An evaluation of stock control at a multi-national manufacturing company operating in Malta

Abstract

Purpose: This research evaluates the stock control techniques that a local company operates. Being a manufacturing company, stock is a fundamental current asset and thus stock control techniques are to be in place. Cost reduction techniques are also essential in order to keep the efficiency within the Company. The Warehousing Department has relationships with other departments; the relationship with the Finance Department is analysed in this study. Design The research methodology chosen is a case study using an interview approach. Interviews were carried out with three levels of staff within the Warehousing Department and an interview with the Finance Department. Findings The findings show that one of the main stock control techniques is the periodical stocktake performed twice a year together with random stock checks. The Company tries to hold the right amount of stock; however, forecasts can change in a couple of days leading to either under or over stock. The Company to a certain extent prefers overstocking rather than under stocking and losing the client. There are also physical controls on stock such as security measures on the warehouses. The current IT system of the Company has in place interfaces which might cause errors. The SOX Act affects the internal controls of this Company. Conclusions Stocktakes are performed in a cycle and also randomly which introduce the element of unpredictability. The SOX Act was created for U.S. companies however, as the Company has ties with the U.S., it applies the SOX requirements as well. The Company is going to change the IT system to remove interfaces and to increase the accountability of stock transactions performed. The performance of the subsidiary operating in Malta has impacts on whether to continue operating the plant or not. Implications/values: A company operating in Malta is to be aware of the international legislations that might affect its way of operating due to foreign ties it might have. Integrated IT system is important as to eliminate the errors that arise from interfaces. Having stock control through IT system and stock checks are necessary, however actual physical security measures remain essential to safeguard the stock.