Procurement and Inventory Management Essay Example | Topics and Well Written Essays - 2500 words

Procurement and Inventory Management - Essay Example There is also very high cost of stocks which occur as a result of the unskilled staff failing to compare prices from a number of suppliers. There is poor record keeping technique such that it is always hard for the company management employees to retrieve updated data along with more current entire company's level of stock. It is also hard for the auditors to retrieve the same data a thing that will result in improper auditing thus creating room for theft in the company. The resultant effect is failure in closely controlling the company's working capital thus failing to monitor correctly the true business progress. The whole system lacks accountability due to the fact that stock control and purchasing performance are not very well monitored making the staff determine their own precedence thus unbalanced cost considerations a thing that can greatly contribute to the failure of the company. Invoices are settled without a delivery proof or even a certification as to whether the items received are the actual quantities reflected in the invoice. This has seen the company loose cash as a result of buying similar items from a supplier at varying prices. The company has been greatly undermined by the suppliers who feel that Sound Electric Ltd has poor specifications. There is lack competition when it comes to purchasing, requires no confirmation as to the obligations met by the contractors, does not negotiate for price reduction, lacks knowledge on suppliers cost, the company's contracts fails to have conditions attached and lacks important knowledge about the contractor's financial capability. The company has been favouring a single supplier a thing that has led the supplier enjoy monopoly in supply, contracts and money orders fails to have price quotations and lastly the unskilled staff failed in the production of the documents involved in procurement. There is ineffective cost control in each and every project of Sound Electrical limited. This is because the concerned staff member fails in putting together the cost figures for each project of the company. The scattered cost figures of the company will never allow an effective cost control measure to take place thus Sound Electrical limited will end up losing a lot of money as a result. It has resulted into increased workload for the company's property administrator making it impossible for him to carry out his duties effectively. With such increased workload the property administrator will be confused on which contracts should concentrate on and he will end up doing very little as opposed to when the workload is manageable. This has in return interfered with the contracting, tendering and the cost of control, making it almost impossible to handle twenty contracts at a go. There has been considerably increased expenditure on miscellaneous purchases following the fact that some purchases are made by the Manager in charge of the head office post room while others are