A Research Proposal Submitted to the Procurement and
Supplies Professionals and Technicians Board (PSPTB)
………………………………………………
Mr. Messon Siame
(Supervisor)
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Table of ContentsACKNOWLEDGEMENT...................................................iiABREVIATIONS.......................................................v
CHAPTER ONE: INTRODUCTION..........................................11.1 Background to the Study......................................1
1.2 Statement of the problem.....................................41.3 Objectives of the study......................................5
1.3.1 General Objectives.......................................51.3.2 Specific Objectives......................................5
1.4 Research Questions...........................................51.4.1 General Questions........................................5
1.4.2 Specific Questions.......................................51.5 Significance of the study....................................5
1.6. Scope of the study..........................................61.6.1 Scope....................................................6
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1.7 Limitation of the Study......................................61.8 Organization of the study....................................6
CHAPTER TWO: LITERATURE REVIEW...................................92.0 Introduction.................................................9
2.1 Store Functions..............................................92.2 .Theoretical Review.........................................11
2.2.1 Store Management........................................112.2.2 Centralization..........................................11
2.2.3 Decentralization........................................122.2.4 Store and stock holding center..........................12
2.2.5 Selection and training of personnel performing stores function......................................................12
2.2.6 Stores management and security..........................132.2.6.1 Control of entry into stores..........................13
2.2.6.2 Marketing of stock....................................142.2.6.3 Fire Precautions......................................14
2.2.6.4 Segregation of high risk material and knowledge of materials.....................................................15
2.2.6.5 Knowledge of materials................................152.2.7 Procurement performance measurement model...............15
2.2.8 Logistic Management.....................................172.3 Empirical Literature Review.................................18
2.3.1 Empirical Literature Review in Tanzania.................202.4 Research Gap................................................21
2.5 Conceptual framework (Conceptual Model).....................22CHAPTER THREE: RESEARCH METHODOLOGY...............................26
3.0 Introduction..................................................263.2 Research Design.............................................27
3.2 Types of Data...............................................283.2.1 Primary Data............................................28
3.2.2 Secondary Data..........................................283.3 Data Collection Methods.....................................28
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3.3.1Questionnaire............................................283.3.2 Interview...............................................29
3.4 Sampling Techniques.........................................293.4.1 Sample and Sample Size..................................29
3.4.2 Sampling procedure......................................303.5. Reliability and Validity...................................31
3.5.1 Reliability.............................................313.5.2 Validity................................................31
3.6. Management and Data analysis...............................323.6.1 Data management.........................................32
3.6.2 Data Analysis...........................................323.7 Expected result.............................................32
REFERENCES........................................................33
ABREVIATIONS
CCKL Coca Cola Kwanza Company Ltd
CPSP Certified Procurement and Supplies
Professional
v
JIT Just In Time
NBMM National Board for Materials Management
SPSS Statistical Package for social and
Science
ECR Efficient Consumer Response
CRP Continuous Replacement Planning
VMI Vendor Managed Inventory
PPE Personal Protective Equipment
SAP System Applied Product
ERP Electronic Resource Planning
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CHAPTER ONE: INTRODUCTION
1.1 Background to the Study
Stocks are goods or merchandise kept on the premises or
warehouse available for sale or distribution. Stock is in
the life of human being it had been practiced almost by
every person sometimes with or without understanding i.e. it
involves holding stocks during a day to day activities,
stocks at home where by a balanced of food, drink-water and
other basic needs have been kept to meet current and future
demands, (Slack et al 2011) said stocks accumulate
unnecessarily through poor control methods, obsolescence,
poor liaison and sub-optimal decision making.
A store is an area where good or merchandize is reserved for
future use. (Jessop et al, 1994). The store should be
considered as a temporary location for materials for
operational purpose and should be planned, organized and
operated in such a way that the period of residence of each
stock is as short as possible in consistent with economy
operation.
Store Management is the process of organizing, planning,
controlling and monitoring movement and arrangement of goods
or merchandize in a store. The scope of stores management
also concerns the fine lines between replenishment lead
time, carrying costs of stock, asset management, stock
forecasting, stock valuation, stock visibility, future
stock price forecasting, physical stock, available physical
space for stock, quality management, replenishment, returns
and defective goods, demand forecasting and replenishment.1
In business enterprises (Bowersox and Closs (2006) said
formulating stock management policies requires an
understanding of inventory’s/stock’s role in a
manufacturing/marketing enterprise. In order to grasp the
importance of inventory one must envision the magnitude of
assets committed in a typical enterprise.
(Dobler et al 2002) Most companies have experience a number
of challenges in relation to stock management. Some of these
problems are
One issue is infrequent large orders vs. frequent small
orders. Large orders will increase the amount of inventory
on hand, which is costly, but may benefit from volume
discounts. Frequent orders are costly to process, and the
resulting small inventory levels may increase the
probability of stock-outs, leading to loss of customers. In
principle all these factors can be calculated mathematically
and the optimum found.
A second issue is related to changes in demand (predictable
or random) for the product. For example having the needed
merchandise on hand in order to make sales during the
appropriate buying season(s). A classic example is a toy
store pre-Christmas. If one does not have the items on the
shelves, one will not make the sales. And the wholesale
market is not perfect. There can be considerable delays,
particularly with the most popular toys. So, the
entrepreneur or business manager will buy on spec. Another
example is a furniture store. If there is a six week, or
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more, delay for customers to get merchandise, some sales
will be lost. And yet another example is a restaurant, where
a considerable percentage of the sales are the value-added
aspects of food preparation and presentation, and so it is
rational to buy and store somewhat more to reduce the
chances of running out of key ingredients. With all these
examples, the situation often comes down to these two key
questions: How confident are you that the merchandise will
sell, and how much upside is there if it does?
And a third issue comes from the view that inventory also
serves the function of decoupling two separate operations.
For example work in process inventory often accumulates
between two departments because the consuming and the
producing department do not coordinate their work. With
improved coordination this buffer inventory could be
eliminated. This leads to the whole philosophy of Just In
Time, which argues that the costs of carrying inventory have
typically been underestimated, both the direct, obvious
costs of storage space and insurance, but also the harder-
to-measure costs of increased variables and complexity, and
thus decreased flexibility, for the business enterprise.
Coca Cola Kwanza has four different stores for handling its
different categorized goods. Engineering store, Raw Material
Store, Fleet Spares stores and Marketing store. All of these
stores have been faced with a number of problems. Example a
number of plant shut down incident were reported due to lack
of carbon dioxide, packing material and concentrate in raw
material store. All these are imported items.3
In Engineering and Fleet spares several incidents of
overstocking were reported which adversely affect cash flow
of the company. In 2011 engineering store was worth
$500,000-$600,000.This caused a lot of queries from the
Group offices.
Due to all those problems, need to deploy stock management
strategies, such as a just-in-time inventory system and
Electronic Resource Planning to help to minimize
inventory/stock costs was considered as the best alternative
because goods are created or received as inventory only when
needed. Companies use inventory management software’s to
avoid product overstock and outages. Hence to support
efficiency and effective system of stock performance.
As of today companies use several systems such as
enterprises resource planning, supply chain execution or
warehouse management system in order to plan and control
material flow (Bowersox and Closs 2006). Many of these
systems have, however, yielded poor results due to the
unavailability of accurate information, its therefore
critical to the success of these companies to have accurate
information on the identity. Accurate of information is
again referring to daily and instant updating of the system.
Coca cola kwanza adapted electronic software called System
Applied product (SAP).The aim was to use this software’s to
address different problems and challenges which were
encountered. i.e. problem like order management, asset
tracking, service management, product identification and
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product searching, data security and cost saving. Major
challenge was how to control ordering since there was a need
to justify each and every purchase in order to avoid out of
stock or overstocking.
However, the questions of meeting overall efficiency and
performance, targets and objectives of organization by
ensuring, rational operational stock is kept to meet
intended targets, (Campton1985) is still a valid question up
to date. Each organization is struggling to establish
appropriate measures and process to achieve desired goals of
stores management.
British standard BS 5729 part 1 introduce the “Concepts and
objectives of stock control as part management strategy”
modern stores management rejects outworn concepts of stores
as “a place where goods are kept until they are needed some
day” Stored should be considered as a profit-earning service
to production or in the case of a warehouse, to
distribution. Storekeeping should contribute directly to
profitability and be concerned with storage costs,
acquisition, packaging pre-selection and issue, packing and
dispatch and other physical aspect.
One of the main questions practitioners face today is how to
justify the investments that enable to improve visibility of
efficient process of stock management, which will enhance
performance of supply chains. Nevertheless, there is still
little research in the stores management efficiency
literature.
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1.2 Statement of the problem
Globally the advancement of technology has helped many
organizations to improve its process and change the way
organization used to operate. Stores management goes hand
with hand, with the introduction and use of different
software to simplify the way we used to handle our stock.
Software like JIT, ERP and CRP were invented to support and
simplify manual ways of managing and controlling stock.
Major challenge to many organizations had been on how to
control, manage and to get a status report which will be
valid, accurate and reliable due to the fact that most of
the stores activities were done manually. Challenge of good
and up to date recording is still impacting negatively the
performance of stores management.
Problem like delay in receiving, stock-out, over stocking,
lack of bin location for some material, redundant stock,
inaccurate posting, delaying in posting, improper storage
locations and handling materials that occur in stores
section encourage the researcher to a deep study to examine
the efficiency and effectiveness of stores management
In Tanzania, though different software’s have been adapted
by different private organizations, challenge is still on
how to get the desired result i.e efficiency and
effectiveness of stores management system. Currently most
private organizations have embarked with this software’s to
manage and control their processes and work flow. Great
emphasis is to attain efficiency and effectiveness of stock
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management system since this process affects directly
financial position and performance of each organization.
Thus efficiency and effectiveness of stores management in
Private Sector is of vital importance due to its
contribution in business performance. The study has then
attempt to find out the factors affecting the efficiency and
effectiveness of proper stores operation at CCKL.
1.3 Objectives of the study
1.3.1 General Objectives
The general objective of this study will be to assess
efficiency and effectiveness of Stores Management in Private
Sector.
1.3.2 Specific Objectives
a. To examine the adequacy of personnel qualifications and
their effects on the proper storehouse operation in the
company.
b. To examine the effectiveness of ordering policies
execution.
c. To examine top management concern on stores matters.
d. To examine the sufficiency of security, hearth and
safety precautions in stores operations.
1.4 Research Questions
1.4.1 General Questions
The general Research question in that: how is the
performance of the stores management of the organization in
the private sector?
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1.4.2 Specific Questions
a) Are personnel qualifications adequate and what are their
effects on the proper storehouse operation in the
company?
b) Is the execution of organization’s ordering policies
effective?
c) How is the concern of top management on stores matters?
d) A security, Health and safety precautions in stores
operations sufficient?
1.5 Significance of the study
a) The study will help Private Sector to formulate stock
management policies and procedure.
b) Study will assist Fast Moving consumer Goods companies to
increase efficiency in stock control thus optimize their
cash flow.
c) To other scholars it may serve as reference materials in
their study if the results will be exposed for public
use.
d) This Topic will also widen researcher knowledge on
appropriate measure to manage stock.
e) The study is the partial fulfillment of the requirement
for professional CSP awarded by the Procurement and
Supplies Professionals and Technicians Board.
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1.6. Scope of the study
1.6.1 Scope
The study will deal with employees of CCKL in Dar es
Salaam. However, it selected only employees from
departments linked with store department. The study
concentrated on stores management.
1.7 Limitation of the Study
The researcher imagines a number of limitations .The study
is limited in a way that, it will only focuses on beverages
industries in Tanzania, yet there are many other industries
that also rely and operate under environment of store
management. Thus findings in this study might not be
adequate representation of the challenge in stores
management hence the results cannot be generalized to all
industries.
Possibilities of the respondents neglect to return the
questionnaires in time may be because of being busy or
other foreseen reason. Time constraint, there is shortage
of time which is required for data collection and analysis
and to complete the work. However the researcher will exert
all effort to closely financial constraint also is big
constraint because the researcher has no support in term of
funds.
1.8 Organization of the study
Organization of this study is as follows:-
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Chapter one; deals with an overview of the study. It gives
the details about the background information to the
problem, Statement of the problem, General question of the
study, Specific question of the study, General objective of
the study, Specific objectives of the study, Significances
of the study, Limitation of the study and Organization of
the study.
Chapter two, Deals with detailed Literature review of the
study, it includes; Theoretical review, Empirical review
and Conceptual reviews.
Chapter three, Concentrates with Research Methodology of
the study where all information related to research design,
sample design and sample size, targeted population, data
collection methods (instrument) are presented.
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CHAPTER TWO: LITERATURE REVIEW
2.0 Introduction
Literature review is a process of identifying or locating,
reading, evaluating, summarizing and incorporating in a
study documents having materials are related to the problem
under investigation.
2.1 Store Functions
The store functions include all responsibilities for
receipts, custody and distribution such as economy,
identification, receipt, inspection, issue and dispatch
(Jessop et al 1994).
Duties and responsibilities associated with stores
management (carter,1989)said there is very wide range of
duties and responsibilities, that are performed in
managing the store at various times and stages of operation.
All are important to overall efficiency of the organization
and its objectives the duties include:
Economy: One of the basic duties of stores manager is to
ensure that operations within the stores system are
performed as efficiency and as economically as possible the
concept of economic levels of stock is part of his/her
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responsibility. Concept of minimum stock should be clear
member of the stores team (Carter, 1989).
Stock Control: This is among the critical role of stores
personnel. i.e. to manage and control stock in a daily
basis. The process of stock control is performed within the
stores section. The store manager must ensure that the aims
of stock control are achieved. Stores must assess the
information concerning production, sales, and distribution
needed to maintain the stock control system (carter, 1989).
Stock Record: It is responsibility of stores personnel to
ensure adequate and up to date stock record are maintained
for every items held in stock. These records must provide
the kind of information required to control and maintain the
levels of stock established i.e. Level of stock, order
levels, code number and supplier references (carter, 1989).
Stock taking and stock checking: The store manager is
responsible for organizing, supervising and communicating
all stock checks out by organization, he/she is required to
formulate counting sheet, allocate staff, check results,
investigate discrepancies and produce final
accounts(carter,1989).
Storage of stock: It is one of the basic duties of store
keeper to store all the goods delivered to the store.
Storage of the materials entails the correct location of
goods in connection with supplies’ instructions. It require
skill and knowledge that is in line with stores functions,
bearing in mind that some of the materials need particular
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conditions of storage example must be kept dry, etc. It is
the duty of stores to ensure that goods do not suffer damage
or deterioration because of inefficiency of storage
(carter,1989).
Identification and location of stores: Stores management
also entails formulating and updating all system of
products/goods description. This can be easily done through
coding, so as to allow efficient identification and location
of all goods and services held within the stores operation.
It is also the duty of stores to ensure that the item
required is not available, then a suitable alternative is
recommended (where one exist, 1989).
Issue and dispatch: It is the duty of stores personnel to
ensure that the goods required for operation are issued as
and dispatched at the required time. Bearing in mind the
need for proper authorization and strict clerical control in
issuing stock. The issue process should be smooth the status
of the stores throughout the whole organization (carter,
1989).
Inspection: One of the key duties of stores personnel is
inspect and check all deliveries made to the store, these
checks to include such factors as quantity, type, quality,
damage, and shortage. In many cases supplier will not accept
responsibility for damage goods unless they are reported
within a specific number of days of delivery. Information
arising from such inspection has to be passed to purchasing
(carter, 1989).
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Security of stores: Stores management also includes security
and safety is maintained at all times within the stores
building and stockyards. The security element of the stores
manager’s job covers not only theft, but also damage,
windows and stock yard fencing are secured (carter,
1989).Safety will again mean that products with different
nature are stored separately.
Materials handling: One of the basic job to the store team
is the handling of materials in a, quickly and safety way.
Moving goods from the store to the factory or warehouse is
very important duty of the store keeper. Handling is not
just a simple task but it requires a person to be keen since
different materials have different handling style (carter,
1989).
Receipt of stock: It is the duty of the store keeper to
receive and handle all the items delivered to the store: to
check the documentation (delivery notes, packing notes, etc)
and inform purchasing stores management of all goods
received (carter, 1989)
Supply chain: Supply chain concept in nutshell deals with
activities that ensures availability of goods and services
to an organization as and when required economically. On the
other hand the supply chain concept focuses on every step
from sourcing of raw material up to the end user and even
the disposal of a package of a consumer finished product.
The value chain concept is aimed at creating competitive
15
advantage. It treats as a chain of value creating activities
(Kilima, 2004).
2.2 .Theoretical Review
2.2.1 Store Management
Storage is the function of material management which is
vital department on the performance of the organization. In
order to assess stores performance, store’s procedures
which accomplish the stores function should be followed
properly and accordingly for better performance (Jessop and
Morrison 1994).
Morrison (1978) explains the basic objectives of stores
function as to provide service economically. This is
achieved through link between organization and customer. He
added that there should be enough knowledge on material
management concept so as to have accuracy performance of
accounting this point/other stores functions include:
identification, receipt, issue and dispatch, stock record,
stores accounting, stock control, storage, and stock
taking.
2.2.2 Centralization
Centralization of stores function occur when all stores
function are done centrally in a central warehouse, all
departments, units or branches replenish their Stock from
this center ware house(Warman,1980).
The centralization of stores function yield significant
benefits. The advantages of centralization are: it
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facilities control of the total stores operation, manpower,
material, space utilization and there is efficacy space and
equipment utilization. Centralization facilities the
balancing of individual workloads and permits more
efficiency utilization of personnel (Warman, 1980).
2.2.3 Decentralization
Decentralization of store function entails that departments
or operating unit have their own sub-stores which do all
stores operations. Decentralization has the following
advantages: it reduces transportation and packaging cost
due to short distance from the warehouse to users: quicker
delivery to customers: risk on stock is spread out since
there are many sub stores: and better relation with
customers and users departments since their requirement is
quickly delivered (Warman.1980)
A stores department is a center for a large part of the
organization’s business other department in the firm as
well as with the firm supplies, Stores function cut across
all departmental lives (Fabricky and Banks)
2.2.4 Store and stock holding center
Stores may be regarded as stock holding center. Stock may
be held in store for a number of reasons. (Warman
1980)postulates the reasons to why firm hold stocks which
are: to ensure that the materials are available in store so
as to meet, customer demand, to allow for the lead time,
takes advantage of buying opportunities, and to obtain
economies of transport. In relation to this, Location and
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Layout of store are important aspects to be considered. The
location of the stores cans work-flow and thus productivity
and profitability –even in small work.
2.2.5 Selection and training of personnel performing stores
function
On the other hand, efficiency of stores function depends
mainly in selection and training of staff. The selection
and training of staff for the stores must be made with at
least as much care as the selection of operators for direct
production work qualities to be looked for reliability,
accuracy, arithmetic (Jessop and Marrison,1994).
Training improved working conditions and increased
efficiency (Saleemi, 2007).Training is the process of
increasing the knowledge and skill of an employee for doing
particular job. It is an organized activity designed to
create a change in the thinking and behavior of people and
to enable them to do their jobs in more efficient manner.
In industry, it implies imparting technical, knowledge,
manipulative skills, problem solving ability and positive
altitudes. The purpose of training is to enable the
employees to get acquainted with present or prospective
jobs and also increase their knowledge and skills, he
added, training make new employee more productive and
efficiency.
It makes old employees familiar with new machines and
techniques by refreshing their knowledge. Training jobs is
never finished so as an organization remains in business.
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Thus, training is not one stop process but it is ongoing or
continuous process, Training method must be appropriate to
the levels of employees the nature of the tasks and the
purpose of training. The effectiveness of training
programs should be evaluated so that necessary improvements
may be done time from time.
(Carter 1989) added that, Training of staff is vital in
order to make full use of their abilities and talents.
Labour is very expensive commodity and therefore it makes
good economic reasons to make full utilization of this
resource, she added that, training must be seen as an
investment in terms of time, money, and energy on the part
of organization and its management, she then said, the
rewards for this investment could develop into major
operational cost savings.
2.2.6 Stores management and security
Stores management cannot be completed unless there are
enough security which covers not only theft and fraud, but
also stock deterioration, damage, location and special
storage.
(carter,1989) said, responsibilities of stores management
in relation to storehouse security, the store’s manager
has a direct responsibilities for these responsibility for
store security in all areas in which materials are stored.
Each of these responsibility demands great care and
attention to ensure a comprehensive security covered,
example custody of store keys should only be for few people
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to ensure adequate control, although a degree of
duplication is necessary for operational and emergency
factors. However, duplication of keys can be undertaken
after consultation between all parties involved.
2.2.6.1 Control of entry into stores
Carter (1989) said, stores management also ensures that no
unauthorized persons are allowed to enter the stores area.
Store should be restricted, this is can be due to for the
following reasons: one to prevent theft of stores and the
second to prevent persons who should not be in the stores
being injured example, falling stock or for lift trucks.
Many stores construct counters to ensure that unauthorized
person cannot easily enter the stores.
In the case of more open areas, such as stockyards, a
system of pass cards can be employed such cards are issued
by management only to those person who should be in the
stores at given times, In some instances entry to stores
can be controlled by an electronic sensor and the pass
cards are specially coded only to allow entry by the
holder.
2.2.6.2 Marketing of stock
It is the responsibility of the store’s manager to ensure
that certain materials held by the store are marked in some
way to identify their ownership and origin, this applies
especially to items of equipment or items which are of high
value and therefore more liable to theft or misuse.
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There are two reasons for marking stock .Firstly, it
discourages theft. Marked stock cannot be easily sold or
used outside the organization and therefore the stores may
lose a degree of attraction for theft. Secondly, it ensure
that, if stock is stolen and subsequently recovered by
police or other agencies, the latter will know to whom the
goods rightfully belong and thus will arrange for them to
be collected. A great deal of stock is recovered every year
by police but, because of the lack of identification, not
all it is returned to the organization from which it was
stolen (carter, 1989)
2.2.6.3 Fire Precautions
These are very important in relations to stores security
and it is the responsibility of stores management to ensure
that all precautions necessary are taken so that all
equipment and procedures are employed properly. Industrial
fires cost organizations hundreds of millions pounds every
year, and loss of life and high insurance premiums all add
to make fire prevention vitally important as part of the
storehouse operations, signs like “No smoking “must be
clearly placed in all part of store, regardless of the
materials being held.
Stores management make sure that the “no smoking “rule is
maintained: fire -fighting equipment must be strategic
positions thought the store’s installations and must be
regularly inspected and maintained: Alarm systems must be
used in all stores to ensure any outbreak of fire is
quickly detected and the alarm raised: fire drills must21
be properly organized and clear fire instruction must be
place on the notice board and other places within the
store: Regular inspection by the local fire brigade’s
preventions officer will help to ensure a safe and
efficient system: fire doors and emergency exists must all
times be kept absolutely clear and a clear passage along
gangways’ must be maintained to facilitate quick exist from
store in case of fire(carter,1989).
2.2.6.4 Segregation of high risk material and knowledge of
materials
Most stores find it more efficient and more cost effective
to store “high risk” materials, such as petrol, oils,
chemicals, explosives, sprits and others in a store
specially designed for the purpose. Such store is usually
placed a reasonable distance from the main buildings of
organization segregation has the following advantages:
first, expensive fire –fighting and prevention equipment
can be concentrated in areas where it is most likely to be
needed and will therefore provide better fire cover.
Secondly, In case of fire in the main store, it will not be
able to reach the high risk stock and therefore the risk of
a large-scale conflagration is greatly reduced. And third,
fires in the high risk can be left to burn themselves out
of need be because it is separated from the main building
(carter, 1989).
2.2.6.5 Knowledge of materials
Part of the storekeepers’ job is to have a sound knowledge
of the materials and items there are dealing with, such22
knowledge will include all the basic characteristics of a
material, and its behavior in given condition and
circumstances, they must be able to recommend alternatives
I (if they exist)to items requested but not stocked. To be
able to do this the storekeeper must have experience and in
some cases training (carter, 1989).
2.2.7 Procurement performance measurement model
Procurement is an operation or activity which is directly
and closely related to that of stores management. Both are
said to be part of supply management and their common
objective is effective control of the goods and services
purchased by an organization. The relationship between
stores and purchasing involves both parties in having a
series of duties to reach other, interims of their
respective roles within supply management.
Procurement involves numerous activities, consisting of
many material and information flows, It is not as simple as
to convey a need from an internal customer to a supplier
and then deriver the item to the internal customer.
Instead, this process consists of activities that are
continuously changing intensity, duration and quality, thus
producing variations in performance, efficiency and
effectiveness of the purchasing department’s work
(Knudsen,1999).The procurement process consumers the
available resource in the purchasing department(input)to
produce a product or service(output)that aims to satisfy
the customer’s needs (Davenport,1994)This implies that a
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process can be described at different leaves with different
magnitudes of details.
Since acquiring external sources in order to satisfy
internal needs is a job with many varieties and options, it
is important to consider the conditions and environment for
procurement in order to produce goods results, this also
implies that a strategic plan for acquiring external
sources has to exist, operating procedures have to be
designed, customer needs have to be fulfilled and supplier
markets have to be surveyed in advance. Likewise, there is
a need to have clear understanding of the environment and
the structure of the purchasing department, which mainly
consists of the purchasing department, internal customers
and supplies, in order to achieved customer satisfaction
with a high level of efficiency and effectiveness (Knudsen,
1999).
At a tactical level, the operating procedure consists of
numerous at the purchasing department processes orders from
internal customers. While carrying out the procedures,
resources are being consumed and efficiency can be
measured. The main objectives of the purchasing department
are to fulfill internal customer’s needs. This gives rise
to measurement of the effectiveness of the process to
ensure that information about the extent to which the
objective set at the strategic Level has been reached or
not (Davenport, 1994).
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A single performance measure is generally inadequate, as it
is not inclusive-it ignores the interactions among
important supply links and ignores critical aspects of
organizational strategies roles, The actual measurements in
the supply link should consist of a set of generic measures
include time, quality and operational costs. These data
will be able to provide information to pinpoint problem
areas, thus giving rise to encouragement for continuous
improvements. It also allows trade-offs to be made between
the different components in the supply link (Knudsen,
1999).
The spectrum about procurement performance measurement
begins with regards to the efficiency and effectiveness of
the procurement process. Therefore; it leads to the
development of a sound measurement system. the design of a
reliable and effective measurement system has to include
some kind of business model or mental model of the system
as a whole. As there is an extensive list available in this
field, a list of the possible measurement areas provided
serve as the fundamentals (Davenport, 1994).
The most important factor that determines the types of
measurement for assessment of performance is the status of
the stores department in the organization. Organizations
where stores departments have a low, clerical status seems
to focus only on operational efficiency measures, while in
organizations where the stores department has a more
status, combinations of both the operational efficiency
25
measures and effectiveness-related measures are
used(Davenport,1994).
2.2.8 Logistic Management
Stores and inventory management as the interface
”procurement” and Distribution it may argue that stores
management is the most link in the supply chain Stock
represent against money, so it is essential that is safe
and levels are appropriate when measured against budged
and desire service level. Christopher (1992) defined
logistics management as the supply chain processes that
plans, implements, and controls the efficient, effective
flow and storage of goods Services and related information
from the point of consumption in order to meet customers’
requirements. Within a supply chain network, ,Logistics
service providers act as a bridge to formulate the linkage
between the upper and lower supply chain parties
processes(Chan and chug,2005).By work doing so, a “virtual
“enterprises is developed requiring the business owners
work collaboratively in order to carry out the business.
(Pagh and cooper 1998) Proposed a “value chain “concept
which has been widely used in presenting the integration
within the function of firm. Underlying the “value chain”
concept, a firm is defined as collection of key functional
activities that can be separated and identified as a
primary activities consisting of inbound logistics,-
marketing and sales, and service, and support activities of
infrastructure, human resource management, technology
development, and procurement .Hence, maximizing the26
linkage between the activities can result in an enhancement
of the film’s operations efficiency and competitive
advantage.
Similar, a” virtual” enterprises operates in the same
approach of involving different number of supply chain
parties to perform various key functions(Chan and
chan,2005),(Armistead 1996)emphasized that it is important
for supply chain members, in particular, the logistics
service providers, to communicate through peers in
performing the same function or activities, Therefore, in
order to enable effective integration in the supply
chainman efficient information-sharing environment is
mandatory to exchange relevant information thereby
visualizing the logistics processes status between up and
down stream supply chain parties.
In stores management, Logistics play a key role to meet the
required materials or services, (Bowersox and closs 2006)
said, in the context of overall business performance,
logistics exist to allow inventory to achieve desired time,
place and possession benefits location to support the
ownership transfer or value-added creation. Then they said,
if the firm does not consistently satisfy time and place
requirements it is nothing to sell. To achieve the maximum
strategic benefits of logistics, the full range of
functional work must be performed on an integrated basis.
27
2.3 Empirical Literature Review
Researchers in the field of supply chain management tend to
place focus on customer service i.e. getting the right
product to the right place at the right time(Stank et
2001)suggest that collaboration, both internal and
external, is key to improving a firms customer service
because it allows “coordination of operations across
business entities “from an inventory control policy
perspective, supply chain management researchers have
begun to address questions regarding how collaboration
across business entities may influence a firm’s inventory
policy decisions.
Much of this advance has come through collaborative
inventory management approaches, such as continuous
replenishment planning (CRP),efficient consumer response
(ECR),quickly response (QR),and vendor managed
inventory(VMI),Which are designed to better match supply
and demand processes and subsequently control inventory in
the supply chain through external collaboration, CRP and
VMI are very similar automatic replenishment programs,
except that under a VMI partnership, the vendor makes the
replenishment decisions, ECR and QR are programs specific
to the grocery and apparel industries, respectively (Stank
et, 2001).
The inventory speculation approach is, by the most
frequently encountered inventory management approach in
practice (Pagh and cooper, 1998).With this approach, a firm
would purchase items and physically hold such items within28
its storage facilities before demand or usage requirements
for these items are known with certainty. This choice comes
with many benefits, not the least of which is the ability
to respond quirkily to demand or usage needs and the
ability to protect itself against fluctuations in prices.
In addition, with this approach, a firm can also avail
itself of volume discounts and reduced inbound
transportation costs from buying in bulk (pagh and cooper,
1998)
However, the inventory speculation approach is not without
its cost disadvantages. Besides the opportunity cost and
financial burden of having cash tied up in physical
inventory, There is also the incurrence of high inventory
holding costs, given the need for storage, material
handling and tracking, and given the threat and expense
of inventory obsolescence, particularly when operating in
highly volatile competitive environments(pagh and
cooper,1998) notes that the purpose of these collaborative
programs is “to make inventory commitment more efficient
“and that the basic for each of the programs is
information sharing. Their study took an approach to
examining involvement in automatic replenishment programs,
while other authors focused on specific programs.
(Katzenberg 2007) hypothesize that the value of information
in inventory replenishment models is dependent upon the
level of demand uncertainty assumed by the model. Thus, as
the focus of inventory management is more focused on
collaborative arrangements and decision making. Model’s29
demand uncertainty assumption and level of uncertainty
assumed becomes more important to the value that
information sharing based inventory management programs
provide.
In addition to the increased importance of the assumption
of demand uncertainty, the review also examines the
importance of the assumption regarding stock out response.
The occurrence of a stock out generally may be modeled in
one of two ways: backorder (backlog) or lost sale. when an
entity within the supply chain is unable to fulfill
customer demand from on-hand inventory, the demand is
either back ordered, meaning that the demand will be
fulfilled in the future when on-hand inventory becomes
available, or the demand is lost, meaning that the demand
will not be fulfilled.
For a given inventory control model, the stock out
assumption is of importance in terms of model’s application
and relevance to various supply chain echelons. Not that
many models, including the basic EOQ model developed by
Horrid (1913), assume that all stock outs are backordered.
While this assumption is certainly valid in some cases, it
is unrealistic in others and over-simplified for example,
when modeling upstream echelons, such as factories or
distribution centers, it is highly likely that unfulfilled
demand will be backordered and fulfilled at a later time.
However, the reaction to stock outs at the retail store
echelon is generally quite different.
30
(Dudley and Lasserre 1989) indicated that timely and
informative customer demand data can result in improved
firm performance through reduced inventories. (Huson and
Nanda1995) proved that the improvement of inventory
turnover(following JIT adoption)by a sample of 55 firm led
to an increase in earnings per share. hen et al,(2005)by
examining how the market values the firms with respect to
their various inventories policies, reported that firms
with abnormally high inventories have ordinary stock
returns while firms with slightly lower than average
inventories perform best over time.
Autry and Daugherty (2003) examined the relationship
between person-organization fit, job satisfaction, coping
behavior, and their impact on warehouse employee turnover.
One of their findings suggested that person organization
fit could significantly affect employee turnover, because
employees whose expectations about their company and
supervisor characteristics are unmet likely are to leave
their companies.
2.3.1 Empirical Literature Review in Tanzania
Stores and procurement management in Tanzania have been
facing great problem of managing its function this is due
to many reasons (Mlolere 2003) said, the inventory
management problems in Tanzania are based on economic,
cultural, social, moral, professional and technological,
but for the case of this study will mention only one.
Subordination of the supply function and NBMM reaction, he
31
said, there is general negligence of supply functions in
Tanzania.
More emphasis is put in finance than in materials, despite
the fact that findings reveal that over 60 percent industry
cost are on materials related expenditures as reported by
Saroya in his research paper,2013) that a lot of companies
abuse the indispensable role of the supply function. He
mention example in Tanzania Electrical supply Co.LTD, the
function has been reduced from a directorate to a
departmental status. The former director for supplies now
reports to his/he former pear, the finance director.
Mziray S. E. (1994) problems facing government stores is
the shortage of qualified professionals hence delays on
reporting or execution of tasks. Unprofessionalism i.e
theft or fraudulent activities are associated to stock
management.
Companies to other professional bodies, NBMM does not seem
to be implementing the policies contained in Act No 9 of
1981 that established the body. He added, organization with
inventories worth millions shillings do not have the right
people to manage the functions, He asked, what is the
reaction of the board to such a professional subordinating?
Then he said, according to studies carried out ( Hosfed,
1983), culturally
Tanzania’s are non-uncertainty avoiders. That is, a general
term we have ready accept situations without consider ring
the effects in future, such cultural values has a negative
32
impact to the inventory management function. The study
concluded at small holder Development for marginal Area
(SDPMA) found that government: practical organizations and
private stores have and are continuing to experience
significance stock losses. Findings have shown that lack of
education background and training has contributed to stock
losses. Found that poor stock checking and weak internal
audit system has been the causes of stock losses (Suka,
2001)
2.4 Research Gap
(Slack et al 2011) stock accumulates unnecessarily through
poor control methods, poor liaison and sub optimal decision
making. Slack did not consider what could be the cause of
poor control or sub optimal decision making. It did not
consider what might be the reason for poor performance.
(Jessop and Morrison 1994) Storage is the function of
material management which is vital department on the
performance of the organization. In order to assess stores
performance, store’s procedures which accomplish the stores
function should be followed properly and accordingly for
better performance. Jessop had only outlined importance of
store management as a function but he did not explain what
to be done in order to attain efficiency and effectiveness
of this important function. Recognizing it is one step but
how to attain efficiency and effectiveness in the most
important and desired goal.
33
Stores function had been considered as a routine job thus
most organizations or companies did not have qualified and
good control policies. Whoever in today’s world stores
function is more strategic in nature due to its effect on
the financial position of the company i.e. profitability of
the company. Thus many studies did not outline different
factors which can influence whether internally or
externally the performance of stores function. Thus this
research is important since it will help to pin point
different factors which will contribute to efficiency and
effectiveness of store management.
2.5 Conceptual framework (Conceptual Model)
Firm’s performance, apart from other determinants it also
depends on efficiency and effectiveness of stores
management. But effective management of stores is directly
linked with various issues: personnel knowledge and skills,
proper execution of ordering policies, and intention of
achieving stores objectives are some of the issue which
influence stores management, In respect to this study, these
issues build an environment within a study has to be
conducted.
34
Above are the factors that Coca Cola Kwanza LTD can look to
improve Efficiency and effectiveness of Stores Management
System.
Good Ordering Policy and Procedure
Operations of companies are controlled by policies and
procedures. This is to ensure that activities are performed
in favor to the organization, so as stores functions. Does
organization have a specific plan to order different items
in different times or it does not have a clear structure?
Good ordering system will ensure that goods are only
procured when they are needed.
Ordering process is also affected by user department. This
is due to the fact that user department are develop a
requirement for purchase of goods. This ordering policy can
35
either be affected positively or negatively by Management
and User department
Qualified Store Personnel
These are employees who have been trusted by company to
oversee performance and operation of store management unit.
Since stores operation involves different activities which
require a great attention. Stock keeper can account into
loss if he/she does not know how to account stock in a daily
basis. In organizations which use automated system require
personnel who are proactive in such a way that every
transaction is recorded on a spot. Good record management
constitutes among the good qualities of stores personnel.
Management with good recruitment and retention policy will
ensure, that it employee experienced, knowledgeable, skilled
and qualified staff allocated or assigned to perform stores
activity. Hence will improve efficient and effectiveness of
stores management. Vice versa will affect performance
negatively.
Security and Safety Precautions in stores management
Efficient store management system will ensure that goods
stored are well secured depending on the nature of the
goods. Safety precautions will involve the use of PPE in all
stores activity. Store has to be secured and restricted from
unauthorized person to prevent theft. Different controls are
set by different companies to guide stores operation.
36
Management with a tight security and safety system will
always have an outstanding performance hence outlays
efficiency system of stores management. Vice versa will
affect stores performance negatively.
User Department and Top Management
These are the dependent variables i.e they influence
directly the efficiency and effectiveness of stores
management functions. The more the awareness of top
management and user department on the importance of stores
operation and how they support store functions.
User department sometimes they place orders or force to get
material/good from the store without following procedures.
Incident like those can lead to poor performance of stores
management. But once user department and top management is
aware and decide to take a lead on driving performance then
efficiency and effectiveness in managing stock will
increase.
37
CHAPTER THREE: RESEARCH METHODOLOGY
3.0 Introduction
This chapter presents methodological framework of the study.
It provides various procedures to be used during the study.
These are study design, sampling, method of data collection
and data analysis.
3.1 Research paradigm (philosophy)
Research philosophy refers to the systematic search for
existence, knowledge, values, reason, mind, and language.
Any research will require an open mind in order to establish
facts to both new and existing mysteries.
Paradigms or ‘school of thought’ is the shared understanding
of reality. It can also be defined as the consequent
approach / methods to generate knowledge that is held by
group of people who have wide influence in that subject
area. Plato and Aristotle are regarded as the father of
philosophyz.
There are three paradigms of doing research; namely
Positivism, Interpretivism and Phenomenology.
Positivism is based on statistical, physical measurements
conducted by natural scientists to arrive at the conclusion.
39
Positivism relate to quantitative data and it base mostly of
the logical or analytical thinking. Positivism have
developed through several stages known by various names,
such as empiriocriticism, logical positivism, and logical
empiricism, and finally, in the mid-20th century, flowed
into the already existing tradition known as analytic
philosophy (also called linguistic philosophy).It is more
objective
The discipline of phenomenology may be defined initially as
the study of structures of experience, or consciousness.
Literally, phenomenology is the study of “phenomena”:
appearances of things, or things as they appear in our
experience, or the ways we experience things, thus the
meaning of things we have in our experience. Phenomenology
studies conscious experience as experienced from the
subjective or first person point of view. Phenomenology is
based on social science approach in which a particular set
of circumstances and individual’s understanding of the
question concerned with the study is proposed (Churchill. et
1984)
During the research will use Positivism philosophy due to
the following reasons:
Positivism relies on quantitative data that positivists
believe is more reliable than qualitative research.
Quantitative research is more “scientific” in its methods
than qualitative research and thus more trustworthy. In
40
research, quantitative data provides objective information
that researchers can use to make scientific assumptions.
Positivism follows a well-defined structure during studies
and discussions. Positivists believe that since there are
set laws and rules followed, there will be minimum room for
error. This structure also gives little room for variance
and drastic variable changes, thus making the study more
accurate when it comes to experiments and applications as it
tries to follow specific rules using objective mathematical
and scientific tools.
Positivism methodology entails looking for correlations
between different facts. A correlation is a tendency for
two or more things to be found together, and it may refer to
the strength of the relationship between them.
3.2 Research Design
A Research design is the conceptual structure within which
research would be conducted (Kothari, 2006)
This study has therefore opted to use a case research
design. A case study is a strategy that involves the
empirical investigation of a particular contemporary
phenomenon within its real-life context, using sources of
evidence (Saunders et al, 2007).The case study design has
been selected because it provides a deeper study based on
selected sample. It also minimizes cost and time usage.
41
Study conducted at Coca cola Kwanza company limited
(CCKLL),it involved both quantitative and qualitative
approach in order to get insight understanding of the
problem and give room for flexibility of the natural
settings. Therefore the same respondents provided both:
qualitative data.
3.2 Types of Data
Data are facts, figures and other element materials past and
present serving as bases for study and analysis
(Krinshnaswam, 1993). The researcher will use various types
of data depending on their availability and accessibility.
Under this study both primary and secondary data will be
used.
3.2.1 Primary Data
A primary data those which are collected a flesh and for the
first time, and this happen to be original character
(Kothari, 2006), A research gathered primary data from the
areas of study through questionnaires and interviewing all
expected respondents. These are new data collected by a
researcher during a field study. Primary data crucial while
undertaking empirical studies. This will constitute large
part of data collected.
3.2.2 Secondary Data
Secondary those which have already been collected by someone
else and which have already been passed through the
statically processes (Kothari, 2006), secondary data used
42
were secured from available literatures, published and
unpublished documents at the company. These are second hand
data, already prepared by other users for other purposes
these are used to supplement primary data.
Secondary data will help to determine whether Coca Cola
abide to country/international standard, procedures and
requirement. Through secondary data research will be able to
establish a malpractice in stores function. Also to provide
comments and recommendations for change.
3.3 Data Collection Methods
3.3.1Questionnaire
Questionnaire will be administered to the selected
respondents from the selected departments. The
questionnaires will be left to respondents for later
collection. This method aim to minimize cost and also gives
respondents anonymity of expression.
The questionnaire will contain both closed and open ended
Questions. A questionnaire is data collection technique in
which a person is asked to respond to the same set of
questions in a predetermined order (Saunders et al, 2007).
3.3.2 Interview
This is a data collection technique in which an interviewer
reads the same set of questions to the respondent in a
predetermined order and records his/her responses (Saunders
et al,2007).The researcher will conduct face to face
43
interviews with respondents. This will be done after
fulfillment of questionnaires in order to access further
details of data. Data will be recorded using prepared
marking schedule by a researcher. A research will use both
structured and unstructured questions that provide the
opportunity to ask broad questions with the aim of
collecting additional details of data. Interview will aim on
establishing understanding of procedures and policies by
employees.
3.3.3 Observation
The researcher will use direct observation to obtain useful
information, hence will be able to examine and evaluate
challenge associated with Stores management at Coca Cola
Kwanza LTD. This has been considered under the circumstance
the respondent may not give some information especially
where is difficult for them to answer researcher questions
though interview or questionnaires. Observation will assist
to give information mostly on the commitment of top
management to improve stores management system. Observation
will also reveal normal stores operation practice as opposed
to standardized procedures of the company practices.
3.4 Sampling Techniques
There are two sampling Technique that is probability
sampling and non-probability sampling techniques. In this
report Non Probabilistic Technique will applied.
Non Probability sampling
44
These are approaches to sampling result in the elements in
the target population having an unequal chance of being
selected into the sample. Non Probability sampling does not
involve random selection while probability sampling does.
3.4.1 Sample and Sample Size
Sampling is the act, process, or technique of selecting a
representative part of a population for the purpose of
determining the characteristics of the whole population. In
other words, the process of selecting a sample from a
population using special sampling techniques called sampling
(Saunders et al, 2007). The study will select the sample
size that will ensure that it represent the entire
population.
This study will target a population of 35 employees from
different department in order to have better and true
representation of daily routines in relation to stores
management. Researcher will go further and select sample of
25 employees.
Table 1: Targeted population and Sample Size of the study
Section Target
Populat
ion
Sampl
e
Units
Finance Section 6 4
Supply Chain
Section
9 7
Planning Section 4 245
Procurement
Section
7 7
Warehousing
Section
3 2
Engineering
Section
5 3
Total 35 25
Source: The researcher (2013)
3.4.2 Sampling procedure
The researcher will use the convenience sampling method, a
sample of convenience is the terminology used to describe a
sample in which elements shall be selected from the targeted
population on the basis of their accessibility or
convenience to the researcher.
Convenience samples are sometimes referred to as ‘accidental
samples’ for the reason that elements may be drawn into the
sample simply because they just happen to be situated or
administratively, near to where the researcher is conducting
the data collection.
This non probabilistic sampling procedure will help to
establish the base/level of understanding to all employees
who works closely with stores department. Furthermore it
46
will establish the reality as to whether company abides to
its stores policies and procedure or not.
3.5. Reliability and Validity
3.5.1 Reliability
According to Krishnaswami and Ranganatham, (2006),
reliability means the ability of measuring instrument to
give accurate and consistent result.
Reliability can also be defined as the extent to which
results are consistent over time and an accurate
representation of the total population under study is
referred to as reliability and if the results of a study
can be reproduced under a similar methodology, then the
research instrument is considered to be reliable i.e. test
is considered reliable if we get the same result
repeatedly.
The study will rely on Cronbach's α (alpha) which is a
coefficient of reliability. It is commonly used as a
measure of the internal consistency or reliability of a
psychometric test score for a sample of examinees which
means validation of measurement instruments such as
questionnaires, tests, and personality assessments. This
research will use this instrument as reliability statistics
test.
3.5.2 Validity
Validity measures the extent to which the research is
really measuring what it says it is. (Joppe, 2000)
47
provides the following explanation of what validity is in
quantitative research. Validity determines whether the
research truly measures that which it was intended to
measure or how truthful the research results are. In other
words, does the research instrument allow you to hit "the
bull’s eye" of your research object? Researcher will
determine validity by asking a series of questions, and
will often look for the answers in the research of others.
Construct Validity refers to whether a scale measures or
correlates with the theorized psychological scientific
construct; that it purports to measure. In other words, it
is the extent to which what was to be measured was actually
measured. It is related to the theoretical ideas behind the
trait under consideration, i.e. the concepts that organize
how aspects of personality, intelligence, etc. are viewed
Content Validity is the estimate of how much a measure
represents every single element of a construct. It is
qualitative in nature, and asks whether a specific element
enhances or detracts from a test or research program. It is
a good indicator of whether the desired trait is measured.
3.6. Management and Data analysis
3.6.1 Data management
The data were checked for their sufficiency computer
software which is SPSS that helped to assemble data for
final stages. However, prior to that were coded for
efficacy use of SPSS.
48
The questionnaires and all important documents will be
completed, incase anything misses it has to be filled from
the right source, during the interview the researcher will
make sure that all important information is collected.
Collection of only relevant data to the research will help
to minimize errors
3.6.2 Data Analysis
Data analysis was done by using both qualitative and
quantitative methods in order to get descriptive results
and statistical results which are presented using charts
and graphs in chapter four. Quantitative data captured by
structured questionnaire were assessed through simple
descriptive statistics.
3.7 Expected result
At the end of the study, the researcher expects the
following;
The challenges will be revealed and suggestions for
improvement presented the beverages industries management,
awareness to the stakeholders will be established in regard
to the efficiency and effectiveness of stock management.
49
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