EFFECT OF INVENTORY MANAGEMENT ON ORGANIZATIONAL PRODUCTIVITY ( A CASE STUDY OF UNILEVER NIG PLC)

ABSTRACT

This study is on effect of inventory management on organizational productivity. The total population for the study is 200 staff of Unilever Nig. Plc, Lagos state. The researcher used questionnaires as the instrument for the data collection. Descriptive Survey research design was adopted for this study. A total of 133 respondents made human resource managers, production managers, senior staff and junior staff were used for the study. The data collected were presented in tables and analyzed using simple percentages and frequencies

 CHAPTER ONE

INTRODUCTION

• Background of the study

The effective and efficient functioning of a productive system requires the regular demand and supply of inventory at the input transformation and output phases of the production process. Management is also seen as the effective and efficient utilization of resources for the achievement of organization objectives. To ensure the achievement of the objective three must be free flow of material, unencumbered at every stage of the production process.

In Nigeria today, there are many soft drink production companies in the beverage industry and they all source their raw materials from few of not the same market. With the present economic meltdown, organization are after these scare resources to product their product. Therefore, the urgency for the effective and efficient management of inventory in form of raw material, work-in-progress and finished goods constitute significant proportion of assets of most organization

But why is it pertinent to keep an eye on these items in other words, why do we engage in inventory management?

Inventory items cost money to acquire, they cost money to store and to look after, which means storage facilities has to be provided so as to   make sure that these materials or items do not get spoilt until they are turned into sellable goods, they do not produce money. When stocks are held, it means tying down capital that would have been used in other areas, so it all represent cost and should be managed properly to acquire efficiently. We must however, hold stocks to meet production needs and sales needs. This is because if we do not hold stocks in sufficient quantities west and the risk of running out of stock. Similarly, if we short of finished goods, we may disappoint our customers. Inventory shortage in both these forms will likely lead to loss of customers and money. For the organization not to have above problems they should strike a balance between too much stocks (over inventory) and carrying too little stock. (Under inventory). This is essentially the importance of inventory management, managing assets of all kinds is basically an inventory problem, the same method of analysis applies to cash and fixed assets as to inventories themselves. First of all, a basic stock must be on hand to hand balance in flow and outflow of items, the size of the stocks depends on pattern of flow whether fast moving or regular items.

Secondly, because the unexpected may occur, it is necessary to have safety stock on hand presenting extra stock to avoid the cost of not having enough to meet current needs.

Thirdly, additional amount may be required to meet future growth needs, these are called anticipation stocks, related to anticipation stock is the recognition that these are optimum purchases size defines as economic order quantity (EOQ)

In borrowing money for buying raw materials for production or purchasing plants and equipments, it is cheaper or more economical to buy more than just enough to meet immediate needs. Manufacturing firms have three kinds of inventories:

1. Raw materials
2. Work-in-progress
3. Finished Goods

1. Raw Materials: inventories are influence by anticipated production, seasonality of production, reliability of resources or supply and efficiently of scheduling purchased and production operations.
2. Work-in-progress:  inventory is greatly influenced by the length of the production period which is the time between planning raw materials in production and completing the finished product. Inventory turnover therefore can be increased by decreasing the production, means of accomplishing these to perfect engineering technician, therefore, spreading up to manufacturing process. Another means is to buy rather than make them. The level of finished goods inventories is a matter of coordinating production and sales.

Holding stocks in whatever form cost money: the capital tied down by the stocks itself has to be serviced by the payment of interest and the land or warehouse needed for the stock has to be bought or rented.

The handling and securing of the stocks and any quality determination that occur also cost money.