Sie sind auf Seite 1von 2

Date: 20 August 2016

The Management,
Central Ventilation Systems, Sharjah
United Arab Emirate
Dear Sir,
I started working in the stores on the 02 August 2016, under the supervision of Aiza and Junar.From general analysis
and from experience they are putting efforts but the system is not how it supposed to be. Inventory Management is
a key area in an organization which have so much effects on a companys financial statements. Below is a step by step
analysis for how the CVS stores is in operation.
1) MATERIAL REQUISTION: Material for Production, Office supplies and Maintenance are not properly requested
for, from the stores. Worker collect items without Material requisition note. The are two main reason for this
-The Item Immaterial (is off less value) based on the Store Keepers judgment or may be the companys standard
-Secondly because the item is has never been in the stock ledger from the beginning, which mean it has never been

STOCK COUNT: Most items in the stock records and different from the physical stock in the stores, that is
why sometimes the stores run out of stock for some items and sometimes even have excesses. The main cause of
this is because the item is not monitor in the system and physically, moreover people collect items without
Material requisition note and lastly they may be theft of items because the stores in open to everyone .

3) MID AND MONTH END STOCK COUNT: The is no mid and month end stock count in the stores to know the
actual physical inventory and reconcile with the stock records and with the finance department. I will recommend
that there should be mid and month end Inventory count in the stores a carry out by all workers in the stores and
one person from the finance department this will give the actual inventory in stores and also reconcile with the
account to give and correct value of Inventory.
4) ITEMS IDENTIFICATION: It is very difficult to identify items in the stores because they are not in the stores
record and they dont have item numbers and sometime when an item is requested and the store keeper cant
identify or dont know the items they will say the item is not available and they will resort to make a Purchase
requisition and afterwords it will be discovered that the items was in stock and therefore we shall have an excess
in the stock which is not good for the company, I therefore recommend that items in the stores should be prenumbered to have a unique item number for easy identification.
5) OBSOLETE ITEMS: There are items in the store which is not in use again, the maintenance department should
therefore carry out an assessment of stock items which are out of date or obsolete then see if the can be repair or
can be sold as scrap to rain some income before those items cannot even have a scrap value.
6) VALUE OF ITEMS: Most if not all item in the stores record dont have value or cost price, therefore we cannot
determined the total values of our Inventory in the stores at a particular point in time. I know the finance
department may have the value for Inventory, but the questions is how accurate are those figures when the stores
does not have values for that inventory and there is not reconciliation of the stores and the finance department with
regards to inventory of the company. This is one of the most sensitive part of a company which mostly under looked
my most management of a company. The effects of this will be analysis in the conclusion.

7) PRODUCTION ITEMS ARE DOUBLE DISPATCH: Some ducts are double dispatch to the client, which means
these items are double manufactured and double dispatch to client. The main reason for this is because some
items have the same item is very doubtful that this items are design for manufacturing, issued for
manufacturing, tested or check for quality and send for dispatch before the error is identified, after which the
client have already received the items. This should be improve on and the CAD operator should check and reconcile
quantity ordered and designed items before issuing for manufacturing.
8) DOCUMENTATION: The stock ledger does not carry a soft copy of Material requisition and Purchase requisition
in the stores. I therefore recommend that store should create a MR and PR index which all MR and PR are scan
and Hyperlink in the system
9) RESPOSIBILITIES: Responsibility should be clearly define in the stores department and all workers should be
collaborate and work towards a common objective
From the above analysis we can conclude that inventory value in the financial statement of CVS is no accurate:
And this can overstated or understated:
If inventory is Overstated profit too will be overstated and vice versa in the Statement of financial performance
(Income Statement). Secondly if Inventory Values is misstated or not accurate, current asset in the statement of
financial position will be misstated and this will affect our liquidity ratio analysis that is how we have cash
which can pay our current liabilities.
If Inventory is not properly documented there will be lack of audit trail and evidence in time of Audit
Lastly In case of natural Disasters if Inventory value is not accurate I will be difficult for Insurance to pay for
loss of Inventory because the inventory value was inaccurate.
From analysis the problems in the stores was from inception so measure need to be taken to adjust that department. It
is a process of change and it must be handle with care and slowly results will be achieved
The main reason for Inventory management is to keep stock at it minimum level, so that we dont have stock in excess
because cash will be tide down in inventory.
Secondly we carry out inventory management so that we can prevent stock out. Therefore we need to keep stock
level at the equilibrium,
Thirdly we keep Inventory management records for safety of Inventory and prevention from theft and account
Inventory management is one of the most sensitive areas in the management of the company. So management must be
critical about it and apply caution in adjusting this department in order to get good reason.
This report is from own point of view and from pass experience