An Assessment of Physical Distribution in the Performance of an Organisation

ABSTRACT

This project work is centered on stock control as a measure for ensuring profitability in an organisation a case study of Kaduna refinery and Petroleum chemical. It begins with the first chapter that deals with the background of the study which gives brief introduction about the subject matter under study. Statement of problem which is the reason why the researcher under take the study to exploit such problem and come up with recommendation which will be beneficial to the organisation and entire society. Research question is drawn up which is in line with the objective of the research work to be open up to get veriables for questionnaires to be administered. Chapter two deals with the review of previous work carried out by other authors on a similar topic. Chapter three deals with the research methodology with research design correlation studies to establish the relationship between stock control and profitability. The study have a sample size of 50 which is 20% of the population of 250 drawn from materials management related department and the sample size selected randomly and questionnaire were administered to them for their response. The findings of the study show that stock control have relationship with the profitability of the organisation. Thus it was concluded that stock control in KRPC is not properly carried out, because replenishment drive is not according to actual materials requirement. Therefore recommended that stock control unit should be established and the use of actual materials requirement should be the principle upon which material replenishment is carried out to ensure that materials are not hold in excess and also not.

Chapter one

Introduction

Background of the Study

Business organization must deal with distribution to achieve a set goal. Distribution is not completed until the goods gets to the final consumers.

Physical distribution comprises the tasks that is involved in planning and implementing the physical flow of materials and good from the manufacturing point to the distributors or the consumer for their own consumption purpose or the aim of making profit.

Distribution of materials is one of the functions of material management in procurement and stores. The over all objectives of distribution is to provide a service to the procurement, marketing, stores and the production function by holding and delivering of goods and services (products) efficiently and economically.

Further more, it can also be related to warehousing, delivering and planning the distribution system. Warehousing is principally a service or production, being designed to hold products for manufacturer to transform stock from production units to marketing (Sales) units and to assemble loads for delivering to consumers/customers.

Distribution also makes the best used of the resources that are available and to keep investment of a reasonable levels of products.Planning the distribution system, it must be designed to coordinate warehousing with delivering to advice on the location of the factories, warehouses and depots to route delivering vehicles to schedule deliveries and to control operations in accordance with requirements.

The supply site, must be designed and decided, (to suit the type of business) routes are needed to develop for supplying of good to the customers.The different types of transportations or routes are rail, road, sea, air and pipeline. These routes must be considered so as to select the one that provides the best services.

Purchasing by Kenneth Lysons 4th editions logistics management which is the same as distribution the author defined it as “the process of strategically managing the acquisition, movement and storage of materials, parts and finished inventory (and the related information flows) through the organization and its marketing channels in such a way that, the current and future profit ability is maximized, through the cost effective fulfillment of orders (Gattona).

Supply chain management (purchasing by Mallam Hassan Mohammed) defines distribution as a “concept that involves the integration of all the value creating elements in the supply, manufacturing and distribution processes of an organization, from the raw materials extraction, through the transformation process to end users consumptions” (pp.16).

Distribution is also a system which is to provide a service to customers who pay to receive goods as ordered.Distribution channel is the path a product takes as it moves from the producer to the user. The objectives generally, is to select the most effective, efficient and profitable pathway.The term physical distribution is part of the working vocabulary of every business many finds it difficult to defines its meaning because a wide range or variety of interpretation are available in the literature of the subject.

Statement of the Problem

Most organization adopt indirect marketing strategy because of its size. The number of products were too many and the organization described to apply the funds to something else.

Indirect marketing is defined “as a process of marketing that uses personal media with or the influence of sale’s man to influence and effect sale’s product – wholesaler -       retailer – consumer.The organization makes use of this strategy effectively and efficiently because of the following reasons:

1. It has a narrow product line
2. It has unable to finance, distribution direct to retailers or decides to apply the fund to something else
3. Retail outlet are many and widely disperse that is with a low concentration
4. The wholesaler are willing to carry the product and give promotional support

Organization who have a poor relationship within any link of the supply chain or distribution channels can have a disastrous consequence for all other chain. Therefore informal interaction and information sharing should be giving priority in physical distribution to make it more efficient and effective.

Objectives of the Study

The major rationale behind this study is to assist us to compare how physical distribution is carried out in different business organization.

This essay will serve as a reference in case of research purpose and also one of the prerequisite for the award of National Diploma in Business studies in the department of Purchasing and Supply , College of Business and Management Studies, (CBMS) Kaduna Polytechnic, Kaduna.

Scope of the Study

It covers the area of input phase which is the moving bought-out items such as raw materials and components from supplier’s to production  and the out put phase of moving finished goods from the factory through the appropriate channels of distribution to the ultimate consumer.

Definition of Terms

Physical Distribution: Is the activities involved in the flow of products as they move physical goods from the producer to the consumer or industrial users.

Logistics: Is the total management of the key operational functions in the supply chain-procurement, production and distribution, procurement includes purchasing and product development.The production function includes manufacturing and assembling, while the distribution function involves ware-housing, inventory, transport and delivery (Knight Wendling/Mallam Hassan)

Ware-housing: a broad range of physical distribution activities including storage, assembling and preparing product for shipping.

Product: A set of tangible and intangible attribute that include colour, price, packing and repetition and services of the manufacturer and the middlemen. A product may be physical goods, a service and idea, a place, an organization or even a person.

Storage: This involves receiving and keeping of materials and issuing them to production department. It also inovles storage of work in progress components and finished goods before being transferred to the ware house.

Packaging: This involves the methods of wrapping up of materials packing and presenting them in good containers to retain the quality ultimately to the consumers.

Routing: it is the systematic study of the detail of the supply sites, customer’s location of delivery of vehicle and operating conditions

Delivery: Is a marketing services being designed for transporting products according to orders and delivering them into the hands of customers

Schedule: is the planning of vehicles journey’s so that order are delivered at the right time, right days, at the right place to the ultimate consumers or users and vehicle are utilized efficiently

Stock/ Inventory Control: This involves the physical control i.e checking, counting and racking of stocks. It also involves, clerical control i.e. keeping records of receipts, issues and balances of all inventories.

Distribution requirement planning (DRP): This is an inventory control and scheduling techniques that applies MRP principles to distribution inventories, which may also be regarded as a method of handling stock replenishment in a multi-echelon environment.

Supply Network: Is the flaw of materials and services into and within the firm starting from extraction, right down t consumption and conversion end products or services.

Planning: Is the preparation of materials budgets product research and development value engineering and analysis and standardization of specifications.

Materials management: Is the total of all those tasks, functions activities and routines which concern the transfer of external materials and services into the organization on the administration of the same until they are consumed or used in the process of production, operations or sale.