A major sources of great concern to manufacturing companies has been the all-important, all pervading recurring issue and question of inventory management. This is understandable; as a dominant constituent of current assets is attributable to the very nature of inventory and the fact that it is among others, a potent tool for cost reduction.
The importance of inventory management as a tool for cost reduction cannot therefore be over emphasized since it has been established to play leading role in the continued efficient and profitable productive existence of any manufacturing organization. For that reason, the trust of this research work is essentially to analyse the importance of inventory management, its problem and solutions and as a tool for cost reduction will Nigerian breweries plc 9th mile corner, near Enugu as a case study.
The data for the research work were collected and collated through the use of questionnaires and personal interviews systematically designed and administered on the respondents. Four department of the company were used for the survey and ninety copies of the research questionnaires were returned. Analysis of the data collected was based on the use of simple percentages.
The research findings shows that effective inventory management enhances efficiency, accountability and reduces cost in Nigeria breweries PLC 9th mile corner. First-in-first-out method of stock valuation was highly favoured.
In line with the objectives of the research recommendations were made, which when properly implemented will help the company immensely. Sequel to the research findings, it is recommended that manufacturing companies should strive to determine the level of stock, the optimum stock to maintain so as to in equilibrium between safety and profitability and thereby reduce cost.
With this adhere to the performance of manufacturing companies in Nigeria will improve tremendously.
“Inventories” and “stock” are used interchangeable in this study.
The most significant component of current asset of majority of predominately large manufacturing companies is constituted by inventories or stock. It has been stated that.
“On an average, inventories are approximately 55% of current assets in public limited companies.
Evidently therefore, the above statements is an affirmation that the greater proportion of the valid, both quantitatively and qualitatively, of what a manufacturing company produces is ascribable to or a factor of the material cost. This element of cost, in other words, represents a large percentage of production cost and as such, special and careful consideration must be given to materials acquisition, storage and usage. Ben. O. Nweke (Collins) (2000) affirmed this much when he asserted that.
“The holding of these ingredients in the from of stock at a reduced cost serves an important management function. Permits continuous production to meet the need of the consumer at a reasonably cost and time”. Different components of stock are raw materials, work-in-progress and finished goods. Raw materials are those basis input materials that are converted into finished goods through the manufacturing process and they include the units of input, which have been purchase and store for future production.
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