IMPACT OF INVENTORY CONTROL MANAGEMENT SYSTEM ON ECONOMIC GROWTH IN NIGERIA

CHAPTER ONE

INTRODUCTION

1. Background of the Study

Inventory control is an extension of stores keeping and it has been in practice for a long time. It has a wide scope of activities today. Inventory control is an act of safe keeping some valuable items for future use and to produce them when the need arises. Inventory control goes beyond the scope of keeping and producing the items only but also involves controlling of operations, receiving, quality control activities, training of store staff, control of all store houses, stock handling as well as clerical documentation.

Inventory control can be defined as an act and science of achieving the objectives of inventory in an organization. It involves planning, organizing, staffing controlling and coordinating all the inventory operational activities for the provision of efficient services. The primary function of inventory control is to provide for efficient inventory and handling of goods to be redistributed to the ultimate user, this activity when carried out with the use of information technology (IT) will make recording of materials easy as the information are already in the computer.

The use of information technology in controlling of inventory eliminates time wastage.

Business in Nigeria has been classified as micro, small, medium and large. However, these classifications can be explained by the criteria of project costs, capital, number of employees, sales volume, annual business turnover and the financial strength. Any business or enterprise below the upper limit of N250, 000 and whose annual turnover exceeds that of a cottage industry currently put at N5, 000 per annum is a small scale industry (Ayozie et al., 2016). The number of employees employable by Micro, Small and Medium Enterprises range from 1-250 (Uche, 2020).

According to the Ministry of Industry, Trade and Investment Nigeria’s over 37.07 million Micro, Small and Medium-scale Enterprises, (MSMEs), account for more than 84 per cent of jobs in the country. It also accounts for about 48.5 per cent of the gross domestic product, GDP, as well as about 7.27 per cent of goods and services exported out of the country. Of the total number of MSMEs, micro enterprises account for the bulk of the Micro, Small(MSMEs) in Nigeria, with 36,994,578 enterprises (about 99.8 per cent), while small enterprises took 68,168, and medium enterprises 4,670 (Times, 2020).

From the above illustration the importance of Micro, Small and Medium-scale Enterprises, (MSMEs), cannot be overemphasized. From job creation, to shrinking of income disparities, Micro, Small and Medium-scale Enterprises, (MSMEs), are the engine room for the development of any economy because they form the bulk of business activities in a growing economy like that of Nigeria. That goes to show the indispensable part and indefatigable role Micro, Small and Medium-scale Enterprises, (MSMEs), play in our economic prosperity. Therefore this project is aimed at exploring alternative way of implementing an inventory system given the inability of Micro, Small and Medium-scale Enterprises, (MSMEs), to adopt state of the art technology because of lack of access to funds, digital divide etc.

Among the identified problems plaguing Micro, Small and Medium-scale Enterprises, (MSMEs), in Nigeria is the use of obsolete business methods, and equipment, as a means of maintaining stocks and inventory which do not tally with modern business procedures (Ayozieet al., 2016). This is rooted in lack of capital or inadequate capital to buy the stocks and equipment, lack of requisite education, training, digital exposure and social economic instability experienced in the incessant devaluation of Naira, the country’s currency which makes it impossible or financially suicidal to buy equipment which are often imported into the country from abroad. The focus of this study is the exploration of an Enhanced Inventory Control management system which is targeted at Micro, Small and Medium sized enterprise in Nigeria. An inventory control management system is the combination of technology (hardware and software) and processes and procedures that oversee the monitoring and maintenance of stocked products, whether those products are company assets, raw materials and supplies, or finished products ready to be sent to vendors or end consumers (Pontius, 2020). A complete inventory management system consists of:

A system for identifying every inventory item and its associated information, such as barcode labels or asset tags.
Hardware tools for reading barcode labels, such as handheld barcode scanners or smart phones with barcode scanning applications.
Inventory management software, which provides a central database and point of reference for all inventory, coupled with the ability to analyze data, generate reports, forecast future demand, and more.
Processes and policies for labeling, documentation, and reporting. This should include an inventory management technique such as Just in Time, ABC Analysis, First-In First-Out (FIFO), Stock Review, or another proven methodology.
People who trained to follow these policies and processes.

In this Project, we try to explore ways in which we can Enhanced inventory control management system in Nigeria. We implement novel methods for identifying and keeping track of stocked goods using the existing equipment which may be unaffordable to most Micro, Small and Medium-sca in Nigeria. We hope to contribute to the adoption of Modern practices and technology by (MSMEs) because we believe that it would go a longway in enabling their business practices and therefore have a ripple effect and impact on the economy in general.

1.2 Statement of the Problem

The following are problems experienced by Micro, Small and Medium-scale Enterprises, (MSMEs) in Nigeria as a result of inability to existing technology in inventory control management system:

General inefficiency due to the usage of old or manual means of record keeping.
Inability to have a timely and current status of their stocks.
Inability to keep accurate record and track of their stocks.
Inability to plan and take timely decision because of improper or distorted knowledge of the inventory.
Loss of stock through pilfering which may arise as a result of improper records.

1.3 Aim and Objectives of the Study

The Aim is to develop an Enhanced Inventory control management system that is targeted at the Micro, Small and medium scale enterprises. The specific objectives are:

Design an intuitive inventory control management system tailored to meet the specific needs of the organization.
Design the system to be scalable, allowing for the accommodation of growing inventory volumes, and adaptable to changes in business processes and technological advancements.
Develop a user-friendly and intuitive inventory control management system tailored to meet the specific needs of the organization.
Perform evaluation of the implemented system by assessing its impact on operational efficiency, reducing costs related to stock outs or excess inventory, and improving overall financial performance.

1.4 Significance of the Study

The implementation of this system would solve the following problems:

Enhance the efficiency and productivity of Micro, Small and Medium Enterprises in Nigeria.
It would serve as an alternative and affordable Inventory System for MSMEs.
Reduce pilfering in the business environment.
Ensure accurate records of goods purchased.
Provide an accurate view of the quantity of goods in stock at any particular point in time.

1.5 Scope of the Study

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