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DISPOSAL PROCEDURES AND LEVELS OF UNWANTED
STOCKS IN PUBLIC INSTITUTIONS
(A CASE STUDY OF THE MINISTRY OF PLANININIG AND NATIONAL
DEVELOPMENT, NAIROBI KENYA).
BY: ABDIKANI HASSAN GEDI
BSP/14949/71/DF
A RESEARCH REPORT SUBMITTED TO THE SCHOOL OF BUSINESS AND
MANAGEMENT IN PARTIAL FULFILMENT OF THE REQUIREMENT FOR
THE A WARD OF A DEGREE OF BACHELOR OF SUPPLIES
AND PROCUREMENT MANAGENENT OF KAMPALA
INTERNATIONAL UNIVERSITY
APRIL, 2010.
DECLARATION
I ABDIKANI HASSAN GEDI do hereby declare that "DISPOSAL PROCEDURES
AND LEVELS OF UNWANTED STOCK IN PUBLIC INSTITUTION" CASE
STUDY- MINISTRY OF PLANNING AND NATIONAL DEVELOPMENT, is entirely
my own work and that it has not been submitted before to any other university or institution
of higher learning for the award of a degree.
Signature . .. ~ . . ... ~ .. . .... .. C/11, !tfi<IL 1 ~0/ 0·
Date ... . ................................... .. . .
APPROVAL
This Research proposal has been submitted for examination with my approval as the
candidate's university supervisor.
Name of the Supervisor: Micheal Ruteganda (AC.LS)
Signature
Date .. 9. _c:_t \ <? ~-1. \() ..... .
ii
DEDICATION
This research project is dedicated to my father, mother, brothers and sisters who are living example of
unconditional love and supp01t, also to my learned supervisor Mr.Micheal Ruteganda, for his wisdom and
insight throughout the writing of this research project. Your encouragement kept me going.
Nothing in life is more important to me.
I love you all.
iii
ACKNOWLEDGEMENT
I first and foremost give thanks to Allah for his divine help, strength and direction and may peace and
blessing be on our beloved prophet Muhammad (S.A.W). lam grateful to my supervisor Mr.Micheal
Ruteganda ,for his valuable time, guidance, continuous assistance and invaluable professional guidance
which enabled me to successfully complete this project in time. His encouragement, constructive criticism
went a long way in making this projects a success. I particularly thank all the lecturers at the school of
Business and management, KIU more especially Madam Sarah Katumba for their contribution throughout
my study in one way or another.
I sincerely acknowledge the support given to me by my wonderful and beloved parents Hajji Hassan Gedi
and Hooyo Qorder Saney since they have been a source of both inspiration as well as my role models.
Iam especially grateful to my uncle Abdirashid, my brothers Abdirahman(Generater),
Abdijabar,Yassin,my sisters Hawa,Hubi,Athar,Malyun and Amina Hassan who encouraged me
to go this far.
My appreciation goes to my discussion mates the likes of Muhumuze Jude, Sande Jeome, Julius,
Tayebwa Seth, Owembabazi Enid Sharon and Abas Mlinga, for sharing their knowledge and experience
throughout my stay in the university.
Special thanks goes to my friends Hussein Huri, Abdiweli, Abdirisaq Loki, Abdiaziz, Said power,
Abubaka,M.Ismail,Hawadle,Qathar,Shaks,Abdirahim,Yaska,Husseiney,AhmedHargeisa,Dakane,Nunez,
Farhiya Abdullahi and Fatuma Ali to mention a few for their advice and encouragement for the success of
this project.
I finally extend my thanks to all those who in one way or another contributed to the completion of this
dissertation.
iv
TABLE OF CONTENTS
DECLARATION ............................................................................................................................. i
APPROVAL ................................................................................................................................... ii
DEDICATION ............................................................................................................................... iii
ACKNOWLEDGEMENT ............................................................................................................. iv
TABLE OF CONTENTS ................................................................................................................ v
LIST OF ABBREVIATIONS AND ACRONYMS ...................................................................... ix
CHAPTER ONE .............................................................................................................................. !
1.0 Introduction ................................................................................................................................ I
1.1 Background of the Study ........................................................................................................... 1
1.2 Statement of the Problem .......................................................................................................... .3
1.3 Purpose of the Study ............................................................................................................... .4
1.4 Objectives of the Study .............................................................................................................. 5
1.5 Scope of the Study ..................................................................................................................... 5
1.6 Significance of the Study ........................................................................................................... 6
1.7 Conceptual Framework .............................................................................................................. 6
1.8 Conclusion ................................................................................................................................. 7
CHAPTER TWO ............................................................................................................................. 8
LITERATURE REVIEW ................................................................................................................ 8
2.0 Introduction ................................................................................................................................ 8
2.1 The Causes of Unwanted Stock ................................................................................................. 8
2.2 Disposal Management ............................................................................................................. 10
2.3 Methods of Disposal ................................................................................................................ 11 V
2.3.1. SalebyTender ..................................................................................................................... 11
2.3 .2 Transfers to Other Institutions .............................................................................................. 12
2.3 .3 Return to Suppliers ............................................................................................................... 13
2.3.4 Sale by Public Auction ......................................................................................................... 13
2.3.5 Sale to a Scrap Stockiest or Dealer. ..................................................................................... .! 4
2.3.6 Sale to Employees ................................................................................................................. 14
2.3.7 Recycle ................................................................................................................................. 14
2.3.8 Dumping, Burning and Burying ........................................................................................... 15
2.4 Why do Organizations Hold Stocks? ....................................................................................... 15
2.5 The Problems Encountered in the Disposal Process ................................................................ 16
2.6 Reducing the Occurrence of Unwanted Materials .................................................................. .18
CHAPTER THREE ....................................................................................................................... 19
RESEARCH METHODOLOGY .................................................................................................. 19
3.0 Introduction .............................................................................................................................. 19
3. I Research Design ...................................................................................................................... 19
3 .2 Sample Size and Study Population .......................................................................................... 19
3 .3 Source of Data ......................................................................................................................... 20
3 .3 .1 Primary Data ......................................................................................................................... 20
3.3.2 Secondary Data ..................................................................................................................... 20
3.4 Data Collection ........................................................................................................................ 20
3.4.lQuestionnaires ....................................................................................................................... 21
3.4.2 Interview ............................................................................................................................... 21
3.5 Data Analysis ........................................................................................................................... 21
vi
3.6 Data Processing ....................................................................................................................... 21
3. 7 Data Presentation ..................................................................................................................... 21
3.8 Shortcomings of the Study ....................................................................................................... 22
3 .9 Conclusion .............................................................................................................................. .22
CHAPTER FOUR ......................................................................................................................... 23
DATA ANALYSIS, PRESENTATION AND FINDINGS .......................................................... 23
4.0 Introduction ............................................................................................................................. .23
4.1 Research Findings ................................................................................................................... .23
4.1.1 Items commonly disposed of ................................................................................................ 23
4.1.2 Who does the organization think is responsible for the occurrence of unwanted stocks? ... 24
4.1.4 The Methods Used for the Disposal of Items ....................................................................... 28
The results are summarized in the table 4.1.4 and figure 4.1.4 respectively ................................. 28
4.1.5 The problems encountered during the Disposal Procedures ................................................ .30
4.1.6 The challenge of maintaining unwanted stocks within the organization ........................ 31
4.1.8 The Effectiveness of the Public Procurement and Disposal Act (2005) .............................. .33
4.2 Analysis ................................................................................................................................... 34
CHAPTER FIVE ........................................................................................................................... 36
CONCLUSION AND RECOMMENDATIONS ......................................................................... .36
5.0 Introduction ............................................................................................................................. .36
5.1: Conclusions ........................................................................................................................... .36
5.2 Recommendations ................................................................................................................... .37
5.3: Suggested Areas for Further Research .................................................................................. .39
vii
REFERENCES ............................................................................................................................. .40
APPENDIX ONE: ........................................................................................................................ .42
QUESTIONNAIRE ...................................................................................................................... .42
APPENDIX TWO ........................................................................................................................ .48
PROJECT BUDGET .................................................................................................................... .48
APPENDIX THREE: .................................................................................................................... .49
TIME PLAN ................................................................................................................................. .49
APPENDIX FOUR ........................................................................................................................ 50
MAP OF NAIROBI ....................................................................................................................... 50
viii
ICT
IPR
KIU
MPND
PPDA
MRP
EU
HQ
GOK
VFM
UGSHS
LIST OF ABBREVIATIONS AND ACRONYMS
Information connnunication technology.
Independent Procurement Review.
Kampala international university.
Ministry of state for Planning and National Development
Public Procurement and Disposal Act (2005)
Material requirement planning.
European union
Head quarters.
Government of Kenya.
Value for money.
Uganda shillings.
ix
CHAPTER ONE
1.0 Introduction
In this chapter the researcher explored the study's back-ground, as well as outlining the problem
under study. This chapter also deals with the objectives of the study both the general and specific
objectives. It further deals with the research questions as well as the significance of this study. It
also highlights the limitations of the study while offering definitions of some terms used in the
research.
1.1 Background of the Study
Materials management activities play a key role in ensuring proper service delivery within the
public service. In particular closer attention is paid to provision of materials with the help of the
employees.
Fearon (1973) defines materials management as the single manager organization concept,
embracing, planning, organizing, motivating and the controlling of all those activities and
personnel principally concerned with the flow of materials into an organization.
Proper implementation of the materials management function helps in solving the following
problems:
► High prices for materials and equipment used.
► Slow inventory turn-over
► Poor employee morale
► Increase of materials obsolesce and scrap
► Poor quality control measures
1
The occurrence of unserviceable, obsolete or surplus stores, assets and equipment in public
entities occur primarily due to poor materials management policies. The government in the
recent past has observed that there was an increase in unserviceable, obsolete and surplus stores
within its stores. Thus the government on 26th October, 2005 made into law the Public
Procurement and Disposal Act No'.3 of 2005. The purpose of this act was to enhance
accotmtability, integrity, confidence, fairness, transparency and value adding in the interest of the
country.
The act established procedures for efficient public procurement and for the disposal of
unserviceable, obsolete or surplus stores, assets and equipment by public entities and provides
for other related matters.
Lysons (I 996) contends that in truth, stock can be a nuisance, a necessity, or a convenience. This
depends on the inventory management techniques in place. Organizations such as government
institutions, manufacturers, healthcare institutions and other service providers place stock in a
subsidiary rather than a central position. However, it is an important element in operational
effectiveness and always appears on the balance sheet as a cun-ent asset, tying up capital.
Jessop and Mon-ison (1994) recommend that materials held in stock that is unlikely to be used
should be disposed of. He recommends some common approaches to the disposal of unwanted
stocks such as:
I. Circulate other potential use
2. Negotiate with the supplier on a return price.
3. Sell by tender
4. Sell by auction
5. Sell to a merchant or dealer
2
6. Sell to employees
7. Give to a 'deserving cause'
8. Recycle
9. Dismantle for spares
10. Dump, Bury or Burn
Wild (1994) contends that proper materials management decisions will be instrumental m
reducing the occun-ence of unwanted stocks.
Zenz (1998) implored that materials management concept brings together under one manager the
responsibility for determining the manufacturing requirements, scheduling the manufacturing
process, storing and disposing materials. As such, it is concerned with the control activities
involved in the acquisition and use of materials employed in the production of an end product.
Bailey et al (1998) contend that at it is important to examine why that unwanted stocks have
occuned in order to put in place measures to control a repeat occurrence. A careful consideration
of the reasons for the unwanted stocks can have a profo1md effect on the economies of an
organizations operation.
1.2 Statement of the Problem.
The procurement function is a very important depru.iment in any organization be it in the public
or private sector. The department utilizes 50% of its fiscal budget in the provision of materials,
however, there is a colossal amount of unwanted stock in government wru.·ehouses leading to a
waste of tax payer's money that could have otherwise been put into more lucrative use.
Since the introduction of the Public Procurement Act 2005 the issue of unwanted stocks worth
millions is still held at government warehouses is being addressed. Such unwanted stock that has
3
been attributed to the old traditional procurement where by the purchasing department purchased
goods without consulting the user department in order to identify their need.
Organizations or firms that lack proper guidelines regarding the procedures or methods for the
disposal of unwanted stocks, often find themselves incu1Ting additional carrying and holding
costs associated with this fowl of inventory.
In some circumstances the procurement department is required to look for alternative places to
store their inventories since those items occupy the available storage space within the stores.
This mainly occurs in organizations where no measures exist to help in the identification of
unwanted stocks.
In an increasingly changing procurement environment where activities performed by staff are
value adding to the organization as a whole. The proper disposal of items is crncial activity
towards the cost reduction objective of the purchasing function. The disposal process will
encompass the following activities; timely identification, the appropriate disposal method to be
used, the valuation of items and their handling and also the reduction of the unwanted stocks in
the organization. It is therefore imperative for an organization to develop adequate measures for
dealing with the disposal of items in order to reduce the expenses brought to the organization
through inventory holding and maintenance costs.
1.3 Purpose of the Study
The purpose of the study is to assess the disposal procedures used in the disposal of scrap,
surplus, unserviceable and obsolete items in the minist1y of planning and national development.
4
Research questions
1. How is disposal procedures and levels of unwanted stocks applied in the Ministry of
planning and national development?
2. What are the roles/benefits of disposal procedures and levels of unwanted stocks in the
Ministry of planning and national development?
3. What are the problems of carrying out disposal procedure and levels of unwanted stocks at
the Ministry of planning and national development?
1.4 Objectives of the Study
Specific objectives
1. To identify how disposal procedures and levels of unwanted stocks applied in the Ministry of
planning and national development.
2. To identify the roles/benefits of disposal procedures and levels of unwanted stocks in the
Ministry of planning and national development.
3. To find out the problems of carrying out disposal procedures and levels of unwanted stocks
at the Ministry of planning and national development.
1.5 Scope of the Study
The study was carried out from the MinistJy of planning and national development headquarters
located in community in the city of Nairobi.
The respondent included purely the employees of Ministry of planning and national development
especially procurement staff and other user departments. They sought to identify how disposal
procedures and levels of unwanted stocks are applied at the Ministry of planning and national
development.
5
1.6 Significance of the Study
1. This research will provide to the procurement functionaries in the public institutions
about the importance and value of developing and maintaining proper disposal
procedures.
2. This research will show that proper disposal is important m improving materials
management activities of an organization.
3. Students of supplies and procurement will learn in detail the importance of the disposal
process from this research.
1.7 Conceptual Framework
Conceptual framework is the link between independent and dependent variable in the research
project. It explains the topic by defining the variables within the topic. Independent variables,
control, influence, determine and predict the dependent variables. The intervening variables work
with the independent variables to influence the dependent variables.
For the purpose of this study, the independent variable will be disposal procedures and the
dependent variable will be level of unwanted stock. The intervening variable may include:
Technological advancement, political instability, poor management, lack of proper guidelines in
the Public Procurement and Disposal Act and the attitude of employees towards the process of
disposal and incorrect specifications.
This can be illustrated using the diagram as shown below:
6
CONCEPTUAL MODEL
INDEPENDENT VARIABLE INTERVENING VARIABLE DEPENDENT VARIABLE
Disposal procedures • Technological Level of unwanted advancement stock
• By tender
• Political instability • Obsolete • Transfer to other a a
institutions .
Poor management Scrap • • • Recycle • Surpluses
• Public auction
• b
a- Indirect influence
b- Direct influence
This leads us to the topic as stated: "Disposal Procedures and Levels of Unwanted Stock".
1.8 Conclusion
This chapter has provided us with a perspective from which to examine disposal procedures
fonnulated in Kenya and the relationship it had with the unwanted stock in public institutions. It
introduced connection between disposal procedure and levels of unwanted stock. I now move on
the next step which is to provide the necessary literacy background for the entire study.
7
CHAPTER TWO
LITERATURE REVIEW
2.0 Introduction
In this chapter the researcher outlines the opinions of various authors and scholar with Regard to
the disposal procedures and levels of unwanted stock in public institutions. This chapter is
divided into the following areas for ease of understanding.
1. The reasons for the occurrence of stocks necessitating disposal.
2. The management and methods applied for disposing such stocks.
3. The problems that are encountered during the disposal of goods.
4. The possible measures that can be put in place to reduce the occurrence of disposable goods.
Over the years many public institutions have lost value for money on their investment because of
the occurrence of unserviceable, obsolete and surplus materials in inventory .Very few authors in
the recent past have focused their attention on the disposal procedures and its implications
towards organizations profitability.
Jessop and Morrison (1994) assert that any material held in stock which is unlikely to be used
should be disposed off.
2.1 The Causes of Unwanted Stock
Baily et al (I 998) acknowledges that despite the considerable efforts being made by the
procurement function in improving materials management in many organizations some obsolete,
unserviceable and surplus stocks occur necessitating disposal.
8
There is therefore a need to critically examine why such stocks have occurred. The reasons for
the occurrence of such materials are many and vary depending on the organization and its nature
of operation.
Jessup and Morrison (1994) explain that redundant materials can arise as a result of over
ordering in manufacturing organizations. Failure by an organization to relate stock levels to
declining production of ce1tain lines results in the accumulation of raw materials and parts that
are no longer utilized.
Lenders and Fearson (1998) further attribute this occurrence to unexpected changes in the pattern
of demand of particularly a problem where 'fashion' is a consideration. Such stock where the
need against which it was purchased has ceased to exist is often said to be obsolete.
In many industries, regular arising of scrap in the four of cuts, tunings, residues, production
rejects and waste materials arise in normal production activities.
According to Bally P (I 991) the occurrence of disposable stocks occur mainly due to
organizational policy problems e.g. where an organization purchases some capital items in the
form of machinery and equipment for performing non-core activities with time such equipment
is subject to technological obsolescence.
He also identifies the existence of inefficient stock control measures within organization as a
contributing factor towards occUITence of disposable materials.
Lysons and Gillingham (2000) blame the occurrence of disposable materials on provision of
incorrect specifications by an organization to its suppliers leading to the delivery of material that
cannot be utilized by the organization. In some other cases, there is a duplication of a materials
description i.e. whereby two different names are used to describe the same item.
Breakages and deterioration of materials in the stores are also identified by Jessop and Morrison
(1994) as causes of disposable materials. Poor handling of materials in the stores causes
breakages which renders such materials un-usable in production process. Where inefficient stock
9
preservation and storage methods are used stock deterioration occurs due to the following
reasons:
1. The inherent nature of the materials such that they deteriorate in time such as unstable
chemicals.
2. Inadequate packages that fail to preserve the materials during storage.
3. Damage to materials through accident or bad handling.
Many organizations are continuonsly increasing their stocks m order to meet increasing
production. This trend may lead to overstocking whereby a lot of stock is held by the
organization in order to avert possible production stoppages thus holding a lot of stocks-in
anticipation of expected price increases or possible material shortages, Baily et al (1998).
2.2 Disposal Management
Lysons and Gillingham (2000) recommends that before the disposal of materials is carried out
the following consideration should be considered.
1. Whether the materials can possibly be used elsewhere in the organization.
2. The possible salvaging or 'cannibalizing' ofnseful parts prior to disposal.
3. Whether some renovating or repairing may increase the sale ability of the equipment and
enhance its value.
Bally et al (1998) on the other hand emphasize that when considering how best to dispose of
materials some other key questions to be considered in addition include;
1. Whether the organization can sell the items in the market place rather than scrap?
2. Where material is to be sold as scrap, can the organization obtain a better price by
segregating by type or size or by bailing into cube form or cutting to smaller sizes?
10
3. Whether it is possible to come to an agreement with a merchant whereby the dealers collect
scrap items.
The author further lays emphasis on the fact that the costs of disposing of materials have to be
factored in and compared to the value obtained from the disposal. It makes no sense to install
some sophisticated scrap system because the cost of doing so is greater than the value received.
He adds that organizations control systems associated with disposal need to be clear and
watertight. Such a system will ensure that it checks materials passes to the merchant and the
subsequent cash paid to the organization in return are properly documented.
Baily et al (1998) recommends that additional security measures are put in place where disposal
of valuable materials such as silver, gold and platinum is being effected. Organizations
concerned with the disposal of significant amounts of scrap or waste materials should keep in
touch with current market trends. This will enables the organization to negotiate for better prices
on their materials.
2.3 Methods of Disposal
There are various methods recommended for disposal of materials by various authors and they
include:
2.3.1. Sale by Tender
The Public Procurement and Disposal Act (2005) recommend that the disposal of goods by
public institutions be can·ied out by way of open tender.
Lenders and Fearson (1998) define a tender as a purchasing procedure where potential suppliers
are invited to make an unequivocal offer of the price and terms which an acceptance shall be the
base of subsequent contract.
11
According to the act and invitation to tender for the sale of boarded items by means of public
advertisement, is required to be placed in at least two English language newspapers.
The advert briefly describes the goods to be disposed of.
From the act the procedure used by the government for disposal is outlined as follows:
Goods deemed as unserviceable, obsolete and surplus are kept separately by the stores staff. The
accounting officer in charge of the warehouses forwards a request for approval to dispose of
those materials from the permanent secretary in the ministry of finance. Upon granting of
permission to do so, the officer then requests the permanent secretary to select a disposal
committee which will evaluate the goods recommending the suitable method for disposal.
In light of the committee's recommendations the materials are disposed of. When the accounting
officer rejects the recommendations of the committee he shall give reasons in writing for his
decisions. The committee shall then be required to further examine and review their
recommendations.
The tender for the sale of the materials is placed in the print media and is required to remain
open for a period of not less than twenty eight days. Tenderers submit their proposals and at the
set time the tenders are opened.
Tender evaluation is then undertaken, awarding of the contract is made and to those who qualify
are notified. Through letters of acceptance send to the tenderers who in tum send letters to the
procurement and supplies department acknowledging their acceptance of the tender. A contract
between the two parties is signed after twenty one days.
2.3.2 Transfers to Other Institutions
The public procurement and disposal act (2005) recommends that unserviceable, obsolete or
surplus materials should be transferred to other public entities such as schools with no need for
financial remuneration.
12
The Queensland purchasing guide (2000) also advocate the giving of stocks not used by
organization to deserving courses such as the donating of old computers to schools in marginal
areas as a way of promoting computer literacy.
2.3.3 Return to Suppliers
In the recent past organizations have embraced the practice of returning surplus materials to
suppliers in return for a discount, a common practice referred to as reverse logistics.
Lysons and Farrington (2006) define reverse logistics as the process of planning and
implementing and controlling the efficient, cost effective flow of raw materials, in process
inventory, finished goods and related information from the point of consumption to the point
of origin for the purpose of recapturing value or proper disposal.
Jessop and Morrison (1994) advocate this method of disposal since the organization is able to
negotiate with its suppliers on a return price for the materials.
Lysons and Gillingham (2000) also note that in cases where materials are returned to the
supplier it is done so at a discounted price.
2.3.4 Sale by Public Auction
Materials being disposed of can be sold to the public by auction.
Jessop and Morrison (1994) recommended that scrap metal should be bailed together and sold on
the basis of its weight. Bidders submit offers on a price for the materials on offer.
The bidder who offers the highest price for the materials is the automatic owner of the items. In
this respect the selling price for the materials is in effect determined by the buyers.
It is a requirement that potential buyers pay a refundable deposit to the organization before the
auction takes place.
13
The public must be informed of the intended auction by means of advertisement in order to
encourage competition.
2.3.5 Sale to a Scrap Stockiest or Dealer
Lysons and Gillingham (2000) advocate that the disposal of scrap whether metal, paper or any
other materials is best done through a recognized broker. The broker should in tum be affiliated
to a recognized body such as the British metals federation. This is in order to ensure that the
organization does not fall prey to unscrupulous and illegitimate dealers. This enables the
organization to negotiate a better price for its materials.
2.3.6 Sale to Employees
According to lysons and Gillingham (2000) items such as cars, motorbikes, computers and
office equipment can be sold off to the organizations employees. This helps reduce costs
associated by disposal by way of tendering such as advertising, clerical, stationery and postage
costs.
However the Public Procurement and Disposal Act (2005) prohibit the disposal by means of sale
to employees and it reads in part "A public entity shall not dispose of in serviceable, obsolete or
surplus stocks and equipment to an employee of the public entity or a member of a board or
committee of the public entity ... "
2.3. 7 Recycle
According to the Queensland purchasing guide (2000) the reprocessing of the old materials to
make a new item is a method through which obsolete items can be utilized. It however points
that it should only be carried out when, it is ascertained that the cost of salvaging the scrap or
rejected part is less than the expenditure to be incurred in reprocessing.
Lysons and Gillingham (2000) identify that recycled of secondary materials have the following
key advantages.
I) Such materials are more cost effective since they do not incur any of the initial costs of
running, processing, transpo1t or smelting like the primary variety.
14
2) Recycling also helps to minimize environmental pollution since materials are not
discarded unprocessed.
2.3.8 Dumping, Burning and Burying
Jessup and Morrison (1994) recommend that obsolete, unserviceable and redundant materials
that cannot be disposed using any of the other methods should be burned or buried.
Saleemi (1997) also confers that any stocks that cannot be disposed of using any of the other
methods be dumped, hurried or burned by assessing the overall impacts of these methods on the
environment.
The public procurement and disposal act (2005) recommends that the stocks that cannot be
disposed off by the other methods should either be burned or be buried. On the other hand
Toxic materials will often be buried since burning would result to environmental pollution via
emission of toxic fumes on the other hand, Waste such as surgical needles for safety reasons are
disposed of by burying.
2.4 Why do Organizations Hold Stocks?
Faced with the risk of obsolescence, scrap as well as surplus one would then wonder why
organization hold stocks in the first place.
According to Saleemi (1997) every organization holds stocks of one kind or another for the
following reasons:
I. Delivery cannot be exactly matched with usage day by day.
2. Economics associated with buying or manufacturing in large quantities more thmi
offset the cost of storage.
3. Operational risks require the holding of stock to guard-against breakdowns or program
changes.
4. For work in progress where a completely balanced productions flow is impracticable. 15
5. For finished products where the holding of a buffer stock between production and the
customer is desirable.
6. Owing to fluctuations in the price of a commodity it is desirable to acquire stocks when
prices are low.
7. In order that materials may appreciate in value through storage e.g. timber, wines and
spirits.
8. In order that the customer may be attracted by a range of ptoducts from which to select.
Baily et al (1998) emphasizes that the responsibility of ensuring only adequate stocks are held in
store is not to be entirely left in the hands of the stores management staff. He instead
recommends that collective responsibility be enforced whereby all departments are consulted
when determining the invento1y to be held in the organization.
2.5 The Problems Encountered in the Disposal Process
Research conducted by an Independent Procurement Review(IPR) with assistance from the
European union (EU) between January and April 2005 concluded that corrnption and lack of
professional knowledge in accounting and in procurement and stores management contribute to
occurrence of disposable items.
In addition (IPR) survey fmiher identified the occurrence of fraud in purchasing and supplies as
major problem in public institutions.
Lysons and Gillingham (2000) pin points the occurrence of fraudulent practices during the
disposal processes as a major problem. He identifies instances in which purchasing staff
prematurely scrap off items that are still in good condition in exchange for a kick back from the
scrap dealers.
16
Under the Public Procurement and Disposal Act (2005) the disposal by tender is advocated. The
tendering process in public institutions is limited by bureaucracy. The writing of letters to the
permanent secretary requesting authorization for tendering subsequent reply takes time. The
formation of the disposal committee with members being drawn from various departments takes
time. The disposal process takes a lot of time up to six months by which the value of goods has
subsequently declined.
Lysons (1998) notes that disposal by tender which is the main method of disposal used by public
institutions is expensive. He explains that the costs associated with open tendering such as
clerical work, advertising, stationery and postage costs reduce the returns from the disposal.
Many authors have not given guidelines regarding the determination of the value of assets and
goods being disposed of. The public procurement act (2005) makes no mentions to the procedure
to be used for the valuation of assets. This in turn exposes many organizations to exploitation by
various brokers who pay very little for the items.
The Queensland purchasing guide (2000) however recommends taking into account of various
factors to achieve the best value when disposing of an asset such as:
1. Whole life costing -this is whereby whole the net costs associated with the
initial purchase of an item as well-as the cost incurred due to holding, maintaining
and operating compared against these costs.
2. Serviceable life of an asset -an asset serviceable life is affected by:
• The nature of the item depending on its length of service.
• Maintenance cost of the asset which increases with age and usage.
• Conformance with specific requirements such as "Dangerous goods".
• Development of new technology which lowers the assets resale value.
• The optimum selling time in order to maximize returns and avoid
unnecessary holding costs. 17
2.6 Reducing the Occurrence of Unwanted Materials.
Jessop and Morrison (1994) admit that it is unlikely to completely eliminate the problem of
unwanted stocks. He recommends the implementation of the following measures to minimize the
occurrence of unwanted stocks:
a) Ensure that stock controllers and buyers are fully informed of changing marketing
policies, production prograrmners or design specifications.
b) Monitor changing patterns of consumption in order to detect obsolescence at an
early stage.
c) Ensure that, where raw materials and components replace existing ones, the old
material is used up before the new one is introduced.
d) Relate acquisition for production very closely to actual needs through the use of
planning techniques such as materials requirements planning (MRP).
18
CHAPTER THREE
RESEARCH METHODOLOGY
3.0 Introduction
Bailey defines research methodology as the philosophy of the research process, which includes
the assumption and values that serves as rationale for research and the standard or criteria the
researcher use for interpreting data and reaching conclusions. To facilitate the attaimnent of
specific objective of this research, this chapter was designed to detennine the research design,
data collection methods, population and area of study, sample size, instruments for data
collection, and methods of data analysis.
3.1 Research Design
The study is a descriptive survey that aims at investigating why unwanted stocks occur, advocate
ways of reducing such occurrences as well as identifying the effective ways of disposing of such
stocks. Gay (1993) defines descriptive research as a process of collecting data in order to test a
hypothesis or to answer questions regarding the current status of the Subject in the study.
Mugenda and Mugenda (2003) emphasize that the purpose of this type of research is to
determine and report on the way things are. This design is considered appropriate due to its
description of the state of affairs as it exists at present and that the researcher can only repo1t
what has happened and what, is happening. as pe1tains the disposal procedures and processes in
public institutions.
3.2 Sample Size and Study Population
The target of the study consists of a total number of 35 employees at the Ministry of Planning
and National Development HQ Nairobi working in various departments such as Procurement,
19
Finance, Administration, ICT as well as the stores subsection. This sample of was deemed to be
suitable and ideal for this study given the size of MPND staff population of about 4000 people
spread across the country which is relatively difficult to reach as the study was exclusively
carried out at MPND head office Nairobi. It was indeed consistent with the Limited resources.
This shall cover the management stiucture ofMPND as follows; Top Management level, middle
management level and operational level.
3.3 Source of Data
The source of data was both primary and secondary data, which assisted me, the researcher, to
make a thorough analysis of the study problem.
3.3.1 Primal)' Data
Primary data refers to raw data collected through personal interview questionnaires e.t.c. primary
data was collected from personal interview questionnaires as well as discussion with MPND
shareholders. The interviews were scheduled at the respondent's convenience to get the right
data to enable extraction of appropriate information.
3.3.2 Secondary Data
Secondary data refer to the obtained through the existing literature from libraries, data from
Published bulletins and newspapers. This data was largely obtained from bulletins, newspapers,
textbooks, journals, World Bank publications Kenya government magazine, the internet and
MPND annual reports.
3.4 Data Collection
The following are the techniques and instruments that I used to collect the data.
20
3.4.1 Questionnaires
The main tool used to collect data was a questionnaire comprising both structured and
unstructured questions. The questionnaire assisted the researcher solicit quantitative and
qualitative Data. Open ended questions were incorporated in the study just to give the respondent
freedom to respond questionnaires depending on the way he or she treats the phenomenon being
investigated; not limited to the researcher way of understanding the topic of interest. As strategy
to avoid inconveniences and create support between the researcher and the respondent a draft
questionnaire was submitted in advance and pre-tested with the aim of giving them ample time
and freedom while filling them.
3.4.2 Interview
Interview method of research refers to where there is person to person verbal communication in
Which one person or group of persons asks the questions intended to obtain inf01mation.
Interview schedules were used. The main respondents were staffs ofMPND.I canied out the
Interview to get clarification on some of the answers the respondents gave in the questionnaire.
3.5 Data Analysis
I used description analysis which includes tables, charts and diagrams to round on the existing
relationship between disposal procedmes and unwanted stocks in public institutions. The use of
this visual aids will better help us in understanding the impact of disposal on public institutions.
3.6 Data Processing
After collection of data, I checked and edited it for accuracy and legibility. Basing on the diverse
Somces of data collected; especially from other somces apart from the Kenya government the
accuracy level is high and reliable due to independence of the data somces.
3. 7 Data Presentation
Data is presented in a descriptive f01m so as to help in its interpretation by all the beneficiaries to
this study. The use of tables goes a long way in assisting us view the outcomes and process the
figmes in order to understand the implications fully.
21
3.8 Shortcomings of the Study
The greatest challenge the researcher met are financial constraints and time constraints. Financial
constraints were one of the limitations that the researcher met and to some extent influenced his
proper research process, in the course of conducting the research. This situation happened
because the researcher is privately sponsored individual with limited resources and limited
opportunities to fund the process. A time constraint is the other limitation the researcher
encountered and to a certain extent obstructed the smooth and efficient execution of the study.
This is based on the fact that the researcher was conducting the research simultaneously with his
studies and therefore it was hard to meet the expected time schedule. The researcher at various
occasions was forced to rush in order to meet the research submission deadlines and other
fixtures of academic programs.
3.9 Conclusion
Using the descriptive research I have made my findings. I interviewed thiliy five staff of MPND
who successfully availed the required data. Using the information from the random sample group
I have evaluated the effect of disposal procedures on unwanted stocks and tried to evaluate the
impact on public institution.
22
CHAPTER FOUR
DATA ANALYSIS, PRESENTATION AND FINDINGS
4.0 Introduction
This chapter presents the analysis of the study findings that are organized on the basis of the research
objectives. My field work study was conducted in Nairobi, Kenya. As I have indicated in Chapter three,
I conducted interviews which were to furnish me with information regarding the disposal of unwanted
stock in the ministry. Items commonly used by the organization were identified and categorized into five
major groups respectively.
4.1 Research Findings
4.1.1 Items commonly disposed of
The items commonly used by the organization and disposed. This research determined that the
institution commonly procures the items listed below in the proportions shown: The organization
purchases stationery and accessories at 45%, computer and accessories at 25 %, fumiture and
furnishings 15%, motor vehicles and parts 10%, machines and equipment 5%.
From the items commonly procured shown above the researcher sought to determine the
categories of items that the organization commonly disposes of the results of which are
summarized in table 4. 1.1 and figure 4.1.1 below:
23
Table 4.1.1: Items commonly disposed of
Description of category of items Percentage of items disoosed
furniture and furnishings 55%
computer and accessories 20%
motor vehicles and parts 10%
stationery and accessories 10%
machines and parts 5%
R~re 1: Items oommonly disposed of in the organisation
Source: Table 4.1.1
■ Funiture aid furnishings
■ Computer aid axessories
Motor vehidesa,d perts
■ Sa:ionery aid axessories
4.1.2 Who does the organization think is responsible for the occurrence of unwanted
stocks?
The researcher identified three parties that are party to the occurrence of unwanted
stocks. On one hand the ministry's purchasing department employees blame suppliers
24
for the occurrence of unwanted stock while on the other hand suppliers blame the purchasing and
supplies staff for the occurrence. The user department also assigns blame to both the purchasing
depaiiment and the suppliers.
The results are summai·ized in the table below.
Table 4.1.2: Responsibility for unwanted stocks
Respondent party Degree of Degree of Degree of
responsibility responsibility of responsibility of
Suppliers purchasing user department
department
Purchasing 40% 40% 20%
department
Use department 25% 70% 5%
Suppliers 10% 85% 5%
Source: Research Quest10nnaires
The user departments identified the purchasing department as the major culprit responsible for the
occurrence of the unwanted stocks. This department also indicated that suppliers were also at fault since
they supplied items that are likely to be superseded by technology easily.
The suppliers blame the purchasing and other user departments for providing them with unclear
specifications thereby leading to the delivery of the wrong items. They also identified the fact that
purchasing staff seek financial incentives from suppliers as a condition for awarding tendering contracts
for the supply of goods. The responses obtained from this research are conflicting with each party
blaming the other for the occurrence of unwanted stocks. It is clear that the relationship between these
parties is strained.
25
Aside from this never ending blame game the respondents were asked to identify the main reasons for the
occurrence of unwanted stocks. Their reasons were summarized in the table and figure below.
Table 4.1.3: Reasons for the Occurrence of Unwanted Stocks
Reason for unwanted stock No. of
Respondent's
Over-ordering and over-stocking 12
Inadequate stock control 10
measures
Breakages and deterioration 5
Lack of proper specifications 5
Organizational policies 3
Total 35
Source: research data
This information is represented in the figure 4. 1.3 below:
26
Percentage no. of
Respondents
24
27
14
14
11
100%
r;; I
I I 25
20
I 1s ~ I
I 10 j
I s
I 0
I Over-ordering Inadequate I & over• stock control ! stocking measures
I Source: Table 4. 1.3
No. of Respondents
■ Percentage no. of Respondents
Breakages & Lack of proper Organizational dctcno,.:ition ~pecif,cations policies
It's evident from the data above that a majority of the respondents pin pointed the traditional
practice of over-ordering and overstocking as a major cause of the occurrence of unwanted
stocks in the organization.
Inadequate stock controls that are manifested by the laxity in conducting regular stock check and
stock taking practiced by the organization.
Breakages and deterioration of materials in the store either due to the poor handling of materials
or due to insufficient stock presentation measures also led to the cases of unwanted stocks.
The lack of proper specifications given to suppliers led to the organization being supplied with
the wrong stock. This is due to the lack of proper communication between the user departments,
purchasing department and the suppliers. Organizational purchasing policies that favor the
buying of items based mainly on their price as opposed to quality thus the organization will most
likely buy cheaper goods which are likely to become technologically obsolete. 27
4.1.4 The Methods Used for the Disposal of Items
The following info1mation was obtained regarding the commonly used methods for the disposal of items.
The results are summarized in the table 4.1.4 and figure 4.1.4 respectively.
Table 4.1.4: The methods for the disposal of items
Method No. of respondents
Sale by tender 25
Transfer to institutions/donations to charity 5
Sale by auction 3
Dumping, burning, burying 2
Sale to employees Nil
Sale to stockiest or scrap dealer Nil
Total 35
Source: Research questionnaires
% of respondents
71.4%
14.3%
8.6%
8.6%
Nil
Nil
100%
Majority of the respondents interviewed identified sale by tender as the main method used by
public institutions for the disposal of items. This method is highly recommended by the Public
Procmement and Disposal Act (2005) for disposing items that are of a higher monetary Value for
the organization to get value for money (VFM).
28
Figure 4.1.4: The Methods of Disposal of Items.
S:lle to s:ockiest or &:r~ dealer
S:lle to employees
[}Jmping, burning, burying
S:lle by ruction
Tra,ster to ins:itutions
S:lle by tender
0 5 10
■ %of ~ndents
■ No. of ~ndents
15 20 25 30
The respondents also identified transfers to other public institutions as being a widely used
method for the disposal of items. This method is particularly used to dispose of old furniture as
well as old computers and accessories.
Sale by auction was another method that respondents identified as being used in very few
occasions by the public institutions. Dumping, burying and burning methods are also used
although their use is limited to disposal of items with no economic value and also items that are
harmful or toxic. The method of disposal by selling to employees is not used in public
institutions since its use and application has explicitly been prohibited by the public procurement
and disposal act.
Public institutions in that same light do not sell scrap items to scrap dealers since regulations in
the act seek to enhance transparency and accountability as well as to enhance competition.
29
4.1.5 The problems encountered during the Disposal Procedures.
They are highlighted in table below
'able 4.1.5: Problems encountered in the disposal procedures
'ROBLEM
3ureaucracy
~ack of training on the part
of personnel
>rice determination
:::orruption and fraud
>ilferage of goods
rotal
NO.OF
RESPONDENTS
20
9
3
2
1
35
Source: Research questionnaires
Figure 4.1.5 The problems of the Disposal procedure.
40 35
RESPONDENTS IN
PERCENTAGE
57.1%
25.7
8.6
5.7
2.9
100
- -- -- ----
30 -1-----------------------25 20 15 10
5 0
30
■ No. of Respondents
■ Respondents in Percentage
From the table above the biggest problem encountered in the disposal of goods are the
bureaucratic processes and procedures that have to overcome before an actual disposal can be
effected. Thus disposals take a long time to go through. Personnel charged with the responsibility
of monitoring the disposal processes lack of adequate training on conducting a disposal as a
result many employees fear to take part in a disposal lest they be accused on improper conduct.
Purchasing also faces an uphill task of determining the price to charge for items being
disposed since the public procurement and disposal act fails to give clear guidelines regarding
the determination of prices. Another major problem is that of conuption and fraud whereby
purchasing staff collude with suppliers to under price items during the sale by tender.
Purchasing employees also commit fraudulent activities whereby they collude with suppliers in
the pre-mature scrapping of machines and other items. Pilferage also occurs whereby employees
help themselves with the organizational items designated for disposal.
4.1.6 The challenge of maintaining unwanted stocks within the organization.
The findings are summarized in the table below:
Tabie4.1.6: Problems of maintaining unwanted stocks
Problem No. of respondents Percentage no. of
respondents
Wastage of money 22 62.9%
Misuse of storage 7 20%
space
Wastage of manpower 6 17.1%
Total 35 100%
Source: Research Questionnaires
31
It was evident from the findings that the main problem of carrying unwanted stocks is the
wastage of money. Funds which were used to invest in stocks that had proved unprofitable,
tying up capital that could have otherwise been utilized profitably elsewhere.
The storing out of the disposal especially since it involves the identification, categorizing and
storage of unwanted stocks is a time consuming process. The time taken by the purchasing staff
to carry out those activities does not add value to the institution. That time could have been
used to perform other better value adding activities.
THE BENEFITS OF THE DISPOSAL PROCESS TO THE ORGANIZATION
Table 4.1.7-The benefits of the disposal process to the organization
Benefit No. of respondents Percentage no. of respondents
fonetary benefit 15 42.9
romote organizational goodwill 10 28.6
'.reates space for storage 7 20
few technologies are procured 3 8.6
rotal 35 100
Source: Research Questionnaires
R9,1re 5: 1he benefit of disposal to the organization
32
■ Monetay benefit
■ A-omoteor~i:zaional ~II
■ 0-eaesspa:::e for storc'g:!
■ New technologesa-e procured
The major advantages of the disposal process identified by the respondents are the gaining of
money especially where goods of value such as machines and equipment, vehicles and parts are
being disposed of transferring items to other public institutions helps to promote and foster
societal goodwill towards the organization. The disposal procedure helps to clear out space most
of the items designed for disposal are stored in open corridors awaiting disposal since the
stores have limited storage space.
This process also encourages the purchasing of new and better modem technologies especially
where old computer monitors were being replaced with new sleek TFT monitors
4.1.8 The Effectiveness of the Public Procurement and Disposal Act (2005)
The respondents were asked whether the measures stipulated in the PPDA act are effective in
resolving the problems encountered during the disposal.
Table 4.1.8: The effectiveness of PPDA (2005) in resolving problems
Response Frequency Finance Store Procurement Administrative
Officers keepers staff officers
Effective 45% 8% 1% 46%
Non- 55% 90% 99% 44%
effective
Undecided Nil 2% Nil 10%
Total 100 100 100 100 100
Source: Research Questionnaires
From the table it was determined that 45% of finance officers, 8% of store control personnel,
1 % of purchasing staff and 46% of the administrative officers interviewed were of the
opinion that the cun-ent regulations regarding disposal are ineffective in resolving the problems
experienced during the disposal.
33
On the other hand 55% of all finance officers, 90/o, 99% of the procurement staff and 44%
of the administration staff admitted that the regulations are not effective in helping -to
resolve the problems witnessed during the disposal process.
4.2 Analysis
The practice of overstocking i.e. carrying stocks in excess of current and future expected
requirements was identified as the main reason for the occurrences of surpluses. In order to
ensure the availability of such stocks as and when required. Where surpluses are not controlled
effectively they cause redundancy.
Poor stock preservation and storage as well as inefficient materials handling also causes the
occurrence of stocks within the organizations store that are no longer of use.
Evidently policy regulations, such as those stipulated by the Public Procurement and Disposal
act 2005 is a major hindrance in the carrying out of the disposal since it lays down several
bureaucratic procedures that have to be fulfilled before disposal can be preferred. Most of the
staff lacks adequate training pe1iaining to the disposal process and procedures and hence they
fear to carry out a disposal lest they get implicated in a scandal. The practices of corruption
and fraud are also another major problem encountered during disposal.
It is clear from this research that the procurement function, the user departments and the
suppliers are jointly responsible for the occurrence of scrap, surplus, redundant and obsolete
materials in the stores. The blame should therefore not be laid solely on the procurement
function.
There would be great benefits to be reaped by encouraging proper communication between the
user department, purchasing function and suppliers. This communication could ensure that
the requirements are expressed clearly in order to be efficiently addressed. What the user
departments ask for through the purchasing function is exactly what they obtain from their
suppliers thus reducing the occurrence of unwanted stocks.
34
The disposal process helps to clear out space most of the items designated for disposal are
stored in open corridors awaiting disposal since the stores have limited storage space. This
process also encourages the purchasing of new and better modem technologies especially
where old computer monitors were being replaced with new sleek TFT monitors.
The stores personnel are the party solely responsible-for ensuring proper stock control in
the ministry. This sub-section of the purchasing department is left entirely responsible for the
inventory management activities such as maintaining adequate stock levels, stock taking as well as stock
preservation and maintenance.
The authority to effect disposal rests solely on the disposal committee and its subsequent
recommendations. 'The committee is made up of staff from various departments such as finance,
administration, procurement as well as the marketing department. Thus in good effect decision
making regarding disposals of items continues to depreciate this means that organization will not be
able to reap maximum financial gains from the process.
Most of the items identified for disposal are located outside the stores some in a yard while some
are stored along the corridors. The lack of a centralized location for storing items creates an
environment that encourages pilferage of items by the organizations employees.
The stock taking adopted by the organization is the continuous review system whereby the stocks
are checked four times a year.
35
CHAPTER FIVE
CONCLUSION AND RECOMMENDATIONS
5.0 Introduction
In this Chapter, I seek to sum up my project and purpose avenues for future consideration when
it comes to disposal procedures on public assets. This study shall present us with the disposal
procedures staiting from problem identification ai1d agenda setting to implementation. These
stages have been discussed and important theories and models of policy making have been
presented.
This section of the report further outlines proposed areas for further research.
5.1: Conclusions
Based on the analysis of the results conducted in the previous chapter, it can be concluded
that there exists a large ainount of unwanted stock that the organization does not use. Though
there are some valid reasons that justify the carrying of excessive stock it is evident that
these reasons have been highly misunderstood to justify the carrying of surplus stocks that
the organization does not require.
The holding of too much stock by the organization in order to meet operational requirements
exposes the organization to risk ofloss in stock through redundancy or obsolesce. It can also be
concluded that the issue of how much stock the organization should carry should not be
entirely left in the hands of the stock control section of the purchasing and supplies department.
Instead collaboration with the various user departments will go a long way in reducing the
occUITence of unwanted stock.
The disposal by tender which is normally the method commonly used by all public institutions is
very labour intensive and time consuming. The tendering process is also an expensive venture
considering the clerical, adve1tising as well as stationery costs it involves. In effect the costs of
conducting the disposal are high such that the organization only gains some little additional
revenue from the process.
36
The procedures needed to effect a disposal are hindered by various bureaucratic hurdles,
thus the effectiveness of these procedures is questionable since so little is achieved i.e.
very few requests for disposal actually culminate in actual disposals taking place. There
is a dire need to review these procedures so as 'to avoid the numerous losses encountered while
stores managers await authorization to discard unwanted stock.
5.2 Recommendations
This research submits the following recommendations based on the findings of the study.
There should be improved communication between the departments and the procurement
department especially in the development of clear specifications. This will ensure that the
items sourced are up to the requirements of the users thus helping to reduce in part the
occun-ence of redundant stock. Strategic measures should be taken to improve the stock control
methods including updating the stock control stuff on proper stock taking at regular intervals as
a way of identifying unwanted inventories in time in order to reap maximum benefits from
the disposal process. The entire procurement function should be trained on disposal of items
so that they can fully understand how they are supposed to conduct a disposal. This will
help eliminate the fear of persecution that the employees have concerning the disposal of items.
The current disposal regulations contained in the public procurement and disposal of public
assets act, law of Kenya (GOK) should be reviewed further in a bid to provide clear
guidelines with regard to issues such as price determination, pilferage of goods, co1ruption and
fraud.
The procedure of disposing unwanted stock should be further reviewed in order to eliminate the
bureaucratic processes that are time consuming. To this extend authority to conduct a
disposal should be delegated to lower ranked officers. For instance, the officer in charge of
the procurement function should be given due authority to dispose stock deemed as
unwanted after it has been inspected by the disposal committee. The items being
disposed of should be maintained under key and lock in order to reduce the cases of
pilferage by employees. 37
The purchasing function should collaborate with the ICT department to make strategic purchases
of new and better performing technologies in a bid to reduce obsolesce. Where unwanted
stock is of value and can be sold the organization should utilize other methods such as sale
by auctions, sale to a scrap dealer as opposed to the traditional system where tendering is
expensive in te1ms of clerical, labour, administration and stationery as well as advertising
costs. In this way the organization only stands to gain a little revenue from the disposal after
the costs have been factored.
The stores function should ensure that it utilizes proper handling techniques in a bid to
reduce breakages.
Specific efforts should be made to ensure that proper stock preservation methods are
used in a bid to reduce urmecessary dete1minations of stock. The two measures will help
unnecessary deteriorations of stock and also control the occurrence of unwanted stocks.
External interference with the functions of the purchasing and suppliers department during
the process of procurements should be avoided. It has been noted that the buying of goods
that are in excess of required quantities and qualities was a major cause of unwanted stocks.
Procurement planning should be further enhanced in order to avoid issues of software
surpluses that led to unwanted stocks.
38
5.3: Suggested Areas for Further Research.
This project proposes the following areas for finiher research on:
► The specific skills requirements and training required by purchasing officers responsible
for the disposal of items process.
► The measures that can be put in place to effectively co1mter the problems encountered
during the disposal process.
39
REFERENCES
Baily P and Farmer D, (1990). Purchasing Principles and Management - 6th edition - Pitman
Publishers.
Baily P, Fanner D, Jessop D and Jones D (1998). Purchasing Principles and Management-8th
Edition- Pitman Publishers London.
Fearon, H. E., (1973). Materials Management - A Synthesis Cunent Review - Journal of
Purchasing February Issue.
Jessop D and Morrison A (1994). Storage and supply of materials - 6th edition - Prentice Hall
Publishing.
Jessop D and Morrison J (1990). Principles of Storage and Materials Management - 6th Edition
Pitman publishers, Great Britain.
Kenneth Lysons (1996). - Purchasing, Fourth Edition - Pitman publishing.
Kenya Gazette Supplements Public Procurement and Disposal Act (2005). - Government printer,
Nairobi.
Kothari .0 (1999). Research Methodology: Methods and techniques. H.S. Poplai New Delhi.
40
Lenders R.M and Fearson.E. Harold (1998). Purchasing and Materials Management - 10th
Edition - Pitman Publishers.
Lysons K and Gillingham M (2000). Purchasing and Supply Chain Management-6th Edition -
Prentice Hall, England.
Malcolm Saunders (1997). Strategic Purchasing and Supply Chain Management - 2nd Edition -
Prentice Hall, England.
Saleemi N.A. (1997). Purchasing and Supplies: Made Simple. N.A Saleemi Publishers, Nairobi
Kenya.
Queensland Purchasing Guide (2000). Better Guide on Disposal of Govermnent Plant Equipment
- Department of Public Works September Edition.
Wild R. (1994). Production and Operation Management - 3rd edition - Pitman Publishers,
London.
Zenz G J (1995). Materials Management; Threat to Purchasing-Journal of Purchasing may.
41
APPENDIX ONE:
QUESTIONNAIRE
INTRODUCTION
This questionnaire is intended to gather information on disposal procedures and levels of
unwanted stocks in public institutions. This study is part of requirement for the confe1ment of the
Bachelors degree in supplies and Procurement management at Kampala International University.
This study is purely for academic purposes and the researcher that the information will be treated
with utmost confidentiality no names to the identification will be used.
Thank you in advance for your assistance and cooperation.
SECTION A:
GENERAL BUSINESS INFORMATION
I. Name of the organization
2. Department working in
3. How long have you worked in this organization
4. What position do you hold in the organization
5. Have you worked in any other department?
Yes ( ) No ()
6. If yes specify the depru.iment and. years worked
7. What is your area of specialization
42
SECTIONB:
1. What materials does your organization commonly deal with in the course of its Business?
Tick where applicable
a) Stationary and accessories ( )
b) Furniture and furnishings ( )
c) Computers and accessories ( )
d) Machines and equipment ( )
e) Motor vehicles and parts ( )
2. Are there occurrences of scrap, redundant and obsolete inventories?
Yes ( ) No ( )
3. In your opinion why there are scrap, redundant and obsolete items in the organization?
i) Over ordering and over stocking. ( )
ii) Unclear specifications. ( )
iii) Inadequate stock control measures. ( )
iv) Organizational policy problems. ( )
v) Breakages and deterioration. ( )
4. Which are five commonly disposed items in your organization? Tick the appropriate
categories.
a) Computers and accessories ( )
b) Furniture and furnishings ( )
c) Stationery and accessories ( )
43
d) Machines and equipment
e) Motor vehicle and parts
( )
( )
5. Which are the commonly used methods for disposing items in your g organization?
i. Sale by tender ( )
ii. Sale by auction ( )
iii. Return to suppliers ( )
iv. Sale to a scrap dealer ( )
v. Dumping, burying or burning ( )
6. Are there any problems encountered in the disposal process? If so list them.
i) ........................................................................................................... .
ii) ........................................................................................................... .
iii) ........................................................................................................... .
iv) ........................................................................................................... .
7. Who is responsible for ensuring proper stock control in the institution?
i) Stores personnel ( )
ii) Procurement staff ( )
iii) Collective responsibility ( )
8. What are some of the disadvantages of canying scrap obsolete and redundant material?
disadvantage
i) Wastage of space ( )
ii) Wastage of manpower ( )
44
iii) Wastage of capital ( )
9. Who is responsible for ensuring the disposal of items in the organization?
1. The disposal committee ( )
ii. The stores personnel ( )
I 0. Where are the items designated for disposal stored?
a) In the store ( ) b) At another location ( )
I I. What are the benefits of the disposal process to the organization?
i) Recovery of storage space ( )
ii) Generation of revenue by items ( )
iii) Promotes organizational goodwill ( )
iv) Promotes new technology ( )
v) Allows use of idle resources ( )
12. What stock taking methods have been adopted by your organization?
a) Continuous review system ( )
b) Periodic review system ( )
13. How often is the stocktaking excises conducted?
a) Annually ( )
b) Bi- annually ( )
c) Quarterly ( )
d) Monthly ( )
e) Weekly ( )
45
14. What are some of the weaknesses you detect in the disposal processes and procedures?
i)
ii)
iii)
iv)
v)
15. Suggest some measures that can be put in place to address the weaknesses mentioned in No.
14 above
i) .................................................................................................. .
ii) ........................................................................................................ .
iii) ........................................................................................................ .
iv) ....................................................................................................... .
v) ··········································································································
16. In your own opinion have the regulations of the disposal act been successful in overseeing
the process?
i. Yes ( )
ii. No ( )
iii. Not decided ( )
46
17. If you answered no in no 16 above suggest what should be done
1. Review the regulations ( )
11. No review of regulations ( )
111. Undecided ( )
Thank you for your cooperation.
47
l'.lS DESCRIPTION
of proposal
aft typing & printing
draft typing & printing
ng
ocopying
tet and airtime
illaneous
Jfthe project.
ft typing and printing
draft typing and printing
t1g of the project
\L
APPENDIX TWO
PROJECT BUDGET
QUANTITY & UNIT PRICE
48 pages@Ugshs 500 per page
( 48 pages @ U gshs. 500sper page) x3 copies
(U gshs 4000) x3 copies
Ugsh 10,000
Ugsh 25,000
Ugsh 50,000
64 pages@ugshs 500
65 pages@ugshs 500
3copies@8000
48
COST IN UGSH.
24,000.00
72,000.00
12,000.00
10,000.00
25,000.00
50,000.00
32,000.00
32,500.00
24,000.00
281,000.00 I
APPENDIX FOUR
MAP OF NAIROBI
B -IS THE LOCATION OF THE MINISTRY OF PLANNING AND NATIONAL
DEVELOPMENT AND VISION 2030.
•
Na,roe. Se<1e~t~ 03~ .'.dVfn:IJ,.I
~ ~ ~,-:h t ..;~r ;,.,r.c..~n LI' ,oil H;,ad Qft,ca
•
;:n,:11ry Certc'
F ;iir\'le>·: ,.,, Ar;:1Tf"".-nt•.
N~l,lfc: sr;.;, Ct,u•cn
p
Freemasons 1-sftll •
If'"• ..
K,;•W~
1-.at~ill S<>1c ,a, Sect, rrty
F ""rtBh~'l
8-shopR(l
Tr"r:•.co,n ..... ~.-\.,e
•• t<cn,a ; .. c,t.on.;;, lth<AN
• CFC
li'eSMn
1'1!\Uf~OC~ tlous~
62
Forl),11 ,\ I-<~,.,,.
• Capdol • -,,11To-.ver
p
\
• RRIIWl'l'/
SpomClub
• t ,.,,.,,, ye)
Mausoh
Keny' P11rt.ao, su,10111,
