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Full Project – MATERIALS MANAGEMENT AND THE PERFORMANCE OF MANUFACTURING FIRMS

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CHAPTER ONE

INTRODUCTION

1.1 Background to the Study

In the production process, materials management is essential. Material and products planning, procurement, storage, and control fall under this umbrella term. Material management’s impact on manufacturing companies’ bottom lines has been studied in depth in recent years. Kundi and Chatha’s (2020) research shows that efficient material management techniques improve manufacturing companies’ competitiveness and profitability. Cost reductions and increased customer satisfaction, they say, may be achieved through better inventory management, supply chain coordination, and procurement. Mishra and Jakhar’s (2021) research emphasizes the value of materials management in enhancing industrial output and quality. They conclude that industrial output can benefit from better inventory management, faster material supply, and more precise demand forecasts. Overall, the evidence from these research points to the importance of careful materials management to the prosperity of manufacturing businesses. Businesses may boost their operations, earnings, and competitiveness by adopting more efficient materials management procedures.

Materials management is that aspect of business activity that deals with planning for purchasing, receiving, handling, storing, and releasing of materials for use in production with effective control measures. Materials are industrial goods that will become part of another physical product. Armstrong (1985) has classified materials for use in manufacture under three headings:- Raw materials primarily from agriculture and the various extractive industries e.g. mineral resources, fruits, and vegetables sold to processor.- Semi finished goods and processed materials to which some work has been applied or value added e.g. rods, wires, paper, chemicals, etc.- Component parts and assemblies that are completely finished products of one manufacture, which can be used as part of more complex product by another manufactures. Consequently, it is the managing of these materials that we refer to as materials management. Thus, materials management has been defined by Lee and Dobler (1997) as the total of all those tasks, functions and routines.

According to Kundi and Chatha (2020), successful materials management methods boost manufacturing companies’ competitiveness and profitability. Companies may save money and increase customer satisfaction through better inventory management, supply chain coordination, and procurement. Mishra and Jakhar (2021) argue that materials management is essential to enhancing industrial output quality and efficiency. Manufacturing output may be improved by careful management of stock, prompt supply of raw materials, and precise demand forecasts. As a result, materials management is crucial to making it in the industrial sector.

In addition, Ali et al. (2020) argue that better company performance may be achieved by the integration of materials management with other business activities including marketing, operations, and finance. They come to the conclusion that businesses that manage their resources as a whole have an edge in the marketplace. In conclusion, the research reveals that materials management is an important aspect in manufacturing organizations’ performance, and that the implementation of good materials management methods may lead to enhanced results.

1.2 Statement of Problem

Delayed deliveries, poor quality outputs due to faulty specifications, duplication of raw materials and continued threats of litigation by the suppliers due to delayed payments, is a common scenario among firms which experience poor relationship with their suppliers. Supplier relationship management provides the holistic approach needed to maximize the supplier’s value to the enterprise. It is a critical shift from managing supplies to managing suppliers. It succeeds through a focus on partnering with industry and leveraging commercial capabilities. The main idea of the relationship between buyer and supplier is to create a win-win situation for both the buyer and supplier, compared to the traditional approach where the buyer had the power and could play the suppliers against each other just to minimize cost. The collaboration should enable for example mutual cost sharing, joint improvement efforts, conflict resolution and better communication. An effective SRM solution contains essential components such as ranking, rating and optimization that allow a firm to reduce its supply base and overall costs.

In recent years Benue Breweries Ltd, Makurdi has suffered from inefficient and imprudent management of resources and product scarcity, which has resulted in invaluable economic and social losses to the society. On the surface, this scarcity has been attributed to shut downs and breakdown at the brewery due largely to a lack of smooth maintenance activities in the plant, which 100 J. Econ. Int. Finance is brought about by the unavailability of replacement of parts, which should have been provided by the materials management department. The function of the materials management department is very important especially in view of the difficulties associated with the purchase of equipment spares, which in most cases are foreign-sourced. Frequently, the materials management department has been accused for the frequent breakdown and shut downs as a result of its inability to provide the necessary spares as at when they are need.

1.3 Aim and Objectives of the Study

The aim of this study is to:

Determine the impact of material management on financial performance of selected Manufacturing firms in Nigeria.

Establish the role of training suppliers on organizational performance of selected Manufacturing firms in Nigeria.
Determine the impact of rewards on organizational performance of selected Manufacturing firms in Nigeria.
Establish the impact of financial support on organizational performance of selected Manufacturing firms in Nigeria.
Establish the benefit of firm involvement on organizational performance of selected Manufacturing firms in Nigeria.

1.4 Relevant Research Questions

To what extent does the impact of training suppliers improve organizational performance of selected Manufacturing firms in Nigeria?

2 How does the impact of rewards improve organizational performance of selected Manufacturing firms in Nigeria?

To what extent does the impact of financial support improve organizational performance of selected Manufacturing firms in Nigeria?
How does the impact of firm involvement improve organizational performance of selected Manufacturing firms in Nigeria?

1.5 Research Hypothesis

Materials management and the performance of manufacturing firms

H_o: Material management does not have effect on the financial performance of selected Manufacturing firms in Nigeria.

H_i: Material management have effect on the financial performance of selected Manufacturing firms in Nigeria.

1.6 Significance of the Study

The researcher hopes that the findings of this study will form the basis on which future researchers could be built and most importantly the Practices of manufacturers with respect to supplier development and supplier performance evaluation will help Nigerian breweries to provide supplier development as value added services to their potential customers and finally The study will contribute to the body of knowledge in the field of manufacturing industry.

1.7 Scope of the Study

The scope of the research work is on Materials management and the performance of manufacturing firms. The study is limited to the selected brewery firms in Lagos, Nigeria.

1.8 Definition of Terms

Procurement: the act of procuring, or obtaining or getting by effort, care, or the use of special means: The organ procurement procedure is very complicated. 2. the act of obtaining equipment, materials, or supplies:
Storage: the act of storing : the state of being stored; especially : the safekeeping of goods in a depository (as a warehouse)b : the price charged for keeping goods in a storehouse
Profitability: Profitability is the ability of a business to earn a profit. A profit is what is left of the revenue a business generates after it pays all expenses directly related to the generation of the revenue, such as producing a product, and other expenses related to the conduct of the business activities.
Department: a division of a large organization such as a government, university, business, or shop, dealing with a specific subject, commodity, or area of activity
Material storage: Material handling involves short-distance movement within the confines of a building or between a building and a transportation vehicle. It utilizes a wide range of manual, semi-automated, and automated equipment and includes consideration of the protection, storage, and control of materials throughout their manufacturing,
Inventory control: co ordination and supervision of the supply, storage, distribution, and recording of materials to maintain quantities adequate for current needs without excessive oversupply or loss.
Materials management: is an approach for planning, organizing, and controlling all those activities principally concerned with the flow of materials into an organization.

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