Académique Documents
Professionnel Documents
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Learning Outcomes
Discussion Areas:
Routine stores operations- Inspections,
receiving, issuing & returns of goods( works &
services).
Inventory Control(stores & other non stock items
& its objectives
The concept of Inventory Management and the
relevant systems.
Optimizing the Inventory management process
Receiving Process(Goods)
Receive the goods the delivery notes,
parking list & the invoice;
Marshal the goods to the receiving &
inspection bay & record/post the receipts in
a transit location;
Arrange for the inspection of the receipts;
Upon inspection receive the inspection
report and act on the recommendations;
Receiving Process(Goods)
If accepted create a GRN: forward the
GRN, inspection report, delivery note and
invoice for payment processing.
If rejected in part/whole: write a letter to
the supplier to collect the defective goods
within a stipulated period.
Recording of goods
Recording of inventory is the responsibility
of the procurement function.
The records of inventory should be
maintained in the inventory master for
stock items.
The records of non-stock items can be
maintained in a ledger, asset register or a
bin card.
Recording of Inventory
All the inventory records should be
updated.
Discrepancies must be investigated;
where necessary approvals sought for
adjustment.
Tools, equipments and other assets
issued to staff should be recorded in their
personal a/c.
Recording of Inventory
Staffs to whom any asset is issued should
annually report on their condition.
Incase of the need to replace an asset
issued to staff, where possible the
old/damaged asset should surrendered.
The cost of missing/lost/damaged assets
in the hand of any staff should be
recovered.
The asset ledger should stored under lock.
Open Forum
Discussion on the receipt of:
a) Partial delivery of goods
b) Works with part progress payment made
c) Consultancy service
d) Receipt of other Assets(Non stock items)
How to explain the receipt of goods in the
store the end up in disposal?
How do explain payment of hot air
Inventory Management
Inventory management encompasses the
activities of forecasting and product
replenishment.
It is concerned with:
a) When to order products,
b) How much to order
c) The most effective source of supply for
each item in the warehouse
Approaches to Inventory
Management
Economics of Inventory
Management
Cost of acquisition: pre-order placement
costs, order placement & post order
placement costs.
Holding costs: cost of insurance, losses
in value, alternative cost of capital held in
stock, storage, labour cost & record mgt.
Cost of stock out: lost production, cost of
idle time, cost of action taken to manage
stock out & loss of customer goodwill
Inventory Metrics
Cash-to cash cycle time: The cash
conversion cycle (CCC) is a metric that
expresses the length of time, in days, that
it takes for a company to convert resource
inputs into cash flows.
Average inventory: An average of
beginning and ending inventory. Formula:
{Inventory (current period) + Inventory
(prior period)} 2.
Inventory Metrics
Inventory turns(Inventory turnover
ratio) is calculated by dividing the cost of
goods sold for a period by the average
inventory for that period.
Fill rate: The fill rate is the fraction of
customer demand that is met through
immediate stock availability, without
backorders or lost sales
Inventory Metrics
Obsolete inventory: The value/proportion
of inventory rendered obsolete(over a
period)
Damaged inventory: The value/ proportion
of inventory rendered unusable as a result
of damage/deterioration(over a period)
Average stock out period: The average
reference period in which a given material
remains out of stock(Months,weeks,days)
Management of Inventory
Responsibilities of the Accounting Officer:
a)To ensure that all inventory, stores and assets
purchased are properly accounted for.
b)To ensure that all inventory are put to proper use
as intended by the procuring entity.(section 162(1))
c)To enforce policy issues set out by the Cabinet
Secretary specifying the life span of each category
of items before boarding for disposal. (section
162(5)).
Management of Inventory
Responsibilities of the Head of
Procurement:
a)Shall arrange for occasional visits of inspection to
the stores, at least quarterly in each calendar year.
b)Shall conduct quarterly and annual inventory and
stock taking in order to ensure compliance with all
respective governing laws and submit the report to
the accounting officer.
Management of Inventory
Responsibilities of the Head of
Procurement
c) Shall ensure that the stores, inventory and assets
that are procured by a public entity does not suffer
deterioration from any preventable cause and
overstocking of any particular item shall be
avoided.
d) Shall receive requisitions for assets or stores
from users
Management of Inventory
Responsibilities of the Head of Procurement
e) Authorize material issues to the requisitioners
NB: The position of the inventory management
roles at the top level of the organization signifies
the importance attached to the function.
Open Forum
What inventory management systems do
we have in place?
What risks are associated with inventory
management in your organization.
How can the PPADA 2015 be useful in
optimizing the inventory control &
management function.
QAC