CHAPTER ONE

INTRODUCTION

1.1 Background to the Study

Before the industrial revolution, merchants basically had to write down all the products they sold every day. Then they had to order more products based on their hand- written notes and their gut feelings. This was an incredibly inefficient and inaccurate way of doing business. Merchants couldn’t really account for stolen good unless they did time consuming physical counts on a regular basis. They also had trouble making sure they got the right number of products when orders came in because of sparse record keeping. But it was the best they could.

Luckily, in 1889, a man named Herman Hollerith invented the first punch card that could be read by machines by feeding sheets of papers that have little holes in specific places; people could record complex data for a variety of purposes from censes taking to clocking in and out of work.

This was basically the precursor to computer that can read data in tiny microchips. And Hollerith’s company event went on to from the word’s first computer company. Harvard University took Hollerith’s idea in the 1930s and created a punch card system for businesses. Companies could tell which product were being ordered and also record some inventory and sales data based on punch card customers would fill out for catalogue items. Unfortunately, other management systems used to cost too much and was to slow to keep up with rising business challenges. In the 1960s, a group of retailer (mostly grocery stores at first) got together and came up with a new method for taking inventory: the barcode. There were several competing types of barcodes before they were standardized with the Universal Product Code (UPC) in 1974. It is still the most used barcode in the United States. It is a known fact that “he who fails to plan, plans to fail” (Winston 210). However, it is clear that planning without control is eventually hopeless and waste of time and resources. Historically, inventory management has been referred to as excess inventory and inadequate management or shortage of inventory and adequate management practices. Several penalize could be apportioned to excesses in either direction. Inventory problem has escalated as progress in technology increases the ability of organizations to produce good faster in multiple design variation and greater quality (Letinkaya and Lee, 2000). Since the mid-1980’s inventory management, production planning and scheduling has become the obvious strategic benefit (Larrson , 1915)

Inventories are the stocks of raw materials, work in progress, finished good and supplies held by a business organization to facilitate operations in the production process (pandey, 2005). Inventories can either be assets as well as items held in the ordinary course of business or they can be goods that will be consumed or used in the production of goods to be sold (Green and James, 2000). Inventory is considered to have originated from the military’s need to supply themselves with arms, ammunition, and rations as they moved from their base to a forward position (Cachon, and Fisher, 2000). According to Silver, David and Rein, (1998).

Inventory management is a system concerned with integration of information, transportation, acquisition, inspection, material handling, warehousing, packaging and control of supplies and ensuring security of inventory. Supply chain management is the process of efficiently integrating suppliers, manufactures, warehouses and stores so that merchandise is produced and distributed in right quantities, to service- level requirements. In the retail environment, this process is well known and been in use for a long time (Fawcett et al, 2009), certain organizations such as Wal-Martt and Dell have managed to streamline their supply chain networks to becomes industry leaders.

The term supply chain management can be conveniently divided into two areas: inventory management and distribution. Besides these two areas there are many other decisions critical to streamline the process, such as facility location, material procurement and adapting to changes in the system and environment (Rajeev, 2008). Japanese firms earned more deserved attention in the mid-to late 1980s due to their notable performance on quality and inventory management. In Nigeria, the size of industry, small medium, and large scale, has a significant effect on both the numerical strength of staff and level of involvement in inventory management of both raw material and the finished product. The type of inventory system in practice in any organization depends on many factors among which are economic stability of the place, infrastructure facilities available, transportation network and many more which are called constraints. Inventory control is the supply of good and service at the right time with the right quality and quantity. It reliable means in which business are been managed to ensure customers are satisfied and organization remains in operations via minimization of losses. Inventory management has been a problem to much business organization in Nigeria. According to retail historian, (Rebery Spector).A critical factor for retailers is that they have to have good inventory systems. If the retailer does not have a good inventory system, they will not be able to forecast demands with any kind of accuracy. This might result I them running out of stock every so often (Levinson, 2005), enterprise.

1.2 Statement of the problem

It has been recognized that small and business enterprises have enhanced economic growth of many countries in Europe and Asia and their presence is starting to be appreciated in Africa including Cameroon as they continue to enhance the growth of the economy from the sale and production level. Access to stock management has been identified as a dominant constraint facing the growth of small scale business enterprises. It has also been shown that problem of stock control and management of small scale business enterprises occur mostly in all parts of Cameroon. Small and business enterprises face lots of challenges in Cameroon to manage stock due to the nature of network system and stock management system. Cameroon has valuable human resources for a strong management system. This resources base should provide a platform for the improvement of stock management control system and contribute to the fight against stock irregularities in business enterprises. Inventories are the successful functioning of manufacturing and retailing organizations.

They may consist of raw materials, work-in-progress, spare parts/consumables, and finished goods. It is not necessary that an organization has all these inventory classes. But, whatever may be the inventory items, they need efficient management as, generally, a substantial share of funds is invested in them. Different departments within the same organization adopt different attitude towards inventory. Problems of inventory management and control have been around for a very long time. The need to give out goods when they are readily available and then store it for times of shortage is perhaps the fundamental stock holding problem, which was tackle long ago by man. In a commercial enterprise like Top Charisma, inventory is conducted to ensure that the required systems are place. Inventory is a vital part of current assets (stock) mainly in manufacturing concerns. It consists of stock management in order to evaluate the entries and exit of stock. Huge finds are committed to inventories as to ensure smooth flow of production and to meet customer demand. Inventory Management there plays a vital role in balancing the benefits and disadvantages associated with holding inventory.

Efficient and effective inventory management goes a long way in successful running and survival of business firms, when organizations fail to manage their inventory effectively; they are bound to experience stock out, the decline in productively and profitability, customer dissatisfaction. In the cause of my internship l observed that the enterprise had expired goods in stock because they did not practice inventory management, because of this issue the enterprise was unable to sell the good because they were expired. Based on the above analogy, the researcher was then motivated to carry out a study on the effect of inventory management system on the growth of Top Charisma Yaounde.

1.3 Research Questions

1.3.1   The Main Research Question

The main research question is the effect of inventory management system on the growth of income of an enterprise case of Top Charisma Yaounde

1.3.2. The Specific Research Question: The specific research questions are

1. To what extend does the inventory ordering system affect the growth of Top Charisma Yaounde?
2. To what extend does the inventory carrying system affect the growth of Top Charisma Yaounde?

• To what extend does the inventory sales procedure affect the growth of Top Charisma Yaounde?

1.4. Research Objective

1.4.1. The Main Objective

The main research objective is the effect of inventory management system on the growth of Top charisma Yaounde.

1.4.2 Specific Objectives

The specific research objectives are

I)To know the different inventory methods used by Top Charisma

Ii)  To know the other factors used to determine the growth of Top Charisma

Iii) To know the other factors that determines the performance of inventory management.