Abstract

This study is carried out at GMC SARL IN DOUALA and the aim was to determine the effect of stock management on the performance of manufacturing company. Specially, the study is aim at establishing the relationship between organizational performance non one hand and inventory turnover, holding cost on the other hand.

Data was collected through the use of questionnaires and analyses using the ordinary least squares technique. Correlation was use as a base to test the presence of multicollinearirty. From findings, it was evident that all the variables constrain passed the test and there exist no multicollinearity.  This analysis always permits the data for further analysis. Thus, further analysis was carried out and hypothesis was tested.

From the test of hypothesis, inventory turnover rate as a measuring variable constrains in influencing performance whereas lead time and holding cost resulted to be significant it was just judged that inventory turnover rate is policy decision making while lead time and holding cost not effective for decision making. The study recommended that GMC SARL should develop a policy framework to facilitate faster implementation of the best inventory management practice such as JIT.

CHAPTER ONE

INTRODUCTION

1.1 Background to the study

Discovering and maintaining optimal level in all type of inventories and minimizing the flow of goods from the point of origin to the point of destination (customer) is the main objective of management inventory (knot 2005). Inventory planning and management aim to determine the basic elements of supply chain management (what to order, when to order, how to order) and placing these elements into action.

Inventory management before the industrial revolution in the world was very primitive. shop keepers and merchants had to rely on their hand-written notes to place orders and control their stocks. It was extremely difficult to account for stolen goods because it will take shop keepers hours or even days to hand count all physical inventories to see if anything was missing (McCarthy, 2018).

Herman (1889) designed the first punch card which was inserted into a computer that read them and eventually passed the information to the storeroom which would then bring the item to the customer. Harvard university was inspired by Hollerith’s idea and created the first modern checkout system which used punch cards to generate billing and manage inventory (McCarthy, 2018) this automated system process was able to manage stocks which was a huge task at the time in USA thereby improving the performance of most organization.

Woodland &silver Bernard (1950s) discover barcoding system was introduced. The where several competing types of barcodes before the where standardized with the universal product code (UPC) IN 1974 and it is still the most used barcode in the US. In the mid-1990s, companies all over the world from the developed world and started experimenting with inventory management software that will record data as product where scanned in and out of the warehouse. Now even small and medium size businesses can find affordable inventory management software’s to meet their needs (Robert Lockard, 2013)

Later on, the radio frequency identification, it was one of the most amazing technology that was discovered by Walton (1983). It’s had microchips that transmits product information that contains everything that is relevant to a business owner and employees. It is faster and can read and count much information per second by adopting the frequency identification, its led most organization all over the world including Africa towards organizational performance as it reduce cost, improved supply management effectiveness by increasing the ability tract and locate equipment’s as well as monitoring theft prevention, distribution management and customer billing.

Inventory management is the backbone of every retail company and the supply management is general and will greatly affect the performance of a business. It is a process of ensuring that a company the company always has products that its needs at hand and its keeps cost as low as possible. They are several reasons to hold stock. Too much stock could lead to funds being tied down, increase in holding stock courses deterioration, obsolete and theft of material and shortage of material could lead to interruption of product for sale, poor customer relations and underutilisatzed (buffer & saran, 2007)

A company’s inventory is one of its most valuable assets whether in a rental or in a manufacturing business. A shortage of inventory when and where it is needed can be extremely detrimental. However, a large inventory carries a risk of spoilage, theft, damage or shift in demand these reasons, inventory management is very important for business of any size. haye (2019) started knowing when to restock inventory, what amount to produce or purchase what to pay as well as when to sell and what price can easily become a complex decision.

Depending on the type of business or product being analyzed. a company will use various inventory management method such as just in time [JIT] manufacturing/material requirement planning [MRP], economic order quantity [EOQ]. Carlson [2019] justified that just in inventory strategy involves ordering and receiving inventory for production and customers sales only as it is needed to produce goods just in time manufacturing method allows companies to save significant amount of money and reduce waste keeping only the inventory they need to produce and sell at the moment. However, Jit can be risky because if demand unexpectedly rises,

The manufacturer will not be able to source the inventory in needs to meet the demand thereby damaging its reputation with customers and driving the business to competition. material requirement planning[MPR]is another inventory management method which is based on sales forecasting, this mean that manufacturer must have an  accurate sales record to enable accrete planning of  inventory needs and  to communicate those needs with  material suppliers in a timely manner.it enables production  planner to match supply and demand efficiently by forecasting the amount and type of product needed for future projects while also tracking the number of materials needed for current ones (Orlicky, 1975). For example, an egg tray producing company such as GMC SARL using the MRP inventory system will ensure that its production materials will be in stock based on past order.

1.2 Statement of the problem

Nothing reduces assets utilization and impact on customer service more than having maintenance or repair jobs delayed because  the right parts are not in stock  [jephson,2021].inventory planning and management reduces out of stock and overstocking.it is not unusual for some organizations to have more funds invested and still not be able to meet customers` demands because of poor distribution of investment among inventory items (Temeng et al, 2010).Efficient and effective inventory management goes a long way in successful running and survival of business firm. When organization fail to manage their inventory effectively; they are bound to experience stock out, overstocking.

GMC SARL Company still faces the problem of overstocking of inventory. Egg trays are been produced in huge amount without any hope of selling them. This problem affects the organization because capital is been tied up in the form of inventory and also huge amount of money is required to maintain these egg trays in order to avoid them from being destroyed. This therefore reduces the performance of the company because finance which would have been used to carry out other activities of the organization in order for them to grow larger is being used to maintain obsolete and over stocked inventory

1.3 Research questions

1. To what extent does inventory management rate affect performance of GMC SARL?
2. What influence does inventory lead time have on the performance of GMC SARL?
3. To what extend does holding cost affect the performance of GMC SARL?

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