CHAPTER ONE
INTRODUCTION
The
manufacturing sector plays an important role in the Nigeria economy and has
benefits that are crucial for her economic transformation in a typical advanced
economy, the manufacturing sector is leading, if not the only leading sector in
many aspects .it is an avenue for increasing productivity related to import replacement
and export expansion creating foreign exchange earnings capacity raising
employment and per capital income which results in unique consumptions.
Before
independence, agricultural production dominated the economy and accounted for
the share of its foreign exchange earning.
Initially, inadequate
capital investment permitted only modest expansion of manufacturing activity
,early effort in the manufacturing sector were oriented towards the adoption of
import substitution strategy in which light industry and assembly related
manufacturing ventures were embarked upon by the formers trading companies.
The structural
adjustment program (SAP) of 1986 was partly designed revitalize the manufacturing
sector of the economy by shifting emphasis from sourcing for inputs from abroad
to increase domestics sourcing through monetary and fiscal policies
deregulation of the foreign exchange market was also effected to make non oil exports
more competitive .although this equally resulted into massive escalation of
input cost.
The overall feeling and the simple truth is
that Nigerian economy sis still in the woods, the business environment is
particularly hostile to industrial harmony and higher productivity, putting
into consideration the past decade and even the present one, would see that the
economic variables of the external business environment which are
uncontrollable in nature have had negative effect an production activities .
Therefore, for
a business to survive, remain profitable and enhance its production activities
it must adopt strategies aimed at effective and efficient management of its
resources to keep it and course,
These
resources are mainly human and material but for its purpose of this project we
are concerned with the raw materials varying from the initial sourcing to the
final utilization in order to get the final goods
Material
management is the act of co-coordinating all material resources available
within the organization in the most economic way that guarantees the right
quality soas to make goods available to customers as when needed in an attempt
to achieve the overall broad objectives of the organization optimum use of them
by ensuring available of materials needed at the right price, quantity, quality,
from right supplier and delivered at the right time and place.
The price, quantity quality, time and sources
already mentioned are controlled variable belonging to the internal environment
of the business which can be managed with proper plans put in place.
Nevertheless,
the greater challenge facing a business as it affects material management in
production deals with the uncontrollable variable of the external environment
which needs to be manipulated particularly in battered economy like ours.
1.1 STATEMENT
OF THE STUDY
The subject of
material management cannot be overemphasized in manufacturing companies today a
failure to take cognizance of it has resulted in the winding up of so many
company in present times because proper management of material was not done
this has led to tying down of capital breakdown in production activities,
reduced sales and profit, increase waste and scrap, loss of customers to competitors
and even fall in our foreign exchange earnings.
Since this
problem is true of many manufacturing companies in our economy, the question
that came to mind which this project will highlights are:
1 How far has material management gone in solving organizational
problem?
2 What effect does material
management has on the employees, company and their output?
3 What are the costs,
techniques organization employ to in the management of materials?
4 How many manufacturing
companies in
have coping with the limited sources of raw materials.
1.2 OBJECTIVE OF THE STUDY
This study aims at under-listed
objectives;
1 To examine how raw
materials can be made available course of source from abroad.
2 To highlight strategies and
sub-strategies that can be adopted in order to develop alternative mean of
getting raw materials soas to guarantee availability as at when needed.
3 To identify the role of
material control effective management of raw material such that can be procured
and stored at an economic quantity that guarantees a fair price and sound
quality
4 To take note, if any of the
role of machine utilization in the management of raw material in order to
reduce scrap rate
1.3 SIGNIFICANCE OF THE STUDY
All
participants of the manufacturing sector are being badly affected by the batter
nature of our economy even the consumers are not spared, the significance of
this study lies in the fact that it will attempts to provide solutions to same
of these, this will reveal alternative mean of sourcing for raw material
thereby solving the problems of complete dependence on foreign sources.
Economically,
producers can plan adequately to guide against higher than maximum stock level
as well as to lower than minimum stock level.
These two situations have
some negative implication on the business working capital and corporate image
respectively
This study
will bring to light the place of material management as an indispensable
function; this will help to eliminate shortage of materials which cause poor market
Performance in case where the organization cannot meet market
This will
enable production specialist to become more conscious about the economic order
quantity (EOQ) i.e. the quantity at which cost can be produced in the barest
minimum ,this will encourage
organization to handle stock control with great caution
1.4 STATEMENT OF HYPOTHESIS
The following
postulation will be made in the course of this study ,these assumptions are
validated with data gather from field work and will be analyzed in chapter four
therefore the working hypothesis employed in the course of this study are
1 Null Hypothesis (Ho)
2 Alternative Hypothesis
(Hi)
Null Hypothesis (Ho)
1. For organization to ensure
availability of needed raw material ,they need to combine local and oversea
resources
2. Even though orders arrive
early ,there will be no need to keep safely stock or make provision for short
falls in inventory
ALTERNATIVE HYPOTHESIS
(Hi)
1 For organizations to ensure
the availability of the needed raw material, they needed to combine local and
oversea resources.
2 Even though orders arrive early, there will be no need to keep
safely stock or make provision for short falls in inventory
1.5 SCOPE AND
LIMITATION OF THE STUDY
This project
covers relevant elements and aspects of materials management to production and
is its relationship with the current situation of our economy .it covers areas
like sources, availability and utilization of materials.
The case study
is limited to Okin Biscuit Nigeria limited for the collection of data, only the
staff from departments related to the topic will be included such as the production,
the store, purchasing, quantity control and accounts departments.
In the course
of the study, the following constraints were encountered such as getting
information from primary and secondary sources as well as in document item,
finance that is needed to carry out a research of this type such that as a
student may not be able to get all materials needed as cost of transportation,
typing and photocopying of relevant materials is high.
Also, all
information needed may not be gotten as same members of staff may be reluctant
to give out information, thus this will limit the research from handling the
topic in a satisfactory manner.
Lastly, since
most of the staff to be contacted are senior worker, it will be difficult to
get them on seat and even when they are on seat, they may be too busy to give
one the needed attention.
1.6 HISTORICAL BACKGROUND OF OKIN BISCUIT OFFA NIGERIA LTD
Okin Biscuit
limited was incorporated in 1978 by the patriotic business and indigene of
Offa, Chief E.A Adesoye, who did so in responses to the call of the state
governor to establish industries in kwara state.
The company
though incorporated in 1978, did not star it production activities until
December 1979 after the land clearing construction and installation of plants
and machinery was put in place.
The company
started its production with three varieties namely, cabin germ and costal
biscuit and has added other varieties such as short cakes and olomokulubu.
The raw material uses in
the production of biscuit include wheat, flour, sugar, margarine, and salt,
baking chemical, flavour and water.
Since major
portion of the raw material and packaging were from abroad ,import license
effected the production target since 1982 continued from ,any years .this
adverse foreign exchange during the following years forced some factorizes to
close down but okin biscult serviced, although the capacity utilization reduced
to 25% In 1987, when the federal government banned the importation of wheat
flour, okin biscuit which operated in line with government rules and regulation
prompted to source its raw material locally and this was partially successful.
In view of
this development, okin biscuit decided to experiment wheat farming kwara state.
This was done in oyun, ifelodun and Babanla local government areas and this has
gone a long way in solving the problem of what flour. However, the ban and importation
of water flour was lifted in December 1992.
The staff strength
of Okin Biscuit is within the average of 500-550 employees employed directly
and trained internally by the industrial training fund (ITF) to develop their
skills and talent.
In 1989 ,okin biscuit
limited acquired the major share of 70% in kwarastate breweries with a view to
revitalize the company which was then poor condition the company is still
looking forward to a rosy future of survival in spite of the battered economy
condition .
1.8 DEFINITION OF
TERMS
This section
aims at defining same registers that the researcher has used in the course of
writing this project that may not be easily understood by persons who are not
in this field.
·
ECONOMIC ORDER QUANTITY: The economic order quantity refers
to the level of stock that will result in the total of ordering and carrying
cost.
·
ECONOMIC: This is a system of production and distribution of
need in order to satisfy the material needs of people in the environment.
·
LOAD-TIME: This is the time between orders placed and when
they are eventually received.
·
MANAGEMENT: Management is the process undertaken by one or
more individuals to coordinate the activities of people working together in a
group in order to achieve organizational goals, aims and objectives.
·
RAW MATERIALS: There are substances in their natural state,
partly manufactured by already manufactured products from which other goods can
be gotten for either domestics or industrial consumption.
·
SCRAP: This term applies to material or equipment which is no
longer serviceable or which is discarded another form of scrap refers to by
product such as fly from cotton s pinning
wrap ends from wearing and meter scrap from boring plaiting machine .
·
RE-ORDER LEVEL: This is the of materials at which the firm
place order for more material to prevent stock out.