining 27–45%. The remaining shares were held by a few private investors, some state governments, and the Federal Government of Nigeria through the B.P.E., which held 11% of the total.

The ANAMMCO Board of Directors was made up of the following individuals: Chief G.U. Okeke, who served as the organization’s chairman, Mr. Onken, Mr. Uche Okeke, Igwe Onyia, and Obi Charles C. Olutala C. The organization employed around 1200 people, including Nigerians and international professionals and technicians who made up less than 3% of the overall workforce.

Statement Of The Problem

1. In ANAMMCO, understocking is the main issue with stocking. due to the importation of German spare parts.

2. The stock taking and stock valuation processes were not properly documented. Without the required authorization, parts are taken and brought back to shore.

3. If stock is not properly managed and authorized, the worth of the company’s present assets will not be accurately recorded.

4. It will be important that stock be carefully maintained, which will lead to proper information on when to order new parts and how the parts were utilized, to ensure that the form does not run out of stock, which will in turn damage their profit.

1.3 The Purpose Of The Study

The following are the main goals of this research project:

1. Identifying a solution to the manufacturing company’s stock management and control issue.

2. Determining the impact of ineffective stock management on the company’s profit.

3. Whether there is a difference between ANAMMCO’s stock management policy and practice.

Research hypothesis, section 1.4

1. First hypothesis:

Ho: The issue of understocking at ANAMMCO prevents the factory from operating at its fullest potential and reduces profits.

Hi: Understocking is a concern for ANAMMCO, but it doesn’t affect how efficiently the company uses its installed capacity or how much profit it makes.

Second hypothesis:

Ho: Inaccurate balance sheets and poor stock management do not result in stock loss.

Hi: Inaccurate balance sheets and stock losses are the results of poor stock management and valuation.

the third theory

The proper arrangement of the parts and the flow of information within an organization are not distorted by improper stock management.

Hi: An organization’s information flow and proper part ordering are distorted by improper stock management.

1.5 The Study’s Significance

The goal of this study is to develop a solution, which is crucial for manufacturing companies in general and Anambra Motor Manufacturing Company (ANAMMCO) in particular. How much stock investment can a corporation make without it having a negative financial impact on its profitability? Because businesses need to run a variety of different operations. Too much stock investing will result in DC letters or not enough money to cover these activities’ costs. Therefore, it is essential that manufacturing firms make sensible stock investments.

The stock will also protect manufacturing firms from risk or losses while promoting growth through the following:

1. To prevent financial loss, it is important to carefully stock Determination and Evaporation materials. The amount to be stored should be determined by the salary rate, and appropriate storage containers should be utilized when necessary to prevent deterioration.

2. Overstocking things that are readily rendered useless by changes in fashion tastes should be avoided as this may cause significant financial losses for the organization.

3. Stock price movements can be used to determine how much a stock holding has changed in price. If high prices are expected, stocks are built. Similar to this, the management will lower the stock if a full price is anticipated.

4. The study’s successful conclusion will increase the body of knowledge on this subject. As a result, subsequent authors can contact us for any information on the subject.

1.6 The study’s scope and limitations

This study examines the requirement for effective stock management in manufacturing organizations generally, with particular emphasis on ANAMMCO. This is done with the intention of learning how the business has been able to manage its stock in accordance with the accomplishment of its goals.

The author’s analysis concentrated on the show investment. The stock consists of finished goods, work-in-progress, and raw material inventories. Due to time constraints, supplier stock was not taken into account in the analysis. Due to time and resource limitations, this study did not compare Peugeot Assembly of Nigeria and Volkswagen Nig. Ltd. with other motor manufacturing firms, but information on the stock of the companies was gathered. The writer has obtained these information and data because the company’s management considers some information to be private and exclusive.

As a result, the researcher was unable to conduct a thorough investigation of the company’s stock management as he would have liked.

Definition of terms, section 1.7

The researcher uses a few specialized terms that are solely relevant to the subject. The following provides an explanation of these technical terms:

Purchasing price:

This price reflects the administrative and secretarial expenses related to creating an order and obtaining necessary paperwork. The cost of ordering materials per unit will be high if they are ordered in small batches and low if they are ordered in large batches.

Carrying expense

carrying the cost of a desired rate of return on the investment in inventory, as well as the price of storage space, insurance, and personal property taxes, as well as the cost of breakage, obsolescence, degradation, and breakage.

Minimum Standards:

It stands for the order point at which a purchase order must be placed in order to grow the organization’s stock amount to the highest possible level. In order to prevent “stock out” situations, avoid material waste, and maintain costs as low as possible, this is done.

mechanism for reordering levels

This technique sets a specified reorder level for each material component.

highest level approach

This is the maximum number of stocks, and the company shouldn’t go beyond it.

Affordable Order Quantity

That quantity is what minimizes the balance of costs associated with ordering and maintaining inventories.

Lead period:

The lead-time is the period of time between placing an order and receiving the products.

Security Stock

This is the stock that has been held aside to satisfy customer demand for raw materials in the event of unexpectedly high usage. To ensure that the business never runs out of supply, safety stock was created. project ideas for manufacturing businesses and the stock market

Stock

A quantity of something held or saved for use as unfinished or finished items, supplies, or work-in-progress. There is a need, particularly for a lot of raw resources.

stock management

Stock management is the activity, process, or research that ensures the number of stocks (such as raw materials, completed items, or supplies) is such that all stock keeping units continue to get satisfactory service levels while holding costs are kept to a minimum.

Holder of Stock

a business or individual with a specific kind of inventory (such as a complete seller with inventory of a certain manufacturer’s products).

Value Evaluation

Examining how each component of a product’s design functions to see whether any modifications to the material, manufacturing process, or design will make the product more valuable to the company and make it obsolete.

the decrease in asset value brought on by outside factors like demand changes or technological advancements.