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THE IMPACT OF EFFICIENT INVENTORY MANAGEMENT ON THE PERFORMANCE OF MANUFACTURING COMPANIES: A CASE STUDY OF GUINNESS BREWERY NIGERIA PLC.

ABSTRACT

The objective of this study was to examine the trend in inventory management in Guinness Nigeria, Plc investment. Relevant literature was reviewed. In this study, we specified a model which we estimated using Guinness Nigeria conceptually covering (1995 – 2010) period. This was done using ordinary least squares regression techniques and error correction mechanism. The result obtained from the estimation exercise were generally satisfactory and encouraging for Nigerian. However, there were expected in a few cases generally, in conformity with apriori expectation, for example, it was found that inventory management in Guinness Nigeria had a positive e impact on Guinness investment and exchange rate has a negative and significant impact on Guinness investment. The findings have policy implication, that the management of Guinness Benin plant should ensure that issues stakeholders in the organization, especially the workers; ensuring quality in the company’s product are maintained; and ensure a strong exchange rate control in order to check floatation in exchange rate that will increase economic performance.

CHAPTER ONE

INTRODUCTION

BACKGROUND OF THE STUDY

The main objective of establishing most manufacturing business is to maximize profit in enterprises which deals on stock, it is the major determinant of profit to be realized. There is therefore, the need for efficient and effective inventory management and control in manufacturing industries cannot be over emphasized as it the pivot on which business organization rest.

Collins English Dictionary (1985) defines inventory as a detailed list of articles, goods properties and so on. Garet and Silver (1973) define inventory as an idle resources of any kind that possesses economic value. The following important questions are important in stock management:

What goods should be included in inventory?

Why is inventory turnover important?

How is the amount for ending inventory determined?

What metrics or standards are most important for inventory management?

Why is records management important in an inventory management?

How do we prevent loss of stock from fraud, fire, thief etc?

STATEMENT OF RESEARCH PROBLEMS 

The core problem of this research work is to critically examine the management of inventory in manufacturing industries with a particular reference to Guinness Nigeria Plc. This study is specifically designed to provide answer to the following questions:

What is the relationship between average stock and inventory management of Guinness Nigeria plc?

What is the relationship between annual demand, interest paid and inventory management of Guinness Nigeria plc?

Is there relationship between annual turnover and inventory management in Guinness Nigeria plc?

BRIEFS ON GUINNESS BREWERY NIGERIA PLC

Guinness Nigeria, a subsidiary of the Prestigious Diages plc of the United Kingdom, was incorporated in 1962 with the building of brewery in Ikeja, the heart of Lagos. The brewery is the first outside of Ireland and Great Britain. Other breweries have been opened overtime – Benin City brewery in 1974 and Ogba brewery in 1982, Guinness Nigeria produces the following brand:

Foreign Extra Stout (1962) Guinness Extra Smooth (2005) Malta (Guinness 1990), Harp lager Beer (1974), Gordon’s Spark (2001) Smirnoffice is a company that believes in enriching its communities. This it has achieved by embarking on laudable corporate social responsibility project in several communities in Nigeria. These Projects are Water of Life Initative, which currently provides potable to 500,000 Nigerians spread across several rural communities from Northern to Southern Nigeria; Scholarship and Guinness Eye Hospitals in three cities in Nigeria. 

BUSINESS OF GUINNESS BREWERY PLC

On the death of Benjamin, Guinness in 1868 the business was worth over EIM, and the brewery site had grown from Arthur Guinness established the st James Gate Brewery Dublin in 1759. He died in 1303, the business being herited by three of his sons, and subsequently in 1985. the Distiller Company plc in 19 1986, and Buckley’s Brewery plc.

OBJECTIVES OF STUDY

According to Agbonifoh and Yomere (1999) the objectives of a research investigation refers what the study seeks to achieve. This study therefore seeks to achieve the following:

To examine the relationship between average stock and the inventory management of Guinness Nigeria plc.

To ascertain the relationship between annual demand and interest paid and inventory management of Guinness Nigeria plc.

To determine the relationship between annual turnover and inventory management of Guinness Nigeria plc.

RESEARCH QUESTIONS

In this research work the research intends to depict that:

Ho: There is no relationship between average stock and inventory management of Guinness Nigeria plc. Hi: There is a relationship between average stock and inventory management of Guinness Nigeria plc.

Ho: There is no relationship between annual demand and interest paid and inventory management of Guinness Nigeria plc. Hi: There is a relationship between annual demand and interest paid and inventory management of Guinness Nigeria plc.

Ho: There is no relationship between annual turnover and inventory management in Guinness Nigeria plc. Hi: There is relationship between annual turnover and inventory management in Guinness Nigeria plc.

SIGNIFICANCE OF STUDY

Adeyemi, S.L and Salam, A.O (2010), conducted a study on inventory management, and came up with the recommendation that inventory that inventory management is a must for the continuity and survival of any goal focused manufacturing organization.

Inadequate and inefficient inventory management practice is a common thing to behold in most Nigeria manufacturing companies, resulting to poor, ineffective and inefficient production, which adversely affect the overall performance of the organization and sometimes lead to folding up or liquidation of the company. Thus a study of this type is fully justified considering the fact that if inventory are poorly handled or managed, it is likely to negatively affect the business enterprises in terms of delay in production, consumer / customers dissatisfaction and low profit.

This study is also relevant as it helps to balance conflicting objectives such as those associated with stock out and over stocking problem. It is believed that this research work will be of great and importance value of benefit to all business enterprises that are involved in one from or the other in inventory, most especially those in the manufacturing sector.

1.6   SCOPE AND LIMITATION OF STUDY

This research work is centered on manufacturing companies, Guinness Nigeria PLC being a case study. The study is a descriptive one which seek to investigate how Guinness Nigeria plc manages its inventory level that is both raw materials and finished goods. It will also inventory management method adopted in the company, investigation will be carried out to know process involved in the management inventory.

Time schedule for the completion of this research work is actually two short to carry out an intensive and comprehensive study of this type. The researchers observed that availability of only few literatures and this had to be contended with. Financial requirement for this type of study is quite enormous.

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