CHAPTER ONE

INTRODUCTION

1. BACKGROUND OF THE STUDY

Stock-taking management is an ongoing and dynamic process. To keep out the inefficiencies in system, process and physical operations, calls for active management participation and continuous improvement in all processed and systems that are involved in stock-taking management. It is all about knowing what is on hand, where it is in use, and how much finished product results. Stock-taking can mean different things and depends on the industry the firm operates in. It includes; Raw materials and components from suppliers, Work in progress or part finished goods made within the business, Finished goods ready to dispatch to customers ,Consumables and materials used by service businesses. Lysons (2006) says that, stock-taking management involves a process of efficiency overseeing the constant flow of units into and out of an existing stock-taking. This process usually involves controlling the transfer in of units in order to prevent the stock-taking from becoming too high, or dwindling to levels that could put operation of the company into jeopardy.

Competent stock-taking management also seeks to control the costs associated with the stock-taking, both from the perspective of the total value of the goods included and the tax burden generated by the cumulative value of the stock-taking. Stock-taking managers are concerned with cost, criticality and contribution of their holdings, ordering and maintaining stock-taking has several costs. These include capital costs, administrative cost, storage charges, shrinkage, taxes and insurance. Most of these vary directly with the average quantity of stock-taking held. Obvious strategies for cost avoidance would be reduce or eliminate inventories. That probably cannot be done in very many cases. Most Firms in the United States of America, west and Eastern Europe determine the level of stock-taking necessary to provide an acceptable level of customer service and manage that size of stock-taking as efficiently as possible.

According to Ballou(2000) Firms like Nissan uses Just in Time method of Stock-taking management hence keep zero or very minimal stock-taking. Stock-taking availability is the most important aspect of customer service. The goal of stock-taking management is therefore to increase financial returns on stock-taking while simultaneously increasing customer service levels (Frazelle, 2002). In this context, the primary goal of stock-taking is to provide the right item, at the right location and time, at the lowest cost. To meet this goal, stock-taking professionals work with two major (and sometimes conflicting) objectives in mind: Maximize customer service (that is, provide material when the customer needs it) and minimize stock-taking dollars (that is, control the number of dollars invested in parts and material). Transit agency executives are interested in meeting both of these objectives. Stock-taking management departments must work with purchasing departments and customers to reconcile the two conflicting objectives. Sumil (2007) states that, stock-taking management requires demand forecasting that is having some record of what sold and what did not sell through the year. Analyze that data. Break the stock-taking down into categories and try to correlate the categories with customers. Trends or patterns will likely emerge. Depending on what business you are in, these might correspond to the rhythm of the seasons, or they could relate to the financial year ends of your biggest customers.

Organizations use stock-taking control to minimize idle time caused by shortage of stock-taking and non-availability of inventories as per requirement to keep down capital investment in stock-taking. According to Sumil(2007), increasingly integrating financial data such as accounts receivable with sales information that includes customer histories is what most firms do. The goal is to control stock-taking quarter to quarter so it does not come back to bite the bottom line. Key components of an integrated system are general ledger, electronic data Interchange, database connectivity and connections to a range of vertical business applications.

According to Lyson (2006), accompany recognizes that customer is always the ‘’King’’ thus the organization ensures the availability of materials in the store so as to prevent any disruption during production process. The company recognizes that customer satisfaction in a manner that the stock-taking control managers defines how often stock-taking levels are reviewed to determine when and how much to order. It is performed on either a perpetual or a periodic basis. Stock-taking manager’s implements stock-taking on the basis of forecasted demand of product availability.

1. STATEMENT OF THE PROBLEM

The introduction of stock-taking in the hotel industry is one of the most important tools for organizational management and profitability; however there are some challenges to the efficiency of stocktaking of food and beverages in the hotel industry. Some these challenges are:

1. The quantity of the food and beverages
2. The quantity of food and beverage and
3. The management policy or organizational culture

Lastly there have been series of study on stock taking but not even a single study has been carried out on the influence of stocktaking in the management of food and beverage in hotel industry; hence a need for the study.

1.3 AIM AND OBJECTIVES OF THE STUDY

The main aim of the research work is to determine the influence of stocktaking in the management of food and beverage in hotel industry. The specific objectives of the study are:

1. to determine the importance of stocktaking in the management of food and beverage in the hotel industry
2. to determine the relationship between stocktaking and the management of food and beverages in hotel industry
3. to examine whether the nature of food and beverages affects the efficiency of stocktaking in the hotel industry
4. to find out if the quantity of food and beverage affecting the stocktaking the hotel industry
5. to investigate other factors affecting stocktaking in the management of food and beverage in hotel industry

1.4 RESEARCH QUESTIONS

The study came up with research questions so as to ascertain the above stated objectives of the study. The following research questions guide the objectives of the study:

1. What is the importance of stocktaking in the management of food and beverage in the hotel industry?
2. What is the relationship between stocktaking and the management of food and beverages in hotel industry?
3. Does the nature of food and beverages affect the efficiency of stocktaking in the hotel industry?
4. Does the quantity of food and beverage affecting the stocktaking the hotel industry?
5. What are the factors affecting stocktaking in the management of food and beverage in hotel industry?

1.5 STATEMENT OF THE HYPOTHESIS

H0: stocktaking has no influence on the management of food and beverages in hotel industry

H1: stocktaking has influence on the management of food and beverages in hotel industry

1.6 SIGNIFICANCE OF THE STUDY

The study the influence of stocktaking in the management of food and beverage in hotel industry will be of immense benefit to the hotel and catering industry. The study will explore the benefits of stocktaking and how it can enhance profitability and accountability in the hotel industry. The findings of the study will educate the hotel industry on how to know the opening and closing stock so as to ascertain goods available for sales. The study will serve as a repository of information to other researchers and students that desire to carry out similar research on the above topic. Finally the study will contribute to the body of the existing literature on the influence of stocktaking in the management of food and beverage in hotel industry.

1.7 SCOPE OF THE STUDY

The study the influence of stocktaking in the management of food and beverage in hotel industry will cover the benefits of stocktaking and how it can enhance profitability and accountability in the hotel industry and how to know the opening and closing stock so as to ascertain goods available for sales

1.8 LIMITATION OF THE STUDY

Financial constraint- Insufficient fund tends to impede the efficiency of the researcher in sourcing for the relevant materials, literature or information and in the process of data collection (internet, questionnaire and interview).

Time constraint- The researcher will simultaneously engage in this study with other academic work. This consequently will cut down on the time devoted for the research work

1.9 DEFINITION OF TERMS

Stocktaking: Stock-taking or "inventory checking" or "wall-to-wall" is the physical verification of the quantities and condition of items held in an inventory or warehouse. This may be done to provide an audit of existing stock.