RA410.G5 0W7
bite C.1
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A COMPARATIVE STUDY OF 

PURCHASING AND STORES MANAGEMENT

IN

PRIVATE AND PUBLIC HOSPITALS

A THESIS PRESENTED TO THE SCHOOL 

OF

ADMINISTRATION, UNIVERSITIY OF GHANA, LEGON

IN PARTIAL FUFILMENT OF THE REQUIREMENTS 

FOR THE DEGREE OF MASTER OF 

BUSINESS ADMINISTRATION 

BY

SAMPSON OWUSU-AFRIYIE

JUNE 2001

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DECLARATION

I, SAMPSON, OWUSU-AFRIYIE, hereby declare that this thesis, 

which is presented to the School of Administration, University of 

Ghana, Legon, in partial fulfillment of the requirement for the 

MBA Degree is entirely my own work and that no part of it has 

been presented for another degree elsewhere.

< ^ f c 5

(SAMPSON OWUSU-AFRIYIE)

SUPERVISORS

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ACKNOWLEDGEMENT

I would like to express my deep appreciation to all the people who made this study possible. 

I owe my gratitude especially to Dr. K. Adu Poku and Mr. Adjei Sefah, my supervisors who 

took time off their busy schedules to read through the entire work forme, giving me 

guidance, encouragement, and the searching criticisms and knowledgeable suggestions which 

followed each draft they read.

I am also indebted to Mr. Isaiah Offeh Gyimah who gave me the advice and encoragement 

to pursue the MBA Programme, and to the Management of Kibi District, Koforidua Central, 

Holy Family and AGC Hospitals for their help in data collection. I owe my thanks to Miss 

Comfort Hannah Obesebea and Kwabena Aboagye who painstakingly and under pressure 

typed the entire work for me virtually at no cost.

Lastly, I am thankful to Dr. I. R. Osabutey, Dr. Rahman, Sister Agnes Otu, Mr. John Ansah 

(Driver) and indeed the entire General Office Staff of Kibi District Hospital for their support 

and co-operation. Without their help and co-operation, this study would not have been 

possible.

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DEDICATION

This work is dedicated to my father 

Mr. Augustine Owusu-Afriyie who saw the potential in 

me and sent me to school.

It is also dedicated to my wife, Mrs. Elizabeth Owusu- 

Afriyie for her moral, spiritual, social and financial

support.

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i i i

ABSTRACT

Every organization, be it primary, manufacturing, or service depends on materials and 

services to enhance its operations. Material requirements are either in their raw form, which 

are used as inputs in the manufacturing process or finished goods, which are used as 

consumables in the running of the organization.

To ensure continuity of operations, organizations require systematic and regular supply 

of materials, which must be purchased and stocked to be issued, out when the need arises. 

Purchasing and Supply is therefore one of the basic and most important function of every 

organization. Indeed no organization can operate effectively and successfully without 

materials, equipment and services.

In the public health institutions in Ghana, purchasing and stores management function 

has not been approached professionally as it should be. As a result most public hospitals such 

as Korle Bu Teaching Hospital have experienced malpractices in this area, which have 

attracted criticisms from the general public.

Little has been heard about the private hospitals with regards to problems and 

malpractices in the field of purchasing and stores management. It is in the light of problems 

associated with purchasing and stores management in public hospitals that the researcher 

decided to undertake comparative study of purchasing and stores management of private and 

public hospitals to find out, first, which of the hospitals meets professionals standard in 

purchasing and stores management. Secondly, to make the necessary recommendations to be 

implemented by those institutions which do not meet the professional standard of practice in

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order to improve the Purchasing and Stores Management functions to achieve efficiency and 

effectiveness.

Purposive sampling technique was used to select two public and two private hospitals. 

The two public hospitals were Kibi District Hospitals, located at East Akim District of the 

Eastern Region, and Koforidua Central Hospital located at Koforidua also in the Eastern 

Region. The two private hospitals were Holy Family Hospital, located Nkawkaw in the 

Kwahu South District in the Eastern Region and Ashanti Goldfields Company Limited 

Hospital otherwise known as Ashanti Goldfields Company Hospital which is located at Obuase 

in the Adansi West District of the Ashanti Region and Ashanti Goldfields Company Limited 

Hospital otherwise known as A.G.C. Hospital which is located at Obuasi in the Adansi West 

District of the Ashanti Region. The former is owned and run by the Koforidua Diocese of the 

Catholic Church and the latter is owned and run by Ashanti Goldfields Company Limited a 

Mining Company in Ghana.

Data for the study were obtained from both secondary and primary sources. The 

secondary sources included hospital reports, minutes of meetings, research findings, 

newsletters and newspapers.

Primary data were collected through two main methods namely, personal interview using 

questionnaire as a guide and personal observation. The personal interview was the main 

method of data collection and personal observation was used as complementary method.

Three officers of the Hospital, Administrator, the Purchasing Officer or the Supplies 

Officer/Stores Officer and Accountant from each of the hospitals were selected as the 

respondents for the personal interviews. The interview questionnaire was divided into two 

sections -  one on purchasing and the other on stores management. The questionnaire and

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interviews inquired about the availability of qualified purchasing and stores staff, authorization 

of purchases, purchasing initiation, segregation of stores, purchasing and accounting duties, 

availability of stores and purchasing departments, security at stores, availability of storage 

facilities, computerization of stores and purchasing functions, procedure for accepting goods to 

stores, supplier evaluation, registration of suppliers, assessment of stores performance and 

many others. Some of the questions were open-ended and others were closed-ended and 

multiple choice. The responses from the personal interview were recorded manually.

Content analysis and descriptive statistics were employed to analyze the responses.

The content analytical method was used for the open-ended questions. The statistical package 

for social sciences (S.P.S.S.) was used for the statistical analysis.

The results indicated that Ashanti Goldfields Company Hospital met professional standards in 

almost all the indicators used in the study followed by Holy Family, and Koforidua Central and 

Kibi District Hospitals -  in that order. Kibi District Hospital, one of the Public hospitals was 

most deliquent in the professional practices.

Recommendations were made for implementation by the public hospitals in order to improve 

the purchasing and stores management to contribute to the efficiency and effectiveness of these 

hospitals. In addition, the Ministry of Health was advised to understudy in detail the Ashanti 

Goldfields Company Limited Hospital’s purchasing and stores management for possible 

adoption by all public hospitals.

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TABLE OF CONTENT

Acknowledgement 1

Dedication ii

Abstract iii

CHAPTER ONE Page

1.1. Background to the Study 1

1.2. Justification for Studying Purchasing and Stores Management

In hospitals 4

1.2.1. Objectives of Purchasing and Supply Department 6

1.2.2. Functions of Purchasing and Supply Department 8

1.2.3. The role of Purchasing and Supply in Organisations 9

1.2.4. Responsibilities of Purchasing and Supply Professionals in an 

Organisation 11

1.3. The Purpose of the Study 14

1.4. Problem Statement 14

1.5. Objective of the Study 20

1.6. Significance of the Study 20

1.7. Research Question 21

1.8. Scope and Limitations 21

1.9. Organisation of the Study 22 

CHAPTER TWO

2.1. Definition of Concepts 23

2.2. Procurement as a means of cost reduction and increase 26 

Corporate profitability

2.3. Purchasing, Stores Management and Fraud 30

2.4. Problems in Purchasing and Stores Management 32

2.5. Attempts by Ministry of Health to address some of the problems 33 

Associated with Purchasing and Stores Management in Public

Health Institutions

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2.6. Procurement organisation and management in Ministry of Health

2.7. Theoretical Perspective

2.8. Stores Management in Organisations

34

40

47

CHAPTER THREE

Research Methodology

3.1. Introduction 57

3.2. Re-statement of Major Research question 57

3.3. Research Design 57

3.4. Study population/organizational sample 57

3.4.1. Sample Method 57

3.4.2. Kibi District Hospital 59

3.4.3. Koforidua Central Hospital 59

3.4.4. Ashanti Goldfields Hospital 60

3.4.5. Holy Family Hospital 60

3.5. Research Setting 60

3.5.1. History of Kibi District Hospital 61

3.5.2. Role of Kibi District Hospital 62

3.5.3. Koforidua Central Hospital 62

3.5.4. History of Koforidua Central Hospital 62

3.5.5. Facilities at the Hospital 63

3.5.6 Role/Function of Koforidua Central Hospital 63

3.5.7. Ashanti Goldfields Company Limited, Corporate Profile 64

3.5.8. Ashanti Goldfields Company (A.G.C.) Hospital 64

3.5.9. Facilities at the Hospital 64

3.5.10. Mission of the Hospital 65

3.5.11. Holy Family Hospital (Nkawkaw) 65

3.5.12. History of the Hospital 66

3.5.13. Role of the Hospital 66

3.5.14. Mission of the Hospital 66

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3.5.15. Facilities at the Hospital 67

3.6. Sources of Data 67

3.6.1. Primary data 67

3.6.2. Secondary data 67

3.7. Methods of data collection 69

3.7.1. Personal interviews 69

3.7.2. Questionnaire (interview guide) 69

3.7.3. Direct observation 72

3.8. Validity and Reliability of the Study 72

3.9. Data Processing and analysis 73

CHAPTER FOUR Page

4.0. Introduction 73

4.1. Re-statement of data collection methods and tools of analysis 74

4.1.1. Purchasing 75

4.2.1. Status of Purchasing in Hospitals 75

4.2.2. Purchasing Organisation 83

4.2.3. Procurement/Purchasing Process 86

4.2.4. Method of buying 95

4.2.5. Computerisation of Purchasing System 98

4.2.6. Problems hindering smooth purchasing function 99

4.3. Stores Management 99

4.3.3. Basic functions of stores 100

4.3.2. Stores Department 101

4.3.3. Storage Facilities 101

4.3.4. Physical address 102

4.3.5. Material Handling Equipment 103

4.3.7. Availability of trained stores staff 104

4.3.8. Procedure for accepting goods into stores 105
4.3.9. Procedure for stock withdrawal 106
4.3.10. Segregation of Duties 107

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4.3.11. Stock Management Techniques

4.3.12. Monitoring of Supplies

4.3.13. Stocktaking

4.3.14. Identification and disposal of scraps obsolete and redundant items

4.3.15. Safety precaution measures against fire, loss and theft

4.3.16. Assessment of Stores efficiency

4.3.17. Stores Procedure Manual

4.3.18. Computerisation of Stores function

CHAPTER FIVE

5.0. Introduction

5.1. Summary

5.2. Recommendations

5.3. Conclusion

Appendix

Acronyms

References

108

109

110

113

114

115

116

117

117

117

133

137

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LIST OF TABLES

Table 1.1. Expenditure on personnel emoluments, materials, and
Overheads at Kibi Districts Hospital (1998 -  99) 3

Table 2.1 Schematic presentation of stores and procurement processes 68

Table 4.1. Purchasing Department 77

Table 4.2. Availability of Purchasing Officers 78

Table 4.3. Performances of procurement functions in the absence of
Purchasing Officers 80

Table 4.5. Perception of Procurement function 83

Table 4.6. Centralisation and Decentralisation of Procurement function 85

Table 4.7. Circumstances under which invoices are approved 94

Table 4.8. Method of buying 97

Table 4.9. Computerization of Purchasing System 98

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CHAPTER ONE 

1.1. BACKGROUND TO THE STUDY

Hospitals, be they private or public, are set up to achieve some objectives among 

which include satisfying clients, and improving the health status of the people within 

their catchment area. (Abebrese, 1998). Hospitals perform these roles through the 

provision of curative, preventive, promotive and rehabilitative health services. In all 

these activities, hospitals need resources including materials of all kinds, including 

drugs, medical equipment and consumables (Abebrese, 1998). These materials are 

used in the process of health care provision to satisfy the needs of customers 

(patients). It therefore implies that the success or failure of hospitals may depend 

largely upon the performance of the sections of the hospitals in charge of arranging 

for the supply of needed materials at all times. For the simple reason above, such 

responsibilities should always be entrusted in the hands of well-structured 

procurement, purchasing or supplies department for the efficient and effective 

realization of the hospitals’ objectives.

Procurement as a management discipline has developed strongly over the past two 

decades especially within the manufacturing sector. Due to the increasing industrial 

competition, the manufacturing companies have given first priority to many issues 

such as cost reduction, quality improvement, and lead time reduction which are 

associated with efficient and effective purchasing management (Mensah, 1999) 

Compared to the manufacturing sector, organizations and institutions in the service 

sector, have lagged behind in the development of effective procurement and stores 

management system. In service organisations, procurement is regarded as an activity 

that is usually limited only to the placement of orders, invoice checking and 

documentation. The issue of strategic purchasing activities including planning,

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organising and system improvement are not given the required consideration 

(Mensah, 1999). Thus, procurement functions in most of the public hospitals are 

always found in the hands of Hospital Administrators and Medical Superintendents. 

In most of the public hospitals in Ghana, the status of supplies/purchasing activities 

are scattered throughout the organisation and not well managed to play the role of 

ensuring that these institutions obtain value for money for all the procurement it 

makes. Most public hospitals do not have well structured procurement departments 

headed by qualified personnel. Even though these hospital have stores department 

which are manned by stores personnel who are staff of Ministry of Finance, these 

personnel concentrate their function at the stores since they are not competent and 

skilful enough to handle procurement function effectively. The purchasing and supply 

function has therefore been taken over by other senior staff in the hospital who are not 

experts in the field (Mensah, 1999).

There are also problems with the inventory control systems at of these public 

hospitals. Inventory levels are not monitored properly, as result, there are frequent 

shortages of essential materials and drugs in most hospitals especially the two 

teaching hospitals - Korle-Bu and Komfo Anokye (Daily Graphic, 22nd August, 1988 

ppl5). This brings in its wake emergency purchases, which are expensive while 

patients’ lives can be lost if these items are not procured in time.

Due to poor sourcing practices at these hospitals, sometimes the suppliers selected are 

not able to deliver the right quantity and quality of items ordered (Annual Report Kibi 

District Hospital). The resultant effects of these problems are that the purchasing 

function in most public hospitals is not managed to achieve the cost saving as 

emphasised by Mr. Kwame Peprah, the former finance minister. (Mensah, 1999). If

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well managed the expenditure savings can be utilised to employ more doctors and 

other health professionals that the Ministry of Health badly needs.

As can be seen from the Table below, procurement of goods, consumables and 

medical equipment constitute the second highest cost of at the hospital after personal 

emoluments.

Table 1.1. Expenditure on personal emolument, materials and overheads at
Kibi Hospital, 1998 - 1999

EXPENDITURE ITEM 1998 1999

% 0 %

Materials 120m 17.9 242m 27.4

Personal Emoluments 495m 74.1 536m 60.7

Overheads 53m 7.93 104m 11.7

Total 668m 99.93 882m 99.8

As can be seen from the above figures from Kibi Hospital, procurement of materials 

constituted 17.9% and 27.4% of the hospital’s expenditure in 1998 and 1999 

respectively.

It is in view of the problems confronting purchasing and stores management in public 

hospitals that the study is being undertaken to examine the procurement and stores 

management practices of some public hospitals to identify areas which need 

improvement so that recommendations for improvement can be made. The study also

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intends to examine the purchasing and stores management practices of some private 

hospitals to identify areas of strength that may be recommended for implementation 

by the public hospitals. The examination of procurement and stores management 

practices at the hospitals will be made against the standards prescribed by the 

Chartered Institute of Purchasing and Supply (C.I.P.S.) UK, the world’s 

professionally acclaimed institution regulating the standard of procurement practice. 

The study will focus on the entire procurement cycle- establishment of need, methods 

of purchasing, sourcing, and certification of invoices for payment. In the area of 

stores management, the study will focus on inventory system, stocktaking practices, 

inspection and quality control, performance measurement in stores management, 

security, the use of personnel in stores management and stores location system.

1.2. JUSTIFICATION FOR STUDYING PURCHASING AND STORES 
MANAGEMENT IN HOSPITALS

Ghana’s long term vision for growth and development is captured in the document 

GHANA VISION 2020. It defines five main areas for priority attention in the 

medium to long term as follows: maximizing the healthy and productive lives of 

Ghanaians; distribution of the benefits of development; attainment of a national 

economic growth rate of 8%; reduction of the population growth rate from 3% to 2%; 

and, the promotion of science and improved technology as tools for growth and 

development.

Taking inspiration from GHANA VISION 2020, the Ministry of Health published its 

Medium Term Health Strategy document in September 1995, for 1997 -  2001. 

Among other things, it set the direction and provided a framework for development in 

the health sector. The document identified priorities for health development as:

1. Improving access to the health services

2. Improving quality of the services

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3. Improving efficiency in the use of resources needed for delivery of 

services.

4. Promoting linkages with other sectors involved in health delivery.

5. Health financing aspects of service delivery.

It is because of the third priority, that is, efficiency in the use of resources needed for 

delivery of health services that the researcher intended to undertake the study to 

examine purchasing and stores management practices of public hospitals to identify 

areas which needed improvement and the necessary recommendations made for 

implementation to ensure efficiency in the use of health resources. Resources 

available to health sector have been shrinking over the years. For the last decade, 

government allocation to the Ministry of Health has been $6 per capita, compared 

with $10 in 1978. This has had a direct impact on the ability of the Ministry of Health 

to run an efficient and effective system. Insufficient amounts are spent on non-wage 

recurrent costs, leading to shortages of drug and other essential supplies and the 

persistence of weak logistic support system (Source: Health Sector 5 year Programme 

of work, Ministry of Health, Ghana). About 60% of recurrent budgets of most public 

hospitals is spent on the procurement of goods and services. Purchasing and stores 

management area has been identified as the number one area where a substantial 

amount of public funds go to waste in the form of fraud, misappropriation and other 

financial malfeasance (Sapati 2000). Studying the purchasing and stores management 

of hospitals will enable the researcher to identify the weaknesses in the system so that 

recommendations can be made as to how best to improve efficiency and effectiveness 

in the area of purchasing and stores management to cut down waste and fraud.

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1.2.1 OBJECTIVES OF PURCHASING AND SUPPLY DEPARTMENT

It is argued that purchasing policies and strategies should be based on the company 

objectives and strategies and that purchasing objectives must be in accordance with 

the overall company policy.

One of the accepted definitions of purchasing objective is “to obtain materials of the 

right quantity, in the right quality from the right source, delivered to the right place at 

the right time at the right price”. This definition has been criticised by some 

purchasing practitioners as being rather simplistic and superficial. It is still seen as a 

valid statement because the definition does provide a practical framework and has 

been seen useful to many users. However, a good objective as outlined by Bailey et al 

(1994) are as follows,

PRIMARY OBJECTIVES

1. To ensure the uninterrupted flow of production by obtaining and ensuring 

delivery of accepted quality of good and services, at the right time and price,

2. To develop reliable alternative sources of supply to meet company 

requirement,

3. To treat all prices and technical information submitted by suppliers as 

confidential in order to preserve a good business reputation and obtain 

competitive prices,

4. To comply in all respects, with the anti trust laws and with all other applicable 

laws without qualification or evaluation

5. To purchase efficiently and wisely materials and services by an ethical means 

for the company’s use at the maximum end-use value per amount spent

6. To resolve conflict on all purchased goods and services

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7. To provide leadership in the standardization of materials, suppliers 

requirements, services and policies.

8. To provide leadership in the management of inventories of purchased goods so 

as to meet the use requirements of the company’s departments at the lowest 

possible cost

9. To maintain sound co-operative relationships with other departments, 

providing information and advice as necessary to ensure the effective 

operation of the organization as a whole

10. To develop staff, policies, procedures and organization to ensure the 

achievement of the foregoing objectives,

11. To diminish the cost of acquisition, improving operations and procedures.

In addition to these broad objectives are some more specific objectives, among 

which are,

12. To select the best suppliers in the market,

13. To help generate the effective development of new products,

14. To maintain the correct value balance of an organization,

15. To protect the company’s cost structure,

16. To monitor supply market trends,

17. To negotiate effectively in order to work with suppliers who will seek mutual 

benefit through economically superior performance,

SECONDARY OBJECTIVES

There are secondary objectives that are supportive of other functions in the

organization including the following:

18. To suggest to the engineering department materials or components which may 

improve the organization’s products.

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19. To strive to introduce standardization in requirements to simply specifications 

and reduce costs of materials and number of types of inventory.

20. To furnish data in forecasting or assist in forecasting availability of materials 

and trends in prices.

21. To participate in make or buy decisions;

22. To serve sales personnel by bringing to their attention effective methods and 

techniques used by sales forces of suppliers and warn against obnoxious 

conduct observed on the part of such sales personnel.

Adherence to these purchasing objectives would enable purchasing to function 

efficiently and effectively to enable the organization to attain its stated 

objectives.

OBJECTIVES OF STORES MANAGEMENT

Ammer (1978) stated that the objectives of stores management are fourfold. These 

include:

1. To have proper supplies when needed.

2. To carry out the buying and storage functions at the lowest possible cost.

3. To pay the lowest possible prices for purchased supplies that are consistent 

with other supplies management objectives and

4. To operate with minimum investment in inventory and other assets that is 

consistent with other objectives

1.2.2 FUNCTIONS OF PURCHASING AND SUPPLY DEPARTMENT

The purchasing function has a complex network of relations in the company because 

it maintains relationship with nearly all departments within the company. It 

traditionally encompasses the process of buying. It involves determining the need, 

selecting the supplier, arriving at a proper price, specifying terms and conditions,

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issuing the contract or order and following up to ensure proper delivery. In short, 

Aljan (1983) says the purchasing function should obtain the proper equipment, 

material, supplies and services of the right quality in the right quantity, at the right 

price and from the right source.

In this description, the purchasing function is regarded primarily as an operational 

activity. Types of activities, tasks and functions on a broad scale include:

1. Requirement determination in terms of required quality and quantities of 

goods and services that need to be bought. It involves functional co­

ordination with manufacturing, engineering, marketing, finance and quality 

control.

2. The procurement decision, involving makes or buys decisions, standards, 

vendor certification, value analysis, market trends, schedule, cost and budget 

consideration and capacity, control and opportunity alternatives.

3. The procurement process; which also involves source selection, soliciting 

bids, schedule, cost price analysis, negotiation, contract, expediting, term and 

conditions, specifications and contract administration.

4. Materials management, which also includes traffic and receiving, economic 

order quantity determination, inventory management and control, materials 

handling, scrap disposal and stores.

1.2.3 THE ROLE OF PURCHASING AND SUPPLY IN ORGANIZATIONS

In general the scope of the purchasing function goes far beyond the activities of the 

purchasing department. In many companies, buyers buy various goods and services, 

therefore many other departments within the company are actively engaged in buying 

product and services. Limiting us to the role of the purchasing department in the

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purchasing process, one realises that this role varies from company to company and 

situation to situation. According to Lyson (1994), the purchasing roles in an 

organization can be grouped into three main categories.

a. Organizational Roles

i. Decision making which is often realised through purchasing’s 

involvement in strategic long term decisions,

ii. Purchasing also contributes to the profitability of the organization by 

adding value as part of the value chain,

iii. Purchasing also contributes to the design of organization structures 

through the centralisation of functions to obtain economies of scale,

iv. Purchasing as an integrated activity has the role of showing its 

information and expertise with other links in the supply chain 

especially design, production and marketing,

v. Purchasing as an integrated function also has the role of demonstrating 

professionalism with respect to expertise and service,

b. Supplier Roles

i. Purchasing’s role in organizations also entails the establishment of 

mutual relationships with suppliers through partnerships to achieve 

cost reduction and quality.

ii. Purchasing also conducts negotiation to reconcile the views of 

suppliers’ staff and colleagues in the business area.

iii. Purchasing also has the role of locating suppliers both local and 

national to supply goods and services required by the buyers’ 

organization.

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c. Operational Roles

i. Communicate effectively with suppliers to reach favourable terms of 

business also forms part of the roles of purchasing; and

ii. Lastly, but not the least, purchasing has the role of managing and 

controlling inventory where appropriate production line.

1.2.4 RESPONSIBILITIES OF PURCHASING AND SUPPLY
PROFESSIONALS IN AN ORGANIZATION

• Purpose

In order for the company to maintain its position of leadership, it is imperative 

that we continually strive to balance cost, delivery and quality, in every area of 

our business operation as stated in the Policy And Procedure Manual for 

Purchasing and Material Control (1992). Materials and service acquisition cost 

account for substantial amount of operating cost and can provide an excellent 

opportunity for cost reduction and control. It is mandatory in purchasing that the 

responsibility for buying materials and services be assigned to a group of people 

skilled in negotiating, value analysis and other purchasing techniques. The 

primary responsibility of the provision for the purchase of materials, supplies and 

service is the objective that they will be available at the TIME, PLACE, 

QUANTITY, QUALITY AND PRICE consistent with the needs of the 

organization.

• Scope

It is of great importance that to realise that this policy applies to all purchases and 

purchase related documents prepared or for that matter processed within the 

organization.

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• Responsibilities

These responsibilities among others can be seen in the following:

1. Those persons to whom authority has specifically been delegated by the 

Managing Directors or Chief Executives of their organizations are authorised 

to commit company or organizational funds for materials equipment, supplies 

and services,

2. The manager of purchasing and materials control has the responsibility for 

procurement of all goods and services, and to either provide the services for 

such procurement or give functional directions to others with delegated 

authority to perform such services,

3. Purchasing has the responsibility for obligating the company or organization 

and for making the final determination of sources of supply, quantity 

purchased delivery schedules and price negotiations, except where orders are 

so authorised by the manager of purchasing and materials control. These 

decisions will be made in conjunction with operation, marketing, inventory, 

accounting/finance and other departments.

4. All negotiations are to be handled by the appropriate purchasing personnel 

within their delegated authority,

5. Purchasing serves as the exclusive channel through which all requests 

regarding prices and products are handled. The purchasing department 

conducts all correspondence with suppliers involving prices or quotations. In 

cases where technical details are necessary, the user departments may 

correspond with suppliers regarding technical issues. In such cases, the 

purchasing department should be provided with copies of all such

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correspondence. Close communication and co-ordination between purchasing 

and the user departments must also be established,

6. Purchasing department is responsible for initiating and maintaining effective 

and professional relationships with suppliers, actual and potential,

7. All employees involved in purchasing activities will work to maintain and 

enhance their organization’s image by their personal conduct and method of 

doing business,

8. When suppliers’ sales representatives make personal sales calls, they are to be 

directed to call on the appropriate buyer at the time,

9. Purchasing personnel are to inform requesting departments whenever the 

quantity or specifications of materials requested are inconsistent with sound 

purchasing practices or market conditions,

10. Purchasing personnel are to seek to obtain and purchase all goods at the lowest 

possible total end-use cost, considering the guidelines of prices, service quality 

and delivery.

11. All employees engaged in purchasing activities will recognise and practice 

good public relations by all callers and visitors and treat visitors courteously.

12. Supplier selection and product purchased are to meet the basic policies and 

standard practices of the company;

13. Purchasing personnel will work to establish and encourage punctual delivery 

of specified goods and services in correct quantities.

14. The manager of purchasing and material control is to assume full authority to 

question the quality and kind of material asked for, in order that the best 

interest of the company may be served,

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15. Purchasing personnel will negotiate the return of rejected equipment of 

supplies to suppliers; and

16. The manager of purchasing and materials control is to advise management of 

economic conditions and changes significant to the company long and short­

term interests.

1.3 THE PURPOSE OF THF STUDY

The purpose of undertaking this study was to examine purchasing and stores 

management practices of some public hospitals in relation to professional standard of 

practice to identify areas where the private and public hospitals fell short and to offer 

recommendations and suggestions more suitable in rectifying problems associated 

with public hospital procurement and stores management systems. These 

recommendations if adhered to and properly implemented would reduce cost and 

inefficiencies, which were associated with the procurement and stores management 

practices of public and private hospitals. The procurement and stores management 

system of two private hospitals will also be examined for the purpose of comparison.

1.4 PROBLEM STATEMENT

Every organisation, be it public or private depends on materials and services to 

enhance its operations. Material requirements are either in their raw form, which are 

used as inputs in the manufacturing production process or finished products, which 

are used as consumables in the running of the organisation. To ensure continuity of 

operations, organizations require a systematic and regular supplies of materials which 

must be purchased and stocked to be issued out when the need arises (Dery, 1996). 

Purchasing or procurement is therefore one of the basic and most important function 

of every organisation. Indeed organisations cannot operate effectively and 

successfully without materials, supplies and equipment. It is therefore often not

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surprising that, in almost all organizations over 50% of total budget allocation usually 

go into the procurement of materials, supplies and services (Lokko, 1994).

This is especially common with manufacturing firms where revenues of these firms 

are derived from the sale of manufactured products.

The ability of purchasing or procurement department to achieve its objective of 

ensuring continuity of supplies depends on how the function is professionally 

handled. As remarked by Lokko (1994), procurement is a professional game and 

must be played by professional players. The importance of a well-trained 

procurement manager can therefore not be over emphasised. Lokko (1994) in his 

study of procurement system of Volta River Authority (V.R.A.) revealed that the 

effectiveness and efficiency of the procurement system of the authority depended on 

the quality of the human resource assigned to the materials department. Top 

management turns to give attention to procurement and the importance of the 

procurement function is well understood by top management in the organisation. 

Most public health institutions in Ghana do not have well qualified personnel to 

manage the procurement and stores function to achieve their objective of ensuring the 

continuous availability of materials, consumables and equipment needed to enhance 

effective health care delivery. (Mensah, 1999)

Most of the purchasing and store staff currently working in most of the public 

hospitals are not professionally trained. The research findings of Mensah (1999) 

revealed that the highest educational qualification of most supply officers who are 

directly responsible for most procurement activities is G.C.E. ordinary level, while 

about 85% of stores staff had only Middle School Leaving Certificates (M.S.L.C.). 

The study also revealed that the only opportunity for staff development of stores and 

procurement staff was for them to receive short refresher course just before promotion

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exams which could be three or four years interval. The opportunity for furtherance of 

course at the university, polytechnic and any other institutions of higher learning was 

non-existing.

With the increasing competition at the market place, and the globalisation and the 

challenges posed by the world economic order, the proper management of purchasing 

and stores function requires personnel with academic qualification not less than 

Higher National Diploma in Purchasing and Supply or Graduate Diploma, awarded by 

the Chartered Institute of Purchasing and Supply (U.K.).

The ability of purchasing and supply management staff to perform their functions 

effectively to affect the smooth running of their respective organizations depends on 

the status given to the department in the organisation’s organogram (Lokko, 1994). 

Most public hospitals in Ghana do not have purchasing department but have stores. 

Mensah (1999) revealed that most of the public hospitals in the Western region of 

Ghana do not have separate department responsible for procurement. Non­

procurement professionals who do not use workable strategies in sourcing for 

materials and relating effectively with suppliers therefore perform the function. 

Mensah (1999) further observed that, in most of the public hospitals, procurement 

committees consisting usually of the following perform the procurement function:

(a) The medical superintendent in charge of the hospital

(b) The Hospital Administrator

(c) The Accountant

(d) The Principal Nursing Officer

(e) The Pharmacist in charge

(f) One Medical Doctor from the clinical unit.

(g) The Storekeeper.

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The medical superintendent is the chairman of the committee with the Hospital 

Administrator as the Secretary. The Storekeeper or (where there is a supply officer), 

is an ordinary member of the committee. One aspect of the committee system is that, 

although some of the members of the committee have first and doctorate degrees, they 

practice fidly in their various areas of specialisation and hence do have professional 

training in purchasing and stores management to exhibit sound proficiency on the 

procurement committee.

Inventory management is a very important tool in stores management. Through 

proper inventory management organizations are able to ensure that the firm’s 

investment in stock is reduced to the minimum while stock out situations, 

obsolescence, and redundancy are reduced to the bearest minimum and at the same 

time maintaining high service level ( Jessop and Morrison, 1994).

Proper inventory management seems to be lacking in most of the public hospitals in 

Ghana. A study conducted in Western Region about how the hospitals in the region 

are managing their stores revealed that most of the hospitals did not have clear cut 

stock control policies (Mensah, 1999). Although maximum, minimum and re-order 

stock levels were located on their tally cards, they were not in use and orders were 

made as and when needed without taking to account the stock control policy. There 

was absence of forecasting or projected future demands in the stores department. The 

only guide used for this purpose was the quarterly budget (and in some cases yearly) 

drawn by Health Services Administrators in running their respective hospitals. As a 

result of lack of clear stock control policies, most of these hospitals purchased their 

requirement only when the items run out of stock. Most of these items were bought 

under certificate of emergency, which almost invariably resulted in higher prices.

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For the efficient management of stores, adequate storage facilities should be provided 

at all the stores locations. These storage areas should be large enough and well 

equipped enough to permit a suitable arrangement of all supplies and to protect them 

from damage. Storage areas must be clean, organised and well lighted (Jessop and 

Morrison, 1994). Most public hospitals do not have adequate storage facilities to 

protect the stores against theft, obsolescence and redundancies. Mensah-Narh (1987), 

in his study of storage system of Ridge Hospital, revealed that the hospital did not 

have adequate storage facilities. The store was bursting at it beams of roof and that 

did not comply with storekeeping regulations regarding proper storage which helps to 

prevent deterioration, obsolescence and unintentional hoarding of supplies. This does 

not augur well for quality care and has other cost implications as well.

One major flaw of stores management of public hospitals is the monitoring of 

supplies after they have been issued to the user departments or internal customers. In 

most of the public hospitals no mechanism exist to monitor the usage of the supplies 

after they have been issued to the user departments. As a result of lack of monitoring, 

some of the supplies find their way in the homes of the officers in charge of wards 

and other heads of departments. The supplies are sometimes misused since the wards 

in charges do not account for their usage. As revealed by Mensah-Narh (1987) in his 

study at the Ridge Hospital, even though all requisitions for stores were to be 

approved before the storekeeper issued out supplies, no effective measures were taken 

to find out how such supplies were used. As a result, when fresh requisitions were 

made, the Stores Officer only used his discretion to issue supplies.

One factor necessary for the smooth operation of any organisation activities is on 

adequate number of qualified personnel capable of carrying out established plans, 

procedures and practices in efficient manner. Mensah-Narh (1987) further revealed

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that at Ridge Hospital where he conducted his study, there were only two people 

responsible for the management of the stores. The resultant effect of this problem 

was that one person did both the authorisation, issue and record keeping functions. 

This does not provide any control measure; incidentally, it was not peculiar to Ridge 

Hospital alone.

In most of the District Hospitals in Ghana, there is only one Stores Officer who is 

responsible for procurement and all functions relating to stores keeping. Duties must 

be arranged so as to be complementary. The work of one person must be subject to 

automatic check by the work of another. Errors are bound to occur and the 

probability of fraud cannot be ruled out.

Disposal of redundant, obsolescent, scraps and unusable store by sales serves as a 

potentially valuable source of income for most organizations (Jessop and Morrison, 

1994). In addition to being a valuable source of revenue, disposal of unusable items 

helps to reduce the firms capital investment represented by inventory. Additionally, 

clearing the storehouse helps to make space available for other important items. Also, 

it reduces cost of storage such as electricity, labour, insurance, personnel, etc. Despite 

the benefits inherent in the disposal of unusable stores by sales, most of the public 

hospitals have heaps of these items in their storehouses and stockyards and are least 

prepared to dispose them off by sale. The reason cited for the lack of preparedness to 

dispose of the unusable items by sale was that the Stores Inspectorate and Audit 

Service rules for the sale of unserviceable goods are very complicated that sometimes 

management at the hospital prefer to let items rot, rather than to go through 

bureaucratic process to get the items auctioned (Mensah-Narh, 1987).

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1.5 OBJECTIVES OF THE STUDY

The objectives of this study were as follows:

1. To examine the purchasing and stores management practices of some selected 

private and public hospitals in relation to professional standard of practice.

2. To assess the status of purchasing and stores management in public and 

private hospitals.

3. To find out whether public and private hospitals have the requisite staff to 

manage the procurement and stores functions.

4. To find out problems facing the public hospitals in the area of purchasing and 

stores management.

5. To observe measures put in place at the storehouses to protect stores against 

theft, fire and other hazards.

6. To find out training and development programmes available for purchasing 

and stores management staff.

7. To suggest appropriate ways for improvement.

1.6 SIGNIFICANCE OF THE STUDY

The study examined the purchasing and stores management practices of public and 

private hospitals in relation to professional standards of practice to identify areas 

where public hospitals were not doing well so that recommendations could be made 

as to how best to manage the function to achieve cost savings in procurement and 

stores management.

Although this study is an academic exercise, the findings and recommendations can 

be of great benefit to students, government institutions and policy makers. It is the 

researcher’s view that the results would be beneficial to the academia — university

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community, in the sense that it would contribute to the existing works and knowledge 

on purchasing and stores management in public and private hospitals in Ghana.

It is also hoped that procurement and supply chain practitioners, policy makers and 

importantly the Ministry of Health (MOH) would appreciate the information 

contained in this work to improve the purchasing and stores management functions. 

Last but not the least, this work served as a foundation stone upon which further 

studies could be undertaken in purchasing and stores management as management 

tool.

1.7. Research Question

The major research question that the study intended to answer was whether 

purchasing and stores management practices of the selected public and private 

hospitals were consistent with professionally accepted practices using some indicators 

as outlined in the research methodology.

1.8. SCOPE AND LIMITATIONS

The scope of the study covered the procurement and stores management of some 

selected public and private hospitals. The study in each hospital covered purchase 

initiation up to the issue of supplies to wards or user departments. The study also 

covered the assessment of availability of qualified staff to man the various areas of 

supply chain functions, availability of training and development programmes for 

stores and purchasing staff and the status of the purchasing and stores management in 

the hospitals.

In an attempt to do these, the researcher had to work within certain limitations. A 

major one was the difficulty in obtaining research materials including proper 

receiving records covering the various dimensions of stores management. This is one 

problem faced by most government hospitals.

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Some of the respondents were also skeptical about the purpose of the study and this 

adversely affected this study since such people were reluctant to give the needed 

information. To address these problems, the researcher had to confine himself to the 

few available records and rely more on observation and records inspection.

Next, funds, manpower, time and logistical constraints limited the scope of the study 

in terms of the data collected and the depth of analysis made. In spite of these 

drawbacks, it is hoped that the work would contribute in some way to the 

understanding of procurement and stores management practices in public and private 

hospitals and the way in which the implementation of standard practice of purchasing 

and stores management can make the function efficient.

1.10. ORGANIZATION OF THE STUDY

The study was organized as follows:

1. Chapter One -  This Chapter dealt with introduction to the

background of the study, problem statement, objectives of the study, 

significance of the study, research question and limitation of the study.

2. Chapter Two -  This chapter dealt with review of existing literature on the 

topic and theoretical perspective.

3. Chapter Three -  Focused on research on Methodology issues considered here 

included research, design data collection methods, data analysis methods, and 

background of the selected hospitals and others.

4. Chapter Four -  Focused on data presentation, analysis and findings.

5. Chapter Five -  Summary, conclusion and recommendations of the study.

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CHAPTER TWO 

LITERATURE REVIEW

2.1. DEFINITION OF CONCEPTS 

PURCHASING

Lyson (1990) defined organization purchasing “as that function responsible for 

obtaining by purchase, lease or other legal means, equipment, materials, supplies and 

services required by an undertaking for use in production” (P.l). In this definition, 

the term production as used by the writer is used in the economic sense of creating 

utilities, that is, goods and services that satisfy wants. It is not, therefore, confined to 

manufacturing output but also applies to servicing, distributing, etc. in organizations. 

The Oxford Advanced Dictionary (1998)defined procurement as “obtaining especially 

with care or effort,” and according to the Longman Dictionary, “it is a formal way of 

obtaining especially with effort or careful attention.”

Also, purchasing has been defined by Fearon et al (1996) as a “function which 

constitutes the body of integrated activity that focuses on the procurement of 

materials, supplies and services need to reach organizational goal” (P.2).

Weele (1992) provide a classic definition of the Procurement function as to “obtain 

materials of the right quality in the right quantity from the right source delivered to 

the right place at the right time at the right price. (P.2)

Weele (1992) also defined purchasing as “obtaining from external source all goods 

and services which are necessary for running, maintaining and managing the 

company’s primary and support activities at the most favourable conditions” (P.4). 

As a way of summary, purchasing can simply be defined as the process by which an 

organization obtains materials, services and equipment needed to carry out its 

activities in order to achieve its objectives or goals.

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STORES MANAGEMENT

Carter and Price (1993) defined stores as an area within organization where all kinds 

of materials needed for production, distribution, maintenance, packaging, etc. are 

received, stored, and issued. The stores function is therefore basically concerned with 

holding stocks, but stores management covers a great deal more than holding stocks. 

It covers the following activities:

(a) Holding, controlling and issuing stocks

(b) Control of all storehouse, stockyards and outside storage

(c) Materials handling functions

(d) Quality control activities

(e) Training of stores staff

(f) Clerical administration of stores operations.

The Institute of Materials Management defined stores management as “the 

management process which integrates the flow of supplies into, through and out of an 

organization to achieve a level of service which ensures that the right materials are 

available at the right place at the right time, of the right quantity and quality and at the 

right cost (pp3 and 4). It includes the functions of procurement, supplies handling 

and storage, production and inventory control, packaging and associated information 

systems and their application throughout the supply and distribution sectors.

Stores management thus further encompasses all the co-ordinated functions 

responsible for planning, acquisition, storage, movement, control and monitoring of 

supplies to optimise the usage facilities, personnel, capital funds and to provide 

customer service in line with organizational goals. The planning function involves 

the preparation of budgets and standardisation of specifications.

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Stores location, stores classification, coding and cataloguing, receipt of purchased 

items, inspection, storage or returns, protection of stores, issue of supplies to user 

departments, provision of cost data, stock records, disposal of obsolete, surplus or 

scrap material are the activities that comes under the storage function. The 

distribution and monitoring of stores involve the determination of the procedures and 

process of distributing supplies to the various user departments within the hospitals 

and the monitoring of how such items are being used.

Stock control or inventory management involves the determination of stock levels 

(i.e. the minimum, re-order and maximum levels) and the quantity of stores to be 

brought at a time.

PUBLIC HOSPITALS

For the purpose of this study, public hospitals include all hospitals that are financed 

from the consolidated fund and donor supports collected by the government. They 

include teaching hospitals (e.g. Korle-bu Teaching Hospital and Komfo Anokye 

Teaching Hospital), Regional Hospitals (e.g. Effia Nkwanta Regional Hospital, Cape 

Coast Regional Hospital, Koforidua Central Hospital), District Hospitals (e.g. Kyebi 

District Hospital, Suhum District Hospital, and Tarkwa District Hospital).

PRIVATE HOSPITALS

Private Hospitals in Ghana can be broadly divided into three as follows:

a. Private for profit

b. Charitable Hospitals (Mission Hospitals)

c. Those established by companies and organizations to cater for the health needs 

of their staff and dependants.

1. Private for profit -  These are hospitals which are established with the aim of 

providing health care for profit and also complement government effort in

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providing health care services for Ghanaians. Examples of these hospitals 

include Nyaho Clinic, Women’s Clinic, etc.

2. Charitable Hospitals (Mission Hospitals) -  These are hospitals established 

by church missions to complement government efforts in providing health care 

services for Ghanaians. Examples include Iran Clinic operated by the 

People’s Republic of Iran and various Catholic, Methodist and Presbyterian 

Hospitals spread over the country.

3 Industrial Hospitals

Hospitals established by industrial concerns to cater for the health needs of 

their staff and dependants. Examples include Ashanti Goldfields Company 

Hospital, Trust Hospital, Volta River Authority Hospital, Valeo Hospital, 

Ghana Manganese Corporation Hospital at Nsuta and others.

2.2 PROCUREMENT AS A MEANS OF COST REDUCTION AND 
INCREASE CORPORATE PROFITABILITY

Lokko (1994) emphasised that interest in procurement within organizations has

increased in recent years and at least two reasons can be mentioned for this.

a. Procurement’s share of a company’s turnover is usually large and so any 

improvement in procurement will substantially contribute to the profitability 

of the company.

b. The introduction and implementation of the total logistics management 

concept is quite recent. Optimum adjustment of the in flow of goods to the 

requirements of the company will lead to a minimization of the cost of 

procurement and rejection of goods required for the production or sales 

process, or rendering of services.

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Reduction of operational costs is a key issue to any organization. Most 

companies, according to Lokko (1994), respond to this issue by:

a. Finding further ways of reducing manpower cost either by introducing 

automation or contracting out certain activities which are not 

considered part of the core activities of the business such as security, 

clearing, cleaning, maintenance, transportation, and advertising.

b. Review or reduce the number of facilities required to run the business.

c. Introduce new technology to change the way products are made or the 

services are provided.

d. Review of other operational costs.

But Lokko (1994) contends that the issue of cost reduction can also be 

effectively tackled from the procurement angle. It is almost as though 

executives believe that purchase costs are inevitable, a function of market 

prices and there is not much one can do. But something can be done to 

achieve cost reduction through procurement. The example below is cited to 

buttress this point. For instance, through effective procurement activities, the 

Ghana Supply Commission has been able to save huge amounts of money for 

the nation in general. In 1983, the Ministry of Roads and Highways was to 

spend $2,928,445 on 43 Bailey bridges. When the Supply Commission 

processed the indent through the tender system, savings of $1,091,529.71 were 

made. This money was used in buying 11 more bridges of different sizes for 

the Ministry.

In 1983 the Ghana Civil Aviation Authority was to utilize a £2.5m E.C.G.D. 

credit facility to purchase communication equipment for the Kotoka 

International Airport. The Commission was however able to procure enough

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equipment with the same amount of money for the Kumasi, Tamale and 

Sunyani Airports when tendering was used. Another example of the 

advantages of efficient procurement processes is when in 1984, the 

Commission was again able to make a savings of 018,459,145.90 which was 

used to procure stationery for the Ministry of Finance and Economic Planning. 

The original cost estimate by the Ministry had been 022,522,500 but was 

procured by the commission at 04,063,354. In general, the Supply 

Commission was able to make a saving of over 02.5b in 1992 on various 

procurement activities for the government of Ghana. (A paper delivered by a 

staff of Ghana Supply Commission during the annual conference of the 

institute of purchasing and supply on the topic “ the strategic role of 

procurement as aid to economic development.)

Lokko (1994), in his study of procurement strategies of Volta River Authority 

(V.R.A.) revealed that 01,000,000 savings made by the materials management 

department reflected in the profit and loss statement as a profit. However, if 

the company sold 01,000,000 worth of electrical power, the contribution to 

profit would be less. Lokko further revealed that, even though the materials 

Management Department of the V.R.A. could not come out with clear cut 

figures, a lot of cost was slashed through:

1. The evaluation and tendering technique

The right purchasing techniques and policies such as competitive bidding, a 

good vendor base, the use of a tender evaluation system and controls such as 

signing authorities, went a long way to illustrate the efficiency of the materials 

management department of V.R.A. when compared to other corporations.

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2. Transportation and cost reduction -  Transport services was 

purchased with much caution as any materials or services were 

purchased. The shipping unit of the materials management department 

was responsible for creating strategies for procuring transport services, 

arranging shipping terms, identifying and conducting transportation 

cost reduction project. The unit achieved cost reduction by the use of:

i. Cost savings multi-modal arrangements with its shipping 

agents and freight forwarders.

ii. Commodity rates -  this is possible because shipments are 

repetitive and relatively large. These rates are obtained from 

the carrier.

iii. Arranging special handling and packaging costs for fragile or 

unusual items. This cost was borne by the carrier at a much 

minimal cost.

3. The sale of surplus items -  Surplus is usually associated with 

mistakes in over procurement, wasteful production processes and 

inefficiencies in general. It therefore turns to rarely receive the 

attention of management. This should not be the case because profits 

are maximized only when elements affecting cost are fully controlled. 

At VRA, all surplus items were sold to workers first where this was 

possible and the rest were sold to the public. This aided in the 

prevention of over stocking. It also reduced depreciation and tax 

expenses. Hence, according to Lokko (1994), the task of the Disposal 

supervisor is to ensure that surpluses are disposed of with optimum 

profitability.

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4. Efficient Inventory Management

The materials management department saved cost through the use of a well planned, 

controlled and efficient inventory policy. By controlling and regulating its block 

levels, the department cuts down cost on:

i. Storage costs, and

ii. Insurance costs -  An additional stock of 050,000 for instance, 

would have been an additional asset on which premium must be 

paid.

The effects of poor inventory control management is unfortunately not directly visible 

on the operating statement as a composite cost of inventory management. 

Nevertheless, this indirect cost, dispersed and hidden throughout the operating 

statement can have significant impact on profit. The responsibility of inventory 

management should therefore lie with top management that should carefully 

formulate and periodically review the basic policies and operating plans that 

constitute the framework within the inventory control operation functions. This is 

practiced by the VRA and is reflected in its organizational structure, with the head of 

the department being raised to the level of a Director.

2.3. PURCHASING. STORES MANAGEMENT AND FRAUD

Purchasing of materials and services and stores management areas are where cost 

savings should be made. But in Ghana as far as public hospitals are concerned, 

purchasing and stores management area has been identified as the number one area of 

fraud and corruption. Mr. Brian Sapati, Acting Executive Director of Serious Fraud 

Office, disclosed this when presenting the annual report of his department for 

1999.(Annual Report S.F.O. 1999)

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Mylton (2000) observed that purchasers could play a huge part in fighting fraud. He 

said that the purchasing profession can contribute to fraud prevention or reduction by 

controlling supply chain and supplier selection process, as well as separating tasks 

and policing staff. Sherwin (2000) partner in consultancy, Enest and Young’s Fraud 

Investigation Department and a co-ordinator of the survey, “Fraud -  the unmanaged 

Risk”, said 60 per cent of 739 respondents world wide have suffered at least one case 

of fraud in the past. “Companies have to look at how buyers are monitored and how 

robust the controls are”, he added. The survey found that 43 companies including 12 

in the U.K. had suffered more than fifty (50) cases of fraud in the past year and 

incurred losses of more than £625,000. Almost half of the cases involving firms in 23 

sectors, concerned banking and financial services. According to Bryle (2000), there 

are a number of basic controls that can be introduced to supply chain processes that 

can help to reduce fraud risk. She mentioned in particular the segregation of duties 

especially between processing and paying of invoices. Bryle (2000), emphasised the 

importance of controls when selecting suppliers. She said “relationships between 

buyers and suppliers must be policed and staff should declare gifts. The survey found 

that large firms were more likely to employ certain fraud controls, such as hotlines for 

reporting suspected cases, awareness training and a clear policy on fraud. “The 

bottom line is that companies must educate people about fraud, said Peter Connor, 

Director of Corporate Investigations at Business Intelligence Firm is Risk Advising 

Group.

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2.4. PROBLEMS IN PURCHASING AND STORES MANAGEMENT

In December 1978, an adhoc group of experts convened by UNCTAD in Geneva

listed the following constraints to improving efficiency in procurement with special

regard to least developed countries.

1. First and foremost, lack of suitably trained personnel, under utilization of 

existing staff and unsatisfactory working conditions in the procurement 

function resulting in low morale.

2. High cost of freight, insurance and other services related to imports.

3. Unfavourable prices due primarily to small sizes of orders, and the 

monopolistic position afforded to suppliers through the existence of narrow 

trading channels.

4. Inadequate or outmoded government procurement regulations.

5. Increased “landed cost” due to port congestion, insufficient transport capacity 

and for land locked country delays and cost in transit movements.

The group noted that if some of these constraints could be removed and 

procurement efficiency improved for instance by 5%, the resulting reduction 

in an import bill amounting to 20% of a country’s G.D.P. would be equivalent 

to a 1% increase in G.D.P. The group also pointed to the fact that better 

procurement would save money immediately, while the benefits of export 

promotion schemes generally take a long time to materialise.

Purchasing today is still deeply surrounded by about the same troubles that 

appear in different forms and in different parts of the procurement process and 

its support services. These include inadequate qualified personnel, low status 

given to the procurement and stores management in most hospitals, lack of

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transparency in the procurement function, attempt by other professionals such 

as accountants to take over the procurement function (Mensah 1999).

2.5. ATTEMPTS BY MINISTRY OF HEALTH TO ADDRESS SOME OF THE 
PROBLEMS ASSOCIATED WITH PURCHASING AND STORES 
MANAGEMENT IN PUBLIC HEALTH INSTITUTIONS

As a standard measure of combating malpractice in the supply contracts in 

government hospitals and enhancing health delivery in Ghana, the past Minister of 

Health, Honourable Samuel Nuamah Donkor, in the Wednesday 16th June, 1999, 

edition of the “Daily Graphic” stated the Ministry of Health new procurement 

methods for the supply of items. Mr. Nuamah Donkor further announced the 

formulated national procurement plans to serve as the basics for centralised 

procurement and supply of medical items to all government hospital in the country , 

as follows:

1. All public hospitals including Teaching and Regional Hospitals would be 

required to submit to the Ministry of Health (MOH) at the beginning of each 

year, their annual procurement plans which would include requirement of 

drugs and non drug items.

2. All inputs from the hospital as well as from others to be added to the list 

would be synthesised and merged to constitute the national procurement plans.

3. After this, an international competitive bidding system in which both local and 

foreign companies would be eligible to participate, would then be set in 

motion to select competent companies that can supply the required medical 

suppliers on time and at the lowest possible cost without sacrificing quality.

4. Such competitive bidding should normally take place and be completed for the 

procurement to be made for the hospital within the next quarter of the year.

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5. Companies participating in the competitive bidding would, among other things 

be required to submit to the Ministry, copies of their performance bonds as 

well as samples of the items they intend to supply.

6. Such samples would then be taken through technical valuation by a committee 

of experts, comprising end users like surgeons, physicians, pharmacists, 

gynaecologists, ophthalmologists, nurses and others to ascertain their 

reliability and usefulness before any commitment is made to any supplier by 

the ministry.

7. The implementation and administrative steps will be taken by the ministry to 

ensure that bid winners supply directly to the respective hospitals to avoid 

over centralisation and concentration of supplies at the centre.

8. The institutionalisation of adequate checks to closely monitor such supplies to 

ensure that they conform with samples already evaluated and accepted.

According to the Minister, it is generally believed that the above procurement 

strategies and policies would be aimed at ensuring the prevalence at all health 

institutions of uniform prices of drugs and other medical items to protect the 

people as opposed to the situation in which possibilities exist for imposition of 

varied and higher prices to the detriment of those seeking medical care in Ghana.

2.6. PROCUREMENT ORGANISATION AND MANAGEMENT IN MINISTRY 
OF HEALTH

In addition to the strategies outlined above by the Ministry of Health to strengthen the 

procurement and stores management system within the ministry, a procurement 

procedure manual has been developed. The procedure manual was developed as part 

of the five year Medium Term Health Sector Strategy (MTHS), 1997 to 2001, for 

Ghana that identified procurement as one of the key areas for capacity building. The

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MTHS is based on a sector wide approach where financing will be channeled through 

a common fund, the health account. It has been planned to organize procurement 

under specific Ministry of Health (MOH) procedures. The most important aspect of 

the procurement reforms is the establishment of procurement unit within the Ministry. 

The procurement procedure manual also covers procurement of works and services. 

The manual stipulates how procurement should be organized at the national, regional, 

districts and hospital levels.

National Level

The newly established Procurement Unit (PU) which falls under the Stores, Supplies 

and Drug Management Division (S.S.D.M.) of Ministry of Health.

Organisation Structure for procurement and supplies in Ministry of Health, 
Ghana

STRUCTURE OF SUPPLY. STORES AND DRUGS MANAGEMENT 
DIVISION OF MINISTRY OF HEALTH GHANA

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S. S. D. M -  Stores, supplies and Drug management 

The S.S.D.M. has the following objectives:

1. To establish the timely procurement of all consumable goods for the public 

health sector in optimal quantity, in the best possible quality and at the most 

competitive price.

2. To establish good storage and distribution system(s) for all goods with 

appropriate linkages with the procurement systems.

3. To establish, together with the Health Administration and Support Services 

(HASS) Human Resource Development Division (HRDD) and Policy, 

Planning, Management and Evaluation Division (PPME) the timely 

procurement and distribution of all equipment, works and services for the 

public health sector in optional quantity, in the best possible quality and at the 

most competitive price.

4. Together with other divisions to establish the timely mobilization of funding 

for procurement, clearing and distribution.

5. To establish a good management system for the cost recovery schemes.

The supplies, stores and drugs management division has the overall responsibility for 

the Supply systems in the Public Health Sector, including procurement. The SSDM 

supervises guidance for the executive functions of storage and distribution delegated 

to the Central Medical Stores (CMS) and Procurement delegated to the Procurement 

Unit (PU) as well as to the lower levels.

The main tasks of Procurement Unit, related to the above mentioned objectives are to:

• Maintain and update the procurement procedures, including Standard Bidding 

Documents (SBDs).

• Execute procurement on a national level, including

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- Preparation, implementation and monitoring of procurement plans 

Options appraisal of capital projects

Preparation of bidding documents using standard bidding documents. 

Launching of tenders 

Evaluation of tenders

- Facilitating Logistics e.g. clearing of goods

- Monitoring contracts

• Manage procurement through procurement agencies (including UN -  agencies);

• Co-ordinate emergency procurement and donations.

• Provide training and supervise procurement at regional and district levels;

• Advise on all procurement issues

• Make necessary preparations for the MOH procurement committee;

•  Report to the auditor for post procurement review; and

• Report to Director, S.S.D.M.

The Procurement Unit reports to the Director S.S.D.M. and also assists the Director S.S.D.M. 

in his work in the Ministry of Health Procurement Committee that bears the end- 

responsibility for all procurement on behalf of MOH. The tasks of the MOH-Procurement 

Committee, which has the overall supervision of the procurement in Ministry of Health, are

to:

1. approve the yearly procurement plan,

2. endorse every intended purchase beforehand, in or outside, the approved 

procurement plan;

3. endorse the Tender Documents (National and Regional level)

4. head the bid opening of tenders;

5. if applicable, give instructions on negotiations; and

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6. make decisions on award/orders based on the Recommendations of Award or Proposals 

for orders/contracts.

The MOH Procurement Committee consists of all the directors of the various divisions as 

members with Minister of Health as Chairman and Director of Supplies, Stores and Drugs 

Management as the Secretary. The Director of SSDM is assisted in his work by the Head of 

Procurement Unit.

Regional and District Level

The responsibility for procurement at the regional and district level lies with the Regional and 

District Health Administrations. Specific MOH Procedures for the procurement of goods 

have been described in the Financial Handbook of 1996 and Rules and Instructions for 

Accounting, Treasury and Financial Reporting of 1998 (ATF), both issued by MOH with the 

consent of the Ministry of Finance. The A.T.F. contains the ruling instructions for the 

Budget Management Centres (B.M.C.). However, it is the Financial Handbook that describes 

procurement more extensively including, for example, the role of procurement Committees. 

The following instructions have been extracted from the Financial Handbook. At all levels 

procurement committees will be formed. The procurement committees of Regional Health 

Administrations comprise (at least) the following members:

• Regional Director of Health Services

• Regional Health Services Administrator

• Regional Accountant

• Regional Supply Officer

• Regional Pharmacist (is deputy Director of Pharmaceutical Services.

The procurement committees of the hospital comprise (at least) the following members:

• Medical Superintendent in charge

• Hospital Administrator

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• Hospital Accountant

• Hospital Supply Officer

• Hospital Pharmacist

The procurement committees of training institutions comprise (at least) the 

following members:

• Principal

• Representative of teaching staff

• Accountant

• Supply Officer

• Hostel Warden

The Procurement committees of the District Health Administrations comprise (at least)

• District Director of Health Services

• Accountant

• Two other members of the District Health Management Team.

Procurement Officer

Another area covered by the Procurement Manual is the appointment of Supply or 

Procurement officer. The document emphasized that every health institution should appoint 

procurement or supply officer to execute the procurement function. The manual states that 

purchasing/procurement/supply officer should not have any storekeeping functions to ensure 

segregation of duties and internal control.

Duties of Procurement Officer

1. Preparation of procurement plan

2. Sourcing items by using procurement methods

3. Evaluation of quotations

4. Contracting out services and works

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5. Preparation and submission of annual report on the departmental activities 

Qualification for appointment as Supply Officer

To qualify to be appointed as a procurement officer, the manual provides that the one must 

have one of the following:

1. First Degree Holder

2. HND in Purchasing and Supply

3. In-service Training in Standard operating procedures for procurement in Ministry of 

Health10.

2.7. THEORETICAL PERSPECTIVE
THE PURCHASING (CYCLE) PROCESS

1. Purchase Requisition

Purchasing process is initiated when Stores Department or the ultimate user 

department issues purchase requisition. In the Materials Requirement Planing 

(MRP) environment the planner releases a planned order authorising the 

purchasing department to go ahead and process a purchase order;

2. Purchase Order Specifications

During this stage of the purchasing process, the purchasing requirements are 

determined and the company is also faced with the ‘make or buy’ question. It 

has to determine which products or activities will be produced or performed 

by the company itself and which products or activities will be contracted out. 

This contracting out issue starts by drawing up a specification of these items 

that will be purchased and consists of the following stages:

a. Drawing up of functional specification. This describes the functions 

that the product must fulfil for the user. The advantages of such a 

specification as Weele (1997) puts it are:

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i. Potential suppliers are given the best possible opportunity to 

contribute their expertise.

ii. New technologies can be used, technologies that the buyer is 

not familiar with;

iii. It creates one standard, against which all concepts can be 

evaluated.

b. Develop a ‘detailed technical specification’. This describes the 

technical properties and characteristics of the product.

c. Define “logistic and maintenance specifications”. These describe how 

the product should be delivered, the conditions in which the product 

will be processed and requirements concerning maintenance and after 

sales service.

3. Supplier Selection

After the purchasing requirements have been defined and described in the 

specifications, the buyer can start his market exploration. Identifying and 

selecting suppliers is a major responsibility of the purchasing department. 

When drawing up the technical specifications, the practical feasibility and 

costs are estimated. The extent of the market search and supplier evaluation 

will depend on the items to be purchased, whether the items have been bought 

before or not. In this direction, Robinson et al (1967) describes three buying 

situations as follows:

i. Straight re buy -  where repetitive purchasing of similar items is carried 

out from the same supplier;

ii. Modified re buy -  where the purchase is modified in some way, for 

example a revised specification is applicable;

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iii. New task -  where no purchasing experience exists in respect of the 

particular item to be bought.

For a new task buying situation the supplier evaluation criteria is a bit 

complex and sometimes demands visiting the potential suppliers to assess their 

ability to carry out the contract if they are awarded the contract. In this 

direction, Lyson (1990) recommended two main ways of evaluating suppliers. 

These are:

a. Desk research -  using published or unpublished data already in 

existence. Examples include company reports, balance sheet, strike 

records and others Desk research is undertaken to evaluate the 

financial position of a prospective supplier to find out whether she/he 

will be able to supply the items after the supply contract has been 

awarded.

b. Field research -  the purpose of this research is to obtain further data 

regarding the technical, production and managerial capabilities of a 

prospective supplier by a visit to his company. Field research is best 

undertaken on a team basis first to enable each member of the team to 

evaluate the supplier from a specialist view print; secondly, to share 

responsibility for the decision to approve or reject the supplier. Desk 

research should always precede field research. To facilitate the work 

of the appraisal team, checklist for supplier visit is prepared. Below is 

the checklist of areas, which warrants particular attention on visit to 

suppliers prepared by a sub-committee of the Institute of Purchasing 

and Supply.

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Personal attitudes: This area of the checklist asses the attitudes of the 

supplier’s company employees towards their work and this provides an 

indication of the likely quality of their outputs and service 

dependability. The state of morale will be evident from:

i. An atmosphere of harmony or dissatisfaction among the 

production workers.

ii. The degree of interest in customer service on the part of 

supervisory staff.

iii. The degree of energy displayed and interest shown in getting 

things done.

iv. The use of manpower -  whether economical with everyone 

usefully busy or extravagant and costly with excess people 

doing little or nothing.

Adequate and Care of Production Equipment

Close observation of the equipment in a plant will indicate 

whether it is:

i. Modem or antiquated;

ii. Accurately maintained or obvious worn;

iii. Well cared for by operators or dirty and neglected;

iv. Of sufficient capacity to produce the quantities required;

v. Of proper size or type to produce the buyer’s requirement;

Technological know-how of supervisory personnel

This segment of the checklist is intended to assess foremen, shop

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superintendents and others to asses their technical knowledge and their 

control and improve operations or processes under their supervision.

d. Means of Controlling Quality -  Observation of the inspection 

methods will indicate their adequacy to ensure the specified quality of 

the product. Attention is given to the following:

i. Whether the materials received are chemically analysed and 

physically checked.

ii. Frequency of inspection during the production cycle.

iii. Employment of such techniques as statistical quality control.

iv. Available of statistical quality control.

e. Housekeeping -  A plant that is orderly and clean in its general 

appearance, indicates careful planning and control by management. 

Such a plant inspires confidence that its products will be produced with 

the same care and pride in their quality. The danger of breakdown, fire, 

or disasters will also be minimised with consequent increased 

assurance of continuity of supply.

f. Competence of technical staff

This segment is intended to assess design, research or laboratory staff 

knowledge of the latest materials, tools and processes relating to their 

products and on anticipated development in their industry.

g. Competence of Management

This segment is designed to appraise the executive personnel of the 

suppliers company.

After the above exercise, some of the suppliers are selected and 

registered to form the supplier base of the institution.

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4. Request for Quotation.

For major items, it is usually desirable to issue a request for quotation. This is 

a written enquiry and is sent to enough registered suppliers to be sure 

competitive and reliable quotations are received. It should be noted that, this is 

different from a sales order. After the suppliers have completed and referred 

the quotations to the buyer, they are analysed for price, compliance to 

specification, terms and conditions of sales, delivery and payment terms. The 

quotations must be evaluated for technical suitability. The final choice is a 

compromise between technical factors and price.

5. Determining the Right Price

This is a major responsibility of the purchasing department and is 

closely tied to the selection of suppliers. The purchasing department is 

responsible for price negotiation and will try to obtain the best price 

from the supplier.

6. Issuing A Purchase Order

After the terms and conditions of the contract have been agreed and 

recorded, the order can be placed. A purchase order is a legal offer to 

purchase. Once accepted by the vendor, it becomes a legal contract for 

delivery of the goods according to the terms and conditions specified 

in the purchase agreement. The purchase order is prepared from the 

requisition or the quotation and from any other additional information 

needed. A copy is sent to the vendor, copies are retained by purchasing 

and are sent to other departments such as accounts, the originating 

department and receiving.

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7. The Purchasing Agreement

After bids have been received and evaluation done, the lowest 

evaluated bidder is selected, a contract will have to be drawn up. 

Depending on the industry, the contract may refer to specific additional 

terms and conditions. The technical content of the purchase agreement 

naturally depends on the product or project that is to be purchased. 

Specific commercial and legal terms and conditions will vary from 

contract to contract, differences being caused by purchasing policy, 

company culture, market situation, product characteristics, etc. Several 

important aspect of the purchase agreement also includes: price and 

delivery terms, terms of payment, penalty clauses and warranty 

conditions as well as other arrangements such as insurance and safety 

regulations, transfer of rights and obligations

8. Follow up and Delivery

The supplier is responsible for delivering the items ordered on time. 

The purchasing department is responsible for ensuring that this is done. 

If there is any doubt that delivery dates can be met, purchasing must 

find out early enough so that corrective actions can be taken. This 

might involve expediting, transportation, alternative sources of supply, 

working with the vendor to solve his problems or rescheduling 

production.

9. Receiving and Accepting Goods

When the goods are received, the receiving department inspects the 

goods to be sure that they are those ordered, are in right quantity and 

have not been damaged in transit. Using their copy of the purchase

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order and the bill of lading supplied by the carrier, the receiving 

department then accepts the goods and writes up a “receiving report” 

noting any variance.

10. Approval of Vendor’ s Invoice for Payment

When the vendor’s invoice is received, there are three pieces of information 

that should agree: the purchase order, the receiving report and the invoice. The 

items and the quantities should be the same on all and the prices and 

extensions to price, should be the same on the purchase order and the invoice. 

All discounts and terms of the original purchase order must be checked against 

the invoice.

Every step in the buying process must be executed carefully and 

systematically in order to provide the internal customer with what he/she 

needs: a product that is fit for its purpose, on time, in the required quantity and 

at a reasonable cost.

2.8. STORES MANAGEMENT IN ORGANIZATIONS

Every organization recognises materials or stores as one of its most important 

assets, which invariably is equated to cash. Materials being the direct 

representation of cost investment requires attention and control, just in the 

same manner as cash is being strictly managed. The stores, function has been 

recognised by many organizations as the medium through which organizations 

obtain materials for their smooth operation. Being such a vital component in 

production, managers of organizations often assess their success or failure 

based on how efficient the stores function operates.

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The Stores Function

The stores function in any enterprise is to assist in the production of goods and 

services. Some of the main objectives of the stores function in the view of 

Jessop & Morrison (1994) are summarized as follows:

“To make available a balanced flow of raw materials, components, tools and 

equipment to meet operational requirements, provide maintenance materials, 

spare parts and general stores as required, to receive and issue work in 

progress as well as finished products and to accept and dispose of discarded 

and obsolete materials as they occur”.

Apart from its primary objective of providing for operational activities, 

Morrison and Jessop (1994) further contend that the store function is also 

charged with the responsibilities of providing service to the various units of 

the organization.

From the foregoing, one can thus describe materials or stores management as a 

process which covers all the activities of organizing, planning, controlling, 

storekeeping, liaising with the purchasing function, distribution and materials 

movement which are the necessary prerequisites for the attainment of 

organizational goals (Morrison and Jessop, 1994).

Further to the above description of materials or stores management system, 

one can safely deduce that the achievement of a sound, effective and efficient 

materials management system by organizations lies with the ability to ensure 

that investment in stores is kept as low as possible whilst at the same time 

providing a service which is acceptable to the customer or the user 

department. The mechanism used to achieve these attributes is the application 

of the inventory control system (Chardwick, 1993)

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Jessop and Morrison (1994) stated stores responsibilities as follows:

1. Identification -  It is the process of systematically depriving and describing all 

items of stock. It includes the preparation of a stores code or vocabulary, the 

adoption of materials specifications and the introduction of a degree of 

standardization. Design, planning or standards departments may do part of 

this work and the purchasing department also has an interest.

2. Receipt -  It is the process of accepting, from all sources, all materials, 

equipment and parts used in the organization including supplies for 

manufacturing or operating processes, plant maintenance, offices, capital 

installations and finished products.

3. Inspection -  Inspection, in this context, means the examination of incoming 

consignments for quantity and quality. Very often there is a separate 

inspection department which does this work, but otherwise goods are 

inspected by stores personnel. Whatever the system of inspection is force, it is 

the duty of the stores function to see that the inspection is done before 

accepting items into stock. Quality assurance activities and “co-maker” 

relationships between buyers and suppliers have reduced the extent to which 

the inspection of incoming goods is undertakings, but it remains on important 

activity.

4. Issue and dispatch -  This is the process of receiving demands, selecting the 

items required and handing them over to users. It includes also, where 

necessary, the packaging of issues and the loading of vehicles with goods for 

delivery.

5. Stock records -  These may be manual, or maintained on a computer, and 

record particulars of receipts, issues and balances of stock. When using the

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manual system, some of the forms used are as follows -  shelf card, stock card, 

transfer notes, withdrawal (consumption voucher) service/fuel voucher, stock 

requisition, order form and others.

6. Stores Accounting -  Stores accounting is the process of recording stock 

movements and balances in value. There are four main methods of pricing 

materials issues. These are cost price, average price market price and standard 

price. Cost pricing is the system of using the actual purchase price of goods 

issued, and it may be applied in two ways:

First in, First out (FIFO) or Last in First out (LIFO)

The most widely practiced of these two is first in, first out, whereby each 

consignment received has its own purchase price and issues are made at the 

price of the first consignment until that quantity is exhausted. Issues are then 

made at the price of the second consignment, and so on.

Average Price -  There are several kinds of average prices, such as simple 

average, weighted average, periodic average, moving average, but for present 

purposes it is sufficient to consider the weighted average, which is by far the 

most common.

Market Price -  Market pricing all material issues at the market price at the 

time of issue, and is sometimes referred to as “replacement price”. The 

method has the major advantage of keeping costs in line with correct prices. 

Unfortunately, during a time of using prices, the stock balance may be very 

much understated. If prices are falling rapidly, the stock remaining is 

seriously overvalued, and large sums have to be written off to reduce it to 

market value.

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Standard Price -  is a predetermined price fixed on the basis of up to date 

knowledge of market prices and conditions. It is set for a given period of 

time, example, six or twelve months, and is kept fixed during that time, 

irrespective of the actual prices paid for receipts of material. At the end of the 

fixed period, the standard is reviewed, altered if necessary, and put into 

operation for a further period.

7. Stock Control -  stock control is the operation of continuously arranging 

flows of materials so that stock balances are adequate to support the current 

rate of consumption, with due regard to economy. It includes the related 

process of provisioning, which is the means whereby instructions are given for 

the placing of orders. In some concerns production control department may 

take a large share in provisioning, at least as far as production materials are 

concerned. The two main inventory or stock control techniques are fixed 

order quantity and cyclical or periodic review. Fixed order quantity is where 

minimum re-order and maximum stock levels are determined and items which 

reach re-order levels are replenished with fixed quantities of items. Periodic 

or cyclical method is the one where stock levels are replenished. There is of 

course, the third method of stock control which is the visual method, example 

of visual method is two bin system being used by some supermarkets and 

other material concerns.

8. Stocktaking, Stock checking and Stock audit

Stocktaking is the process of physical verification of the quantities and 

conditions of goods, usually on a periodic basis for the purpose of ensuring 

that an appropriate figure appears in the organization accounts. Stock 

checking is similar, but may be done on an adhoc basis for operational

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reasons. Stock audit involves an external agency, and the purpose is 

verification

Jessop and Morrison (1994) stated the reasons for stock taking as:

a) To verify the accuracy of stock records

b) To support the value shown in the balance sheet by physical 

verification

c) To disclose the possibility of fraud, theft or loss.

d) To reveal any weakness in the system for the custody and control of 

stock.

9. Storage of Stock

It is one of the basic duties of stores to unload and store all the goods delivered 

to the Store. Storage of materials entails the correct locations of goods in 

connection with suppliers’ instructions and requires skills and knowledge on 

the part of stores staff, bearing in mind that some materials need particular 

conditions of storage, e.g. must be kept dry, etc. it is the duty of stores do 

ensure that goods to not suffer damage or deterioration because of inefficient 

storage.

10. Security of Stores

It is the duty of stores management to ensure that security is maintained at all 

times within the stores buildings and stockyards. The security element of the 

stores manager’s job covers not only theft, but also damage, fire and spillage. 

It also includes ensuring that all doors, windows and stockyard fencing are 

secured.

11. Materials handling -  One of the basic jobs of any stores team is the handling 

of all materials, quickly and safely. Moving goods from the store to the

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factory or warehouse is a very important duty of the stores manager and his 

staff.

RELATIONSHIP BETWEEN STORES AND OTHER MAJOR 
DEPARTMENTS

The stores, by virtue of its functions, must be seen as providing a service to the rest of 

the organization in which it oper