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Chapter 5

Chapter 5

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Chapter 5
Chapter 5

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Published by: Terrence on Apr 23, 2010
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Chapter 5 5.

0 Summary, Conclusions and Recommendations Introduction This study was designed with these questions in mind: y To what extent has the adoption of inventory management led to success of small scale business? y How do we lower holding costs and carrying costs of stock incurred by small scale businesses and maximize their profits? y What challenges face adoption of effective inventory management controls?

Summary Extent of the adoption of inventory management in small scale business: Case A-One electronics The researchers established that small scale businesses mostly used inventory management systems and mostly practiced accounting system and internal control system both by 37.5 percent. Classification system and counting system were least used because of time consumption, a lot of paper work involvement and changes in technology. Determination of lowering holding and carrying costs that small scale businesses should incur to maximize profits: Case A-One electronics The researchers established that the business used storage facilities for storing stock. With these storage facilities the business incurred costs of storing stock and holding costs of stock. The business incurred transport costs relating to stock. This is the cost of carrying stock from the storage facilities to the business premises. The challenges experienced in the adoption of inventory management system: Case A-One Electronics From the research findings, it is established that small scale businesses are facing various challenges. The businesses usually have difficulty in reconciling the systems that they use, the

failure of suppliers to supply goods on time, conflicting systems, theft, shoplifting and damages of stock by employees and customers. Action to be taken; y Have strong security controls to avoid shop lifters and theft by customers and employees y y y y The managers and team members should also co-operate Dealing with inventory/stock problems quickly as they occur Use of computers at the sales and purchasing points and stock taking Handling inventory/stock with care by all concerned.

Conclusions From the findings in chapter four and the summary in this chapter, it can be concluded that majority of the organizations in small scale business practice inventory management system. It can be concluded from results that companies are adopting different types of inventory management ranging from classification system, counting system, internal control system and accounting systems. Stock holding costs and stock carrying costs are incurred in businesses that deal with ready merchandise. This is evidenced by the existence of warehouses and stock transport means. It can also be concluded that small scale businesses are faced with a number of challenges that bar the adoption of effective inventory management systems and which can be resolved by the given remedy actions. The research study reveals also that a number of further actions can be undertaken to achieve an effective inventory management systems. The actions are discussed in the recommendations of the study.

Recommendations In light of the above, the following recommendations are made: y y Inventory management should be incorporated in all functions of an organization Inventory management should be driven by the line managers with the objectives of developing the systems all round y Inventory management should be owned by all the employees for it to benefit the entire organization. y Training the employees on ways of handling and managing inventory as well as new employees on stock management and handling. y y Training the managers on internal control. Laying out formal procedures of inventory management of effective inventory management. y y y y Making sure employees and management are involved in the stock management. Improvement of storage facilities. Setting clear inventory controls as well as account for stock on regular periods. Introduction of effective computer systems.

The study inventory management is a new concept because inventory management is a new practice of management in the store and purchasing management. As seen in the background of this study, it is more practical in the western world than in Kenya and it has yield good results. It therefore needs to be explored further in Kenya and clear practice put in place to ensure proper management of the stock for maximum productivity and success as in the western world. Limitations The business in question A-One electronics did not give full information on inventory systems in place in its organization and also the full role the systems play in enhancement of achieving the overall objective of the business, that is, what level of profitability is achieved, fearing exposing confidential information about the business to competitors who are many and are lined up along the same business centre / street.

Areas for further studies as well as suggestions The research has revealed that there is inadequate use of the day technology. Further research is recommended in the following areas; y y Adoption of technology in the small scale businesses Impact of customer satisfaction on sales.

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