CHAPTER ONE

INTRODUCTION

1.1      Background to the study

Although the origins of inventory management techniques are unclear, it is safe to say that some of the first pioneers of this field were merchants and shop keepers. Inventory management before the Industrial Revolution was very primitive (Balda, 2018). Shop keepers and merchants had to rely on their hand- written notes and gut feelings to place orders. It was extremely difficult to account for stolen goods because it would take shop keepers hours or even days to hand count all physical inventory to see if anything was missing. To be fair, the scale of operations back then was extremely small when compared to those of today, so there was no push to improve efficiency (Anafu, 2018).

The forerunner to the modern barcode was created in the late 1940s. In the 1960s, a group of retailers invented the modern barcode to track inventory. (David, 2009) Overtime, inventory tracking by hand was replaced by scanning products and inputting information into computers by hand. In the early 2000s, inventory management software’s were developed such that barcode readers could instantly update their databases. Recently, International Standards for Inventory Management ISO 9001brings a unified method for stock control in all categories of companies (small, medium or large) and sectors of which the brewery industry is no exception. As much as the ISO 9001 is a quality management standard, applying the principles could bring many benefits to a business.

Inventory is a vital part of current assets mainly in manufacturing organisations that needs high level of attention. Inventory consist of raw materials, work-in- progress and finished products. Huge findings are committed to inventories as  to ensure smooth flow of production so as to meet up with customer demands. Inventory management also entails holding or carrying and opportunity costsenabling it to play a crucial role in balancing the benefits and disadvantages associated with holding inventory. (Okoro, 2016).

Inventory management as explained by Lavely, (1996) is an active control programme that permits firms to govern the running of the various departments in the organisation that is the production, research and development,  purchasing, marketing, human resource, accounting and finance. Inventory control and management are pivotal to a firm as such, mishandling of inventory endangers a firm’s capacity to do practical and useful activities (Sprague et al, 1996). The financial supremacy and inventory management malfunction may have a direct influence on the firm’s equity capital, output and customer services. The concept of inventory management suggests that the formation of inventory positioning and well calculated objectives will improve on the organisational performance (Vergin, 1998).

Inventory management techniques is a huge determinant for the prosperity or downfall of a business for huge reduction of investment in working capital and exceptional operational performance will affect the organised management and orderly control of inventories either negatively or positively (Mittal, et al., 2014). Thus, according to Gupta (2012), the overall calculated business objective should be inventory management since it has a remarkable capacity on the performance of the organisation. This is further supported by Chalotra (2013), who states that well established inventory management levels outcomes by intensifying competitive ability and market share of firms, companies can experience high-ranking competition and high-level of financial performance from correctly controlled inventories.

In present day, supply chain, holding and warehousing inventory plays an important role in a firm. Logistic cost survey in Europe identified the inventory cost to be 13% of the entire logistic cost while 24% was accounted for warehousing (Baker, 2007). Inventory management techniques provide great potentials for firms to reduce costs and improve customer services performance (Jeffrey et al, 2008). Therefore, by reducing and minimising costs from inventory means saving money which can be used to increase profit in the firm thereby improving performance.

1.2  Statement of the Problem

Looking at existing literature, there is an inclusive view that proper inventory management techniques will lead to an increase in productivity. At first glance it seems obvious that implementing proper inventory management techniques

will instantly improve the productivity of any company (David, 1996). However, a careful assessment of firms that have implemented proper inventory management techniques show mixed results since some have been successful while others have failed (Agu, 2016).

Research Questions

The main research question of this study is: “To what extend does inventory management techniques affects the productivity of alpha marine limbe?” The specific objectives are;

• To what extend does the ABC technique influence the productivity of alpha marine limbe
• What is the influence of Economic Order Quantity on organisa- tional productivity of alpha marine limbe?
• To what extend does Just-In-Time Inventory system affect the productivity of alpha marine limbe?

1.3  Objectives of the Study

The objectives of this study will be classified into main and specific objectives. The main objective of this study is to investigate the effect of inventory management techniques on the productivity of alpha marine limbe

The specific objectives include to;

1. Determine the effect of ABC technique on the productivity of alpha marine limbe.

1. Evaluate the influence of Economic Order Quantity on the productivity of alpha marine limbe.

• Assess the effect of Just-In-Time technique on the productivity of alpha marine limbe.