The Impact of Material Management on the Profitability of an Organization
CHAPTER ONE
OBJECTIVE OF THE STUDY
This study will show with statistical evidences that materials management will significantly increase the profitability, wellbeing and productivity of the organization. However, the specific objectives of the study are:
- To examine the impact of materials management on the productivity of the organization.
- To examine the impact of materials management on profitability.
- To examine the effect of materials management on the organizational efficiency and performance.
CHAPTER TWO
REVIEW OF RELATED LITERATURE
Theoretical Background
Barker (1989), identified five key functional areas that materials management cuts across which include purchasing, production and inventory control, quality control, storage and warehousing and physical distribution. Other literatures(Donald, 1975; Why bark& William,1986; Linton et al.,2007)expanded the areas to include forecasting demand and quantity materials requirements, good supplier and customer relationship, indigenous source of supply for foreign materials, developing skills of workers in material management, improved departmental efficiency and research and development(R&D) in material management. These activities are managed by the material management department. Selection of personnel for marketing, purchasing, inventory control, stores management and materials handling and their training and placement is also to be seen by the materials management department. Materials are the lifeblood and heart of any manufacturing system and noorganization can operatewithout them. They must be made available at the right price,at the right quantity,in the right quality in the right place and at the right time in order to co-ordinate and schedule the production activity in an integrative way for an industrial undertaking. A manufacturing firm will remain shaky if materials are under stocked, overstocked, or in any way poorly managed (Banjoko,2000). According to Navon&Berkovich (2006), the main logistic responsibility in any organization is to formulate master programme for the timely provision of materials, components and work- inprogress. Stevenson (2001), explained that logistics, including materials and goods flowing in and out of a production facility as well as its internal handling has become very important to an organization to acquire competitive advantages, as the company’s struggle to deliver the right product at the correct place and time. The main aim is to actually promote, with low cost, a flow whose velocity allows the execution of manufacturing process with expected satisfaction level. Bowersox&Closs (2002), articulated that improvement in continuity of supplies with reduced lead times, will lead to improvement in cooperation and will also enhance cooperation’s and communications with reduced duplication of efforts, reduction in material costs and improvement in quality control, which are the main benefits of materials management.
CHAPTER THREE
RESEARCH METHODOLOGY
Research design
The researcher used descriptive research survey design in building up this project work the choice of this research design was considered appropriate because of its advantages of identifying attributes of a large population from a group of individuals. The design was suitable for the study as the study sought to the impact of material management on the profitability of an organization
Sources of data collection
Data were collected from two main sources namely:
Primary source and Secondary source
Primary source:
These are materials of statistical investigation which were collected by the research for a particular purpose. They can be obtained through a survey, observation questionnaire or as experiment; the researcher has adopted the questionnaire method for this study.
Secondary source:
These are data from textbook Journal handset etc. they arise as byproducts of the same other purposes. Example administration, various other unpublished works and write ups were also used.
CHAPTER FOUR
PRESENTATION ANALYSIS INTERPRETATION OF DATA
Introduction
Efforts will be made at this stage to present, analyze and interpret the data collected during the field survey. This presentation will be based on the responses from the completed questionnaires. The result of this exercise will be summarized in tabular forms for easy references and analysis. It will also show answers to questions relating to the research questions for this research study. The researcher employed simple percentage in the analysis.
CHAPTER FIVE
SUMMARY, CONCLUSION AND RECOMMENDATION
Introduction
It is important to ascertain that the objective of this study was to ascertain the impact of material management on the profitability of an organization
In the preceding chapter, the relevant data collected for this study were presented, critically analyzed and appropriate interpretation given. In this chapter, certain recommendations made which in the opinion of the researcher will be of benefits in addressing the challenges of material management on the profitability of an organization
Summary
This study was on the impact of material management on the profitability of an organization. Five objectives were raised which included: To examine the impact of materials management on the productivity of the organization, to examine the impact of materials management on profitability, to examine the effect of materials management on the organizational efficiency and performance, to examine the impact of materials management on customers’ satisfaction, to examine the effect of materials management on the organizational coordination. In line with these objectives, two research hypotheses were formulated and two null hypotheses were posited. The total population for the study is 200 staff of Nestle plc. The researcher used questionnaires as the instrument for the data collection. Descriptive Survey research design was adopted for this study. A total of 133 respondents made up human resource managers, production managers, senior staff and junior staff was used for the study. The data collected were presented in tables and analyzed using simple percentages and frequencies
Conclusion
This research paper found out that there is a significant relationship between materials management problems and the frequent breakdown of the plant. This can be expected since the existence of materials management problems result in the breakdown of the plant. Out-of stock and lack of spare parts interrupts production and hinder profitability. This research has shown how profitability can be achieved via effective management of materials with particular attention to sourcing, receiving, storing and issuing materials. Prudent management of materials reduces depreciation, pilferage and wastages and ensures availability of materials. We would like to re-emphasize that for a firm to achieve profitability the goal of materials management should be properly planned. It is clearly significant to manage all materials from the creation stage to the construction stage. The waste of materials should also be minimized throughout the construction stage in order to avoid loss of profit. Failure in managing site material and inventory will result in cost overrun, postponements in project completion and reduce overall project performance. Better management among purchase and finance department will help in attaining greater efficiency in Inventory management
Recommendation
- Material supply should be optimum to avoid “stock out” while work in process.
- Organizations should always take into knowledge the cost of production or price of raw materials before arriving at selling price
- There should be good and effective record system of materials for the operations of the organization especially as it affects production.
- Rate of spoilage and wastages should be minimized as much as possible and ensure that products pass quality control.
REFERENCES
- Barker, T. (1989) Essentials of Materials Management, McGraw Hill Book Company.
- Banjoko, S. A. (2000). Production and Operations Management, Lagos: Saban Publishers.
- Bell, L., &Stukhart, G. (2007). Attributes of Materials Management Systems. Journal of Construction Engineering and Management, 112(1), 14-21.
- Bowersox, D., &Closs, D. (2002).Logistical management: The integrated supply chain Process. New York: Mc-Graw-Hill.
- Chase, R.B. Jacobs, R.F. Aquilano, N.J., &Agarwal, N.K. (2009).Operations Management for competitive Advantage, 11th Ed. New Delhi Tata Mc-Graw Hill.
- Donald, F. (1975) Materials Management Concept, Great Britain: McGraw Hills Education Ltd.
- Gopalakrishnan, P., &Sundaresan, M. (2006). Materials Management: An Intergrated Approach, New Delhi: Prentice Hall.
- Jacobs, R. F. Chase, R. B., &Aquilano, N. J. (2009). Operations and Supply Management, Boston: Mc-Graw Hill. Linton, J.D.
- Klassen, R., &Jayaraman, V. (2007). Sustainable Supply Chains: An Introduction. Journal of Operations Management, 25(6), 1075-1082.
- Monday, J. U (2008). Effects of Efficient Materials Management on Performance of Firms in Food and Beverage Manufacturing Industry in Nigeria, MBA Dissertation, Nigeria: ObafemiAwolowo University.
- Navon, R., &Berkovich, O. (2006). An automated model for materials management and Control, Construction Management and Economics, 24(6), 635-646.