ASSESSING THE EFFECT OF STORES MANAGEMENT ON ORGANIZATIONAL PERFORMANCE: A CASE STUDY OF KAMPALA PHARMACEUTICAL INDUSTRIES

INTRODUCTION

1.1 Background of the study

According to Richard et al (2009) organizational performance encompasses three specific areas of firm outcomes; financial performance which is concerned with profits, returns on assets, and return on investment; product market share and shareholder return that involves total shareholder return and economic value added. Therefore organizational performance comprises the actual output or results of an organization as measured against its intended outputs which are its goals and objectives (Jabareen, 2009). It deals with the relationship between costs or inputs and the revenue from outputs and shows how the system is efficient (Konke, 2003).

Organizations that do not increase performance quickly lose competitive advantage. Increases in performance can be gained by increasing output while input remains the same, increasing output while input increases at a slower rate, maintaining the same output while the input decreases or by declining output while input falls at a faster rate (Needharm & Dransfield, 1995).

According to Miller 2010, a professionally managed store has a process and a space within, to receive the incoming materials (Receiving Bay), keep them for as long as they are not required for use (Custody) and then to move them out of stores for use (Issue). In a manufacturing firm this process forms a cycle to maintain and run the activities of Stores (Kortz 2003).

 

Stores management is the following of certain activities that are managed through use of various resources in a store (Dimitrios, 2008). Store management involves the lanning, control of issues of stores (Kortz 2003).  The objective of store management is to efficiently and economically provide the right materials at the time when it is required and in the condition in which it is required (Ogbo & Onekanma, 2014).

The role of the store manager hence is to receive the goods and act as a caretaker of the materials and issue them as and when Production demands it. Needless to say store management activity does not add any value to the product but may be costly if poorly managed (Schonsleben, 2000). The organization has to spend money on space that is to say expenditure on land, building and roads, equipment, machinery and other facilities provided such as electricity, people (salaries and wages), insurance, maintenance costs, stationary, communication expenses and the cost to maintain the inventory among others (Ogbo & Onekanma, 2014).  All of these get added to the organizational overheads and finally get reflected in the costing of the finished product.

With increasing need for effective operations management, Kampala pharmaceutical industries now requires that costs and cost centers be well managed and controlled. Consequently stores as a cost centers must be well managed. In practice Kampala pharmaceutical industries limited spend an inordinate amount of resources (i.e. time and money) managing and directing their suppliers to ensure that critical inventory/stock levels are maintained and the vital flow of product needs for operations continue. Kampala pharmaceutical industries stores are set up to provide safe custody of its properties and goods Ayad, 2011. Kampala pharmaceutical industries ensures that there are proper stock control systems and adequate measures to prevent abuse, unauthorized disposal of serviceable stores for personal gain, misappropriation of the assets and theft (Mulondo, 2010). Thus, the study will make an assessment on the effect of stores management on organizational performance, a case study of Kampala pharmaceutical industries.

1.2 Statement of the problem

Performance of Kampala pharmaceutical industries in terms of profits, sales, revenues is low due to the numerous challenges especially materials overstocking which eventually get expired or out dated, under stocking, lack of stock-taking, theft of materials by workers and delays in deliveries of materials into the organizations among others (Mulondo, 2010). It is against this background that the study seeks to assess the effect of stores management on organizational performance.

1.3 Purpose of the study

The purpose of the study will be to make an assessment on the effect of stores management on the performance OF Kampala pharmaceutical industries.

1.4 Specific objectives

1. To examine the objectives of store management at Kampala pharmaceutical industries.
2. To establish the performance of Kampala pharmaceutical industries.
3. To establish the relationship between stores management and performance of Kampala pharmaceutical industries.

1.5 Research questions

1. What are the objectives of store management at Kampala pharmaceutical industries?
2. What is the performance of Kampala pharmaceutical industries?
3. What is the relationship between stores management and performance of Kampala pharmaceutical industries?

1.6 Scope of the study

Content Scope

The area of the study will be carried out at Kampala pharmaceutical industries. The study will be interested in trying to understand the objectives of store management, the performance and the relationship between stores management and performance.

Geographical scope

The study will consider 2012-2016 as the period of data to be considered in the organization.

Time scope

The study will be carried out for a period of four months from February to May, 2017.

1.7 The Significance of the study

1. Other stakeholders such as customers, suppliers who need knowledge about stores management can use the research as a reference.
2. The findings will help customers by receiving good service from the organization as a result of the improvement in store management practices in the organization.

• Stakeholders will find it useful since they will be able to know about the performance of store management in the organization and its general performance.

1. Suppliers will help the findings useful since they will have access to know the criteria followed in store management in the organization.
2. The research will benefit the management and the workers of the organization to know why there are challenges in their stores management system and what to do to improve stores management since the research will be conducted among them.
3. The study findings will to be useful to future researchers who will be studying a similar topic as they will use it as literature review.