CHAPTER ONE
1.0
INTRODUCTION
The issue of
materials management and its operational effects in the manufacturing
organization is among the last of the specialized business function to centralize
and given responsibility and authority of making major contributions to
profits. Since the basic goal of any manufacturing company’s activities is the
development and manufacturing o products that can be marketed at a profit, this
is accomplished by the appropriate blending of what management authorities
called the five m’s: machines, men, materials, money and management which are
interrelated factors that must be combined properly to achieve economic
production, satisfactory and adequate services. Also the effective management
of materials engenders the production and modification of materials into useful
forms through the utilization of various manufacturing process.
In most business
operation today, the cost of materials is the remaining cost that is truly
variable, all other major cost are either fixed or semi fixed and to this
effect, the cost of materials in a typical manufacturing organization
constituted about sixty – five percent of the total operational cost. The
opportunity for profit improvement in the materials area is virtually
impossible to match in any other area of business operation. Also, in a
manufacturing organization, materials is the life wire and no company can
operate without them, only the most progressive manufacturing firm realize that
material availability, engineering or purchasing specifications fabrication
cost and distribution cost are all factors which impinge on total material cost
and all these factors must be coordinated and controlled by a system oriented
called material management.
Materials
management can therefore be defined as a science based
Art, which deals with the planning,
organizing, controlling and directing of supply and processing activities of
materials in an organization. It follows that the management of materials in an
organization is all embracing than any other arms of management because of the
diverse activities involved and the complexity of the problems it process in
synchronizing the activities to make them a successful whole
From the above
view, it can be seen clearly that material management is an organization leadership
task and onus of the leader’s task is effective and efficient coordination and
development of available human and materials resources so as to achieve the objectives
of the organization. So, whosoever is conferred with the responsibilities of
ensuring successful performance of the above activities is regarded as
materials manager.
1.1 STATEMENT OF PROBLEM
Until very
recently, the materials management profession had hitherto been treated with
wave of the hand. This is why most of the very useful models and techniques
developed by the supply experts have not received popular recognition by most
companies in the industrial set-up.
Investigations
revealed that the company that forms the subject matter had found it difficult
to see to materials management as an entity capable of making meaningful
contribution to its profit planning and in material control programmes. For
this reason, the procurement function has been swept under the carpet by the
management of 0kin Biscuit.
The trade of this
non-recognition can still be felt in the organization of the company concerns
its application of material management. A lot still need to be done to put the
company on a sound footing in the areas of materials management.
The problem is not
peculiar to 0kin Biscuit Industry alone, it is a problem to be seriously
addressed by the majority of manufacturing companies of today: otherwise, the
vast colossal sum of money being lost to un-orthodox purchasing practices will
continue unchecked.
1.2 RATIONALE (AIM) FOR THE STUDY
This research work
has been undertaken as a fulfillment of one of the conditions necessary for the
award of National Diploma (ND) in Business Studies in the Department of
Purchasing and Supply, Institute of Finance and Management Studies, Kwara State
Polytechnic, Ilorin.
The researcher has
gained a lot of practical knowledge from the research. This research has got
the researcher exposed to the happenings in the industry sector of the Nigeria
economy and this has installed some
Confidence and
skills in the researcher. Through this research work, the researcher’s
professionals mind had been positively influenced, also the researcher’s sense
of awareness as far as store management and inventory control are concern has
been highly fostered.
The subject matter,
0kin Biscuit Industry will definitely find this research work very valuable
especially in the areas of their store and purchasing activities. For instance,
the problem of improper record keeping, stock outs, over and or under stocking,
obsolescence or damage to inventories in the store, etc. With this research,
the company shall find a lot of useful elements that will aid smooth inventory
management. The supply department has through this research seen the need to affect
highly sophisticated stock control and stock taking. All the fact uncovered in
the course of carrying out the research shall help the company to improve on
its store management.
The society as a
whole will also find this research absolutely useful, professional purchasing
personnel materials management students and other members of the public having
interest in materials management can refers to the research both as an id to
professional practices, examination purpose and in case of future researches.
1.3 SCOPE OF THE STUDY
This research work
is based on material management of Okin biscuit industries.
The scope of this
research work centers its attention on the core areas of application of
materials management concept in manufacturing organization such as purchasing,
storage, issuing etc.
It covers the
review of literatures and textbooks and the research will give various
definition of terminology used in the course of the project work. It also include
the activities been carried out by the materials management and their importance
to the organization. The project work will also review the survival fact of the
research work on the organization and offers appropriate advice its
contributions to every business as a whole.
1.4 LIMITATIONS AND CONSTRAINTS
The successful
conduct of this research work has not by any means been an easy task. The
researcher was faced with a lot of problems, which almost threatened the
success of the research.
Firstly,
in view of limited time for the submission of the research work, the researcher
has limited the report to application of material management.
Also, lack of
enough and adequate financial resources has made it quite impossible for the
researcher to visit other similar companies scattered all over the country.
Another problem faced by the researcher was the uncompromising attitude of the
management of the firm to release for use some of the essential facts that
would have been of good materials for this research study.
Finally, there was
the problem of inadequate and up to date statistical in almost all department
of the company that forms the subject.
1.5 OBJECTIVES of STUDY
The research work
has been carried out to achieve very many noble objectives. One of the objectives
is to pin-point areas where the majority of Nigerian manufacturing concerns are
making a very big mistake by allowing their store operations to be handled by
quack store personnel.
Another objective
of the study is to find out from where the company at forms the subject matter
get their supply of inventories.
Finally, the
research study has the aim of making all profit-oriented organizations to realize
how much is being lost daily as a result of non-recognition of the materials
management function. In effect, the research work as an eye opener for all
profit – conscious organizations to see materials
1.6 BRIEF HISTORY OF THE ORGANISATION
0kin Biscuit
Industry Off a, was established in May 1978 by a patriotic businessmen, Chief
Emmanuel 0. Adesoye, who is an indigene of Offa, in Offa Local
Government Area then in response to the call to the Kwara State government
calling on well meaning Kwarans to establish industries in the state
The company was
incorporated in December 1979, under the Control of the Nigerian Customs and
Excise Edict of 1969. “The manufacturer of biscuit”. The producing and sales
started on 2nd June 1980. The company started with production of
three varieties of biscuits namely Cabin Gem and Coaster in 1980, and other
varieties like Short Cake, “Olomokulubu: were introduced.
The demand for 0km
Biscuit industry out stripped supply machinery for the 2nd line of
production plant was installed in 1982 to double the capacity of production.
Production capacity was reduced in the following year, is as a result of import
license, since major portion of raw materials were imported.
The adverse
situation of foreign exchange during the following year forced many factors to
close down for long period, but 0kin Biscuit Limited still survived through the
capacity utilization had to reduce to a level of 25% to 30%. 0km Biscuit still
has other branches of items like Okin Foams Limited, Okin Express and 0km Malt,
which is presently under market testing and had staff strength of about 670 in
which 70% are skilled workers.
However, the
factory has four main section production engineering, administrative and
accounts. The head of each section is directly responsible to the General
Manager. Implant training course were conducted in cooperation with industrial
training fund (ITF) to develop skill
and talents of employees.
Employees are
normally sent for training courses conducted by other management training
organizations as well. Today, there are only two expatriate in the factory as
compared to six expatriates in seven years ago. The company also offers
training opportunity for the students from the higher institution of learning
with the facilities provided at the various departments.
Today, 0km Biscuit
produced the Coaster and Short Cakes and has became mostly consumed biscuit in
Nigeria and were also exported out to the neighboring African countries.
1.7
DEFINITIONS OF TERMS
Peculiar to all
field of specialization, be it management studies or science based course,
every field of specialization has got its own terms, often been used for
communication. The following are the definition of terms in materials management
as used in this project.
i.
Materials Management: Can be defined as a science art which
deals with the planning, organizing, controlling and directing of supply and
processing activities of materials in an organization. In a nutshell, material
management can equally be regarded as the integration of purchasing and stores
activities under the control of the Manager.
ii.
Specification: A specification of an item is the
description of the item, its dimension analysis, performance or other relevant
characteristics in sufficient detail to ensure that it will be suitable in all
respect for the purpose for which it is intended.
iii.Standardization: is the process of reducing the number
of varieties of stocks to a controlled minimum.
iv.Procurement: this is defined as a whole process
whereby all classes of resources (people, materials, facilities and services
required are obtained).
v.
Negotiation: it simply means conferring discussing
or bargaining to reach agreement in business transaction.
vi.Value
Analysis: It is
an organized procedure for the efficient identification of unnecessary cost in
the materials used for the production of a product through analysis of the
function expected of that product, with due cognizance of availability and
storability.
vii.
Obsolescent: an item is said to be obsolescent
when it is going out of use but is not yet completely unusable.
viii.
Obsolete: An item is regarded as obsolete when
it is no longer in use or usable by the business concerned, because of changes
in operational practice of production methods.