SOURCING AND FINANCING LOCAL RAW MATERIALS IN THE NIGERIAN BEVERAGE INDUSTRY

CHAPTER ONE:

INTRODUCTION

HISTORICAL BACKGROUND OF THE STUDY:  SOURCING AND FINANCING LOCAL RAW MATERIALS IN THE NIGERIAN BEVERAGE INDUSTRY

The history of raw materials can be traced back to the rise of industrialization from the Middle Ages to the eighteenth century when the feudal system was still in existence in England.

Farming was the principal occupation of the thirteenth century in England and was destined to remain so for another 500 years. Baronial power was strong and increased with the enclosure movements for sheep rearing in the late middle age, especially after the Black Death of 1348-49 had killed at least one third of the laboring population. This gave a fillip to the principal manufacturing industry of the age the cottage wearing of wool especially in eastern England. At first the raw product only was exported, mainly to the wearing centers in flankers. By the mid thirteenth century the domestic course weaving industry had become sufficiently established in rural areas to facilitate an important cloth exporting trade as well. Near the end of the century Edward III induced the skilled Flemish weavers to settle in England, safe from religious persecution and fine quality cloth manufacture arose.

Metal working was perhaps the only other not worthy industry of these times, primarily for weapons of war rather than implements of peace reflecting the unsettled nature of the times. Iron smelting using wood as fuel was located mainly in forested areas such as the weald and Gloucester shire. Other industries, of less importance included the product ion of glass and salt, ship building and the mining of lead and coal.

In late mediaeval England, the location of wool manufactured moved from the plains of the east to the higher lands in the rural west and north, with its domestic and part time nature emphasized. In home industry the women and children carded and spun, and the men wove the yarn. Merchant capitalists, using pack horse transport delivered the raw materials and collected the finished product. Production was cheaper and less restricted than in the old gild dominated towns and facilitate the use of local water supplies for power and for filling, but by the nature of production the work could not be closely supervised and losses of cloth and time had to be tolerated by travelling merchants.

At this, time, export of raw wool hides, leather and tin from England were controlled by the merchant staplers and woolen cloth primarily by the merchant adventures. The country had been a late starter in international trading owing to her position on the fringe of the old world. The Mediterranean has maintained its Northern Europe involved continental merchants such as the handcars of German and Scandinavian, who largely provided the initial impetus and enterprise which brought English traders wide markets.

The tempo of economic change accelerated in the mid eighteenth century and was associated with the beginning of modern industrialization. Only since that time has a general expansion of goods and service been a regular occurrence. In the last two centuries the population has become seven times dense and the average real income has become unrecognizably greater and more valid. In that time unit of economic activity has become the company in an urbanized society, involving complex and impersonal relationships.

     Personal freedom permitted mobility from the land to the industrializing coal field based towns and led to the national spirit of laissez-fire, later succeeded by the safe guarding of markets and raw materials by colonial expansion. The application of steam to land and sea transport further increased the mobility of labour, bulky and perishable materials and industrial location. It vitalized the developments in the iron founding engineering, coal, textiles and chemicals industries.

Though the start of the industrial revolution was probably in the middle late eighteenth century and economic change was accelerated by the pressure of the Napoleonic wars, the most marked period of industrialization was between 1815 and 1875. The rate of expansion was 3- 4% per year, or twice the average of the previous century and by 1860 Britain supplied half of the world’s coal and manufactured goods.

Up to 1850, industrial growth was mainly associated with cottons in Lancashire, a prolonged depressing in farming and harsh conditions in the newer factory towns. During the third quarter of the century the relative importance of the still expanding textile industries declined owing to the rapid of the metallurgical trades, associated with the development of railways steamships, free trade and the limited liability Acts of 1855 and 1862. 4 

The general importance of the railway can hardly be over emphasized. The new form of cheap, rapid, bulk transport rapidly supersede the much slower canals and meant that industrials location was no longer dominated by the need for immediate proximity to producing or importing areas of raw materials. Perishable foods could be transported further and more quickly rapidly expanding town populations. Socially, the railways enabled associations of employees to be formed more easily and workers to spend weekends and holidays away from the industrial towns. In association with the steamship, the new world now was opened up both as a market and as a source of food and raw materials for Britain and later Europe. Business concerns with worldwide interest arose and the concept of world economic and commercial interdependence became a reality.   

 STATEMENT OF THE PROBLEM

            The social and economic justification of the existence of any company ability to satisfy its ultimate consumers. It is necessary therefore, for a company to establish a standard way of making the raw materials necessary for production of the products available in the right quantity and quality at the lowest possible cost.

            However, lack of proper research for the optimal sources of raw materials and also the lack of proper selection of the method of financing the materials sometimes makes production fail to meet the specification and satisfaction needed. This is due to the in ability of the purchasing department to source and finance local raw materials thereby making the organization to rely solely on imported raw materials. The purpose of this project therefore is to investigate how local raw materials can be sourced easily and financed effectively.

            International beer and beverage industry plc has been chosen by the researchers for a case study as it is one of the largest industries in Nigeria.  

            Thus, it is well known for proper sourcing and financing of local raw materials. It has also attained a point of high recognition for its proper sourcing and financing of raw materials as well as its utilization for the maximization of profit at the lowest possible cost.

            I.B.B.I is also known to be producing of high quality which is as a result of the industry’s ability to source for quality local raw materials at a cheaper rate and finance such raw materials. This has definitely helped us in writing this project.

 AIMS AND OBJECTIVES OF THE STUDY:  SOURCING AND FINANCING LOCAL RAW MATERIALS IN THE NIGERIAN BEVERAGE INDUSTRY

            The aims and objectives of this project is to examine how sourcing and financing of local raw materials in the beverage industry is more convenient for the production of quality products and, if well carried out, will lend to the successful operation of the industry.

            Many writers and authors have conducted research to discover how local raw materials can be sourced and financed and they have also tried to evaluate the problems that may be encountered when sourcing and financing local raw materials in terms of effective operation of the beverage industry. We also tried to analyze how sourcing and financing of local raw materials can be done effectively in order to minimize the cost of procurement and the time of production, less fatigue on the sourcing process and production activities, and reduce dependence on foreign raw materials. This research will suggest the moves that can be made towards effective sourcing of local raw materials and its finance of which if properly handled will lead to the achievements of the industry’s overall goals.

            Summarily, the objectives of this project are:

To see how local raw materials are sourced and financed in the Nigerian Beverage industries

To see how the Beverage industries embark on generating their raw materials locally.

To see how government programme influence the sourcing and financing of local raw materials to the beverage industries.

To find out how beverage producers association encourage the farmers to produce their raw materials.

To provide effective background for the executives who are concerned with financing and sourcing local raw materials in the beverage industries.

What can raw materials be taken to mean?

What are the various ways through which these raw materials are sourced?

What are the types of raw materials and their needs?

What is the implication of these raw materials in the production system and the company?