Impact of stock taking as a control measure in manufacturing company (a case study of dangote flower mills ilorin)


Attempt has been made in this project to discuss generally and analyze the impact of stock taking as a control measure in manufacturing company in Nigeria today, Dangote Flower Mills Ilorin is being chosen as a case study.

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Attempt has been made in this project to discuss generally and analyze the impact of stock taking as a control measure in manufacturing company in Nigeria today, Dangote Flower Mills Ilorin is being chosen as a case study. Stock taking is an act of verifying inventory in the store while purchasing could be defined as the function which is responsible for the procurement of equipment, materials, suppliers and services required in an organization for the use of production in accordance with the standards perforation, in the most efficient and economical manner. This project is divided into five chapters, the chapter one present introduction of the topic, statement of problems, objective of study, significant of the study, scope of the study, limitation of study, historical background of case study and definition of terms. Chapter two deals with the literature review. Chapter three contains research design and methodology, area of the study, sample frame/population, instrument for the data collection, and methods of data research question. Chapter four presents presentation analysis of data, data interpretations, and analysis of data. Chapter five shows the summary of the findings, conclusion of the findings and recommendation. References.  


Title Page                                                                                i

Certification                                                                                      ii

Dedication                                                                               iii

Acknowledgement                                                                   iv

Abstract                                                                                  vi

Table of Contents                                                                    vii


1.1     Introduction                                                                   1

1.2     Statement of Problems                                                   5

1.3     Objective of Study                                                                   5

1.4     Significant of the Study                                                 6

1.5     Scope of the Study                                                        7

1.6     Limitation of Study                                                       7

1.7     Historical Background of Case Study                                     7

1.8     Definition of Term of Historical Background                11


2.1     Classification of Stock Items                                          13

2.2     Stock Turnover, Requisition and Issues of Stock                    14

2.3     Stock Valuation Receipt and Issues of Stock                18

2.4     Stock Taking Reclamation, Procedure and Principle     20

2.5     Duties and Responsibilities of Stock Keeper                           23


3.1     Research Design and Methodology                                29

3.2     Area of Study                                                                29

3.3     Sample Frame/Population                                             30

3.4     Instrument for the Data Collection                                30

3.5     Methods of Data Collection                                           31

3.6     Methods of Data Analysis                                             32


4.1     Presentation Analysis of Data                                       34

4.2     Data Interpretation                                                        34


5.1     Summary                                                                       45

5.2     Conclusion                                                                     46

5.3     Recommendations                                                                   47

References                                                                      51

Questionnaire                                                                52



Stock taking is the physical verification of the quantities and condition of items held in an inventory, as a basis for accurate inventory audit and valuation. Stock taking is necessary to ensure that the stock records are accurate.

Regular stock taking is an essential element of a loss minimization strategy. The process helps you to compare actual stock levels with the stock levels based on your ordering records.

A company is expected to maintain adequate stock of material for a continuous supply of raw material to the factor for an interrupted production It is not possible for a company to procure raw material whenever it is needed, and more so the finished goods manufactured by a company cannot be sold of the sometime, a time log exists between demand for material and supply.

The procurement of material may be delegated because of such factors as strike, transport , disruption, short supply etc therefore there is a need for a firm to maintain sufficient stock of raw material at a given time to streamline production to maintain the concept and conservation of account. The continuity existence to adequate raw materials for economics purpose.

The control of inventories and management of store house in common with the other major branches of commercial and individual work become specialist activities.

The stores should be considered as a temporary location for materials needed for operational purpose and should be planned, organized and operate in such a way that the period of residence of each stock items is as short as possible consistent with economic operation.

In general, if demand is steady or highly predictable then we should store for very short period if at all when demand is highly unpredictable then storage for longer period may be necessitated.

There is no standard system of store keeping which and universally recommended or applied but in the course of me certain principle and practices of more or less general application haven been involved large sums of money are involved and it is essential or organic to stock management or sores function so that the investment is kept to the minimum from the stores point of view the most important thing is to keep the quantities of incoming goods in their appropriate and respective position and necessary records and transaction follows immediately shortage must be avoided or else production line will have to stop.

At the same time for much must not be delivered or it will clog up the ware house and perhaps also the production area, apart from the fact that excess deliveries will be tie up more capital.

It is well known that most materials will determined in store in the course of time and the fact that a building is provided for storage in itself an acknowledgement that some degree of production is required.

Large stores are generally term describing goods which are hold in storehouses and stock yards.

The bulk of those goods usually intended for this in connection which production or operation activities, but the expression “stores” also course finished product waiting to suppliers.

The store plays an important role in advisory on the quantity of items to be stocked, and disposal of obsolete materials.

The objectives of store function are: –

  • To make available a balance flow of raw materials components tools equipment and any other commodities necessary to meet operation requirements.
  • To provide maintenance materials spares and general storage for community of existence.
  • To receive and issue work — in — progress and finished production. Production is not completed until it goes to final consumers.
  • To accept other discarded materials as it arises.
  • For the efficient operation of the stores system and for the achievement of the stated objectives. It is necessary for an organization to have a strong stock control procedure.

A great attention should be focused on the operation of the stores because of general scarcity of materials vis — a — vis the higher cost of material and equipments.

The rationale behind stock or inventory management or stores function involves: –

  1. What things to keepings stock
  2. When to order those things
  • What quantities of them to order

Most factories stock some very expensive items as well as some very cheap one and use some perhaps once in a year while other may be required at a rate of hundred in a day in deciding what to stock, unit cost, rate of usage, lead time, deterioration, obsolescence, stock facilities and capital must be carefully considered.

It is therefore follow that before a system of storage and stock control can sensibly be desired account must be taken of the nature and need of the organization.


This study is aimed at finding out the following problems facing manufacturing industries with particular reference to stock taking as a control measure.

  1. To verify the accuracy of store record
  2. To compare the balance sheet records with physical verification.
  3. To disclosed the possibility of fraud (Thief /Loss)
  4. To reveal if there is any weakness in the system for the custody and control of stocks.


This research like any other is carried out in order to achieve some objectives such as:

  1. To identify problems associated with carry out effective inventory management or stock function.
  2. To ascertain the problem of ineffectively handling of stock (problem definition).
  3. To forestall the possibility of fraud occasional by theft/loss (Analyzed the problem & prevented of loss).
  4. To resolve the level of stock to be added when inventory should be replenished.
  5. Order quantity problem i.e. colour, brand, size etc


The study will enable the management of any organization to: –

  1. Identify any pay attention to their role in ensuring smooth stock management so as to achieve the corporate goal and objective of the company.
  2. Identify the effectiveness and efficiently of the organization through the stock management skills or techniques.
  3. Show how organization should carefully pay attention to receiving and issuing of materials the level at which it is necessary to place an order and with what quantities.
  4. Give an overview of the experience to the management and accounting students who may like to carry out a similar research in the future.


This will cover all aspect of stock taking as it affect manufacturing industries the survey is a case study of Dangote Flour Mills Industries Limited Ilorin Kwara State. The study was design to operate within the frame work of its objective to examine the impact and effectiveness of stock taking as employed by the company.


This study would have broader scope but for the following factor: –

Money and time have been the major constants on work of this nature. However the research accepts that time has plugged the overriding factor militating against the study.

People even after proper identification still find it difficult to part with some vital information which will be of great help to this work as they entertain fears that such information might be sold for industrial espionage.


Dangote Flour Mills Plc commenced operations in 1999 as a division of Dangote Industries Limited (DIL). One of Nigeria largest and fastest growing conglomerates following the strategic decision of Dangote Industries Limited to unbundled if various operations, Dangote Flour Mills was incorporate in 2006 when Federal High Court sanctioned a scheme of arrangement in all the asset, liabilities and undertakings of the yeast while flour division of Dangote Industries Limited was transferred to Dangote to Dangote Flour Mills.

From an initial installed capacity of 500 MT per day at its Apapa Mill, Dangote Flour has expanded rapidly by opening on quick successions three other flour mills are in Kano (2000), Calabar (2001) and Ilorin (2005).

Each of the mills started with an installed capacity of 500 MT per day but all of them have subsequently expanded resulting in a total installed capacity of 5, 000 MT per day distributed as follow: –

Apapa                  1,000 MT             Per day

kano                     500 MT                Per day

Calabar                1,500 MT             Per day

Ilorin                              1,000 MT             Per day

These expansions were in response to a growing national demand for flour and based products in addition to the company’s drive for increased market share. Thus from a modest beginning the company has growing to become one of the industry leaders within a six years period. The company has 3 wholly owned subsidiaries namely: –

Dangote Agro Sack Limited

Dangote Pasta Limited

Dangote Noodle Limited

In line with Dangote Industries Limited business philosophies of establishing a dominant presence in any sector it operate in these subsidiaries occupy leadership position in their respective industries.


The company is in the business of flour milling processing and marketing of branded flour. Its product port-folio comprises the following:

  • Bread Flour
  • Confectionery Flour
  • Semolina and
  • Wheat Offal (Bron)

Wheat is transformed into high-quantity flour, by using state of the art plant and equipment backed by renowned technical expertise Dangote Flour Mills across the country equipped with the least flour milling technology available in the word.


The company import its principal raw materials wheat (the hard Red winter wheat No. 2 variety) from united state of America in shiploads, Wheat Silo trucks (also Dangote Industries Limited Owned) there after convey the Wheat to the inland mills to Kano and Ilorin.

Alhaji Aliko Dangote holds the position of chairman of the board of direction at Dangote Flour Mills Plc. In addition he occupies the post of Dangote group’s president and chief executive officer. He also serves on the board of National Council of Nigeria Vision, Mohammed Bello endowment for justice and jurisprudence, Kano foundation, the Nigeria Economic submit group African Petroleum Plc, National Investment Promotion Council and the heart of African (a management group on Nigeria Image Project) etc Alhaji Aliko Dangote Graduated in Business from Al – Azahar University Caire, Egypt

NAME                                     CURRENT POST

Alhaji Aliko Dangote              Chairman of the Board

  1. Samuel Legal Advisor, secretary

Rohit Chavdhry                      managing director

Shuaibu Idris                           Executive Director

Olakule Alake                          Director

Uzoma Nwankwo                    Director

Sani Dangote                           Director

Abdullahi Mahmond               Director

  1. Teidi Director

Abdul Dantana                        Director


There are some terms that are common in the economic and marketing circles and the definition of such term are enumerate below.


The middle person can be defined as any individual or a group of individuals or an organization that serve as a link between the companies and its market.

The middle person to any firm includes, the firms market, the firms suppliers and of course the firm intermediaries.


The market refers to the place where products and services and their competitive substitutes are brought and sold, an opportunity to sell, or the demand for goods and services. It is also a set of potential or real buyers or a place in which there is a demand for products or services.


The suppliers are individuals or business that provides resources needed by a company in order to produce goods and services.


Market intermediaries is also known as middlemen or distribution intermediaries. It is an important part of the product distribution channel. Intermediaries are individuals or business that make it possible for the product to make it from the manufacturer to the end user, essentially facilitating the sales process.




STOCK CONTROL:Alex Mornison M. (1981) defined cost control in the operation of continuously arranging receipt and issues so that stock balances are adequate to support the current rate of consumption with due regard to economics.

Alex Mornison M. 1981 defines Stock Taking “as process of physical verification of quantities and condition of goods”.

STORAGE: – Comprise the management of store house and


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