At home, we stock supplies of foods, drinks, soap, and many other items, because they make life easier than it would be otherwise. During times of calamities when there is no electricity and gas for cooking, one's stock of canned goods and other ready to eat foods are of great help. Olivario (1998) said that an adequately stocked workstation is essential to someone’s productivity. If someone runs out of supplies in the middle of critical task, one could lose valuable work time by stopping to replenish needed supplies.Also one runs the risk of not completing the task on time.
Inventories include office supplies which is the generic terms that refers to all supplies regularly used in offices by business and other organizations who work with the collection, refinement, and output of information (colloquially referred to as "paper work").Office supplies cost businesses a considerable amount of money every year. Most of these costs cannot be avoided but with some attention and by doing some planning beforehand, a large chunk of these costs can be easily cut. In businesses, office supplies make the employee effective in doing his job. Of course with the aid of technology such as computers, fax machines, photocopiers, and other gadgets, employees are too dependent on the use of office supplies.
Resourcefulness is crucial in any business since most companies nowadays are in financial hardships. So if companies are used to of laying-off employees, there is also a need to extend cost cutting and budgeting in using office supplies.This does not only make one resourceful but also save the company from total financial trouble. So if employees wish to do their part in reducing expenses, they can do it n their own little ways such as wisely using office supplies.
The above mentioned realities prompt the researchers to assess the effectiveness of office supplies inventory management practices of Holy Name University. Theoretical Background of the Study Effective materials management is essential for providing the best service to customers, for producing efficiently, and for controlling the investment in inventories. Successful materials management requires the development of a system involving sales forecasting, purchasing, receiving, storage, production, and shipping.In large organizations, purchases of materials usually are made by the purchasing department, headed by a general purchasing agent. In smaller companies on the other hand, department heads or supervisors have authority to purchase materials as needed. The procurement and use of materials usually involve the following steps: 1) establishing the bill of materials 2) preparing production budget 3) purchase requisition 4)prepares purchase order 5) make receiving report 6) make materials requisition 7) recording receipt and issuance of materials in materials record cards.
The principal forms required in purchasing are the purchase requisition and the purchase order. By the time the materials reach the receiving department, the company usually receives an invoice from the vendor. The invoice and the copy of the purchase order are filed in the accounting department. Invoice approval is important in materials control because it verifies that the goods have been received as ordered and that payment can be made. If the invoice is correct, the invoice clerk approves it and attaches it to the purchase order and receiving report for preparation of a voucher.
Voucher data are journalized, posted to the subsidiary records, and entered in the cash payments journal. Materials and a copy of the receiving report are forwarded to the storeroom from the receiving or inspection department. Admittance to the storeroom usually is tightly restricted, with materials being issued through cage windows. The control of materials also requires a system for issuing materials.
The materials requisition authorizes the storekeeper to issue materials. Electronic data processing for materials requisition could also be used.The system produces materials summaries as needed and updates subsidiary records and general ledger accounts automatically. Inventories serve as a cushion between production and consumption of goods (Carter, 2007). A sound economic justification for the inventory should exist, because each additional unit carried in inventory generates some additional costs. Materials planning deal with two fundamental factors- the quantity and the time to purchase.
The Economic Order Quantity(EOQ) formula can be used to compute the optimum size of a production run.The formula is as follows: Economic order quantity=2x Annual required units x Cost per order vCost per unit of material x carrying cost percentages The EOQ assumes a uniform of materials usage. This formula addresses the quantity problem of inventory planning, but the question of when to order is equally important. Order points are reached when the available quantity is just equal to the foreseeable needs; that is, when the sum of inventory on hand (I) and quantities due (QD) in equals the sum of lead time usage quantity (LTQ) and safety stock quantity (SSQ). In equation form, the point can be expressed as: I+ QD = LTQ + SSQ.Materials control methods differ primarily in the care and cost expected.
They are the order cycling method, min-max method, and just-in-time method. The order cycling method periodically examines the status of quantities of materials on hand for each items or class. High-value, critical items usually require a short review cycle. For low-cost, noncritical items, a longer review cycle is common. The min-max method on the other side is based on the premise that the quantities of most stock items are subject to different limits. A maximum quantity for each item is established.
Min-max can be based on physical observation, or it can be keyed in to the accounting system. Physical observation that an order point has been reached is illustrated in the two-bin method. Under this method, each stock is stored in two bins, piles, or bundles. When the first bin is empty and the second bin is tapped, a purchase requisition for a new supply is prepared. Just-in-time emphasizes that all materials and components should arrive at a work station when they are needed-no earlier and no later.
The more common inventory costing methods are first in, first out (FIFO); average; and last in, first out (LIFO).When materials are issued, the FIFO method assigns them the cost of the oldest supply in stock. The average cost method divides the total cost of all materials of a particular class the number of units on hand to find the average cost. The last in, first out (LIFO) method assigns the cost of the most recent purchase in stock to each batch of materials issued to production.
In periods of rising prices, FIFO measures issued items at lowest costs, LIFO measures them at highest costs, and average costing yields a figure between the two.Proper inventory management and inventory management practices are identical. Therefore, they cannot be separated. If someone says that he is managing his inventory well, it goes with it that he has been applying well-defined inventory management practices.
The Office of the University CIO of Administrative Services of Harvard University states that: “As a University Service Centre, we purchase and distribute technology products that are maintained as inventory until they are sold or used.The following items should be included in inventory: items purchased explicitly for resale; items purchased in quantity for subsequent use; and materials used to produce items for resale. And we highly give emphasis on the proper application of inventory management practices in these inventories. ” Harvard University applies two inventory management practices. The first practice is the control and security of inventory.
Control and security are subdivided into purchasing controls, receiving and shipping control, warehouse security, and tracking controls.Purchasing controls is the proper procurement of inventory items that involves planning, scheduling, policy interpretation, research, negotiation, selection and processing. It also necessitates follow-up with individuals responsible for shipping and receiving to ensure proper delivery and inspection of the merchandise for quantity and quality before acceptance and payment. It is the responsibility of business management to ensure that inventory-purchasing responsibilities are only granted to qualified and properly trained staff.In receiving and shipping controls, the person physically receiving and verifying purchased items must be someone other than the person who placed or approved the order. Individuals who are responsible for the receipt of inventory merchandise must verify that the goods received are the same as those that were ordered.
Inspect incoming shipments for quantity, condition, and conformity with specifications and terms of purchase before they are added to inventories. The packing slip is the documentation that lists the items and quantities shipped and should accompany the shipment.The packing slip is matched to the corresponding automated order information as part of receipt confirmation process with discrepancies clearly documented including items missing, damaged or not ordered. Once items are received, a tracking number should be assigned to each item in the shipment to ensure proper tracking. Moreover, inventory items under warehouse security should be housed in secure locations that are only accessible to authorized personnel. All warehouse facilities should be equipped with key/key card access systems.
Access to inventory warehouses should only be granted by business management. Lastly, all inventory items under tracking control should have specific item or part numbers assigned to them so that they can be tracked in the physical warehouse and in the inventory management system. The second inventory management practice focuses on inventory ordering and vendor payments ; returns. Inventory should be ordered by approved purchasers only using the business’ procurement and inventory system. All purchases should generate a unique system identifier (e. g.
a purchase order number) to facilitate order tracking.All purchases should be in compliance with the UIS/OAS “Purchasing Approval and Signature Authority Policy” and must be approved by business management and transacted through/with qualified University vendors. Payments to vendors must be compliant with the UIS/OAS "Accounts Payable Policy", and should only be made after satisfactory verification of the following: the product has been inspected and is consistent with the product and quantity ordered, the product is deemed free of damage or defects, and the receiving report and packing slip have been verified with the original purchase order.
