EFFECT OF PHYSICAL DISTRIBUTION ON ORGANISATIONAL PERFORMANCE
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EFFECT OF PHYSICAL DISTRIBUTION ON ORGANISATIONAL PERFORMANCE
Chapter one
INTRODUCTION
1.1 Background of the Study
As competition increased in the 1990s and markets got more global, so did the hurdles of getting a product and service to the right place at the right time for the lowest price. Organisations realised that improving efficiencies within an organisation was insufficient; their entire supply chain needed to be competitive (Tan, Lyman, and Wisner 2002).
Understanding and applying physical distribution management has become a vital prerequisite for remaining competitive in the global competition and increasing profitability (Moberg et al. 2002).
The Council of Logistics Management (CLM) defines physical distribution management as “the systemic, strategic coordination of traditional business functions
and tactics across these business functions within a particular organisation and across businesses within the supply chain for the purposes of improving the long-term performance of the individual organisations and the supplychain as a whole.”
The purpose of a physical distribution system is to seamlessly integrate information and material flows throughout the supply chain as a competitive weapon (Childhouse and Towill 2003; Feldmann and Müller 2003).
Academics, consultants, and business managers alike are increasingly interested in the concept of physical distribution (Tan, Lyman, and Wisner 2002; Feldman and Müller 2003; Van 1998).
Many organisations have begun to recognise that physical distribution is critical to maintaining a sustainable competitive advantage for their products and/or services in an increasingly crowded market (Jones 1998).
In the transportation and distribution (T&D) industry, like in many others, effective operational performance is critical. To attain high performance, you must understand which operational aspects are vital to success and which are less important. Only then can management focus on the elements that have a significant impact on performance.
There are challenges in developing acceptable performance measurements for supply chain analysis (Arzu Akyuz & Erman Erkan, 2010; Beamon, 1999). Researchers have so been content to limit their choice of performance measures.
Customer response has also been identified as a key aspect of physical distribution management performance (Christy and Grout, 1994). Furthermore, Lee and Bullington (1993) identified supply chain flexibility as a key indicator of physical distribution management performance.
To capture the construct of performance measurement, all variables of physical distribution management performance must be addressed simultaneously.
Furthermore, because physical distribution has firm-level implications, it is critical to assess the effects of physical distribution management performance on organisational performance metrics (Green, McGaughey, & Casey, 2006).
The goal of this study is to empirically assess the impact of physical distribution on organisational success. Determine the links between physical distribution techniques, competitive advantage, and organisational success.
1.2 Statement of the Problem
Distribution companies have long looked for ways to reduce costs while increasing flow while sending each unit of product to and from the supply and demand nodes.
Though storage has smoothed out market volatility in demand and supply, major limits remain in assigning supply and effectively matching orders placed during redistribution to final retail outlets.
In recent years, logistics organisations have encountered more difficult challenges in optimising the entire system in order to develop tactics that minimise costs while increasing throughput.
Setting geographical coverage areas for each warehouse to avoid conflicting customer coverage; efficiently utilising space, resources, and capacity of warehouses to avoid diseconomies of scale from under-utilization of warehouses;
and allocating the flow of products and balancing routes from each salesman to retailers’ outlets are some of the constraints affecting effective physical distribution in agro marketing firms.
This research study focuses on the concerns and challenges that organisations face as they attempt to improve the efficacy and efficiency of their distribution processes and activities.
1.3 Aim and Objectives of the Study
The purpose of this study project is to investigate the impact of physical distribution on organisational success in marketing organisations. The study’s aims include the following:
i. Identify the relationship between product availability and sales turnover.
ii. Assess the relationship between product delivery flexibility and cost efficiency.
iii. Determine the association between customer responsiveness time and lower inventory costs.
iv. To determine whether warehousing has an impact on the market share of agricultural marketing enterprises.
1.4 Relevant Research Questions
To meet the goal of this research study, the study will seek to provide answers to the following research questions in order to reach a reasonable conclusion.
i. Is there a relationship between product availability and sales turnover?
ii. Is there a relationship between product delivery flexibility and cost efficiency?
Is there a strong association between customer responsiveness time and lower inventory costs?
iv. Does warehousing have an impact on the market share of agricultural marketing firms?
1.5 Relevant Research Hypotheses.
The following tentative statements may be connected to the work study and will be tested later.
Hypothesis one.
Ho: There is no substantial association between product availability and sales turnover.
Hypothesis two
Ho: There is no relationship between product delivery flexibility and cost effectiveness.
1.6 SCOPE OF THE STUDY
The purpose of this study is to investigate the impact of physical distribution on organisational performance in agromarketing enterprises. The study focuses on organisational performance in relation to physical dispersion.
The study will focus on five (5) agro-marketing enterprises in the Agege area of Lagos State. The companies are also restricted to those dealing with chicken goods.
These firms are:
Address of the firm
1. Poultry Support Service Ltd. 309, Old Abeokuta Motorway, Abattior.
Lagos.
2. Soleace and Moxie Inv. Ltd. 309, Old Abeokuta Motorway, Abattior
Lagos.
3. Solution Feeds Ltd. 305, Old Abeokuta Motorway, Oko-Oba.
Lagos.
4. Sabina Pad Ent. Nig. Ltd. – 311 Old Abeokuta Motorway, Oko-Oba
Lagos.
5. Cervi Plus. Abibatu Mogaji Market, Old Oko-Oba Road.
Oko-Oba, Lagos.
1.7 Significance of Study
The study is relevant to managers of agromarketing enterprises because it exposes them to systematic methods of distributing their products for improved performance.
This study is particularly critical for academics and practitioners since the suggested framework is predicted to reveal many previously overlooked links that managers are interested in.
Furthermore, specific trends in physical distribution methods would be exposed, encouraging managers to use this technique and potentially improving both physical distribution management and organisational performance.
Finally, the study contributes to the body of knowledge and may serve as a springboard for students, businesses, and managers interested in pursuing a career in physical distribution.
1.8 Definition of Terms
Physical distribution is the movement and storage of products from their point of origin to their site of consumption or usage through various distribution networks.
Postponement is the practice of transferring one or more operations or activities (producing, procuring, and delivering) to a later point in the supply chain.
Physical Distributor: A service provider who has signed a physical distribution agreement with the principal and has committed to carry out physical distribution.
Wholesalers: Increases marketing efficiency by purchasing a wide range of products in large amounts and selling them to other firms that require small quantities of a variety of commodities.
Agricultural marketing encompasses both on-farm and off-farm activities ranging from agricultural product production to commercialization, including post-harvest handling, processing, marketing, and related commercial activities.
Agricultural marketing firms are interdependent networks of businesses, institutions, activities, and relationships that develop and deliver material inputs to the farming sector, produce primary commodities, and then handle, process, transport, market, and distribute food and other agro-based products to consumers.
Acquisition Performance: This is a perceived performance indicator that measures an organization’s performance based on the number of new customers it acquires, the increase in sales growth, and its market share.
Retention Performance: This is a perceived performance indicator that measures an organization’s performance in terms of its ability to retain customers.
Organisational performance refers to how successfully an organisation meets both its market-oriented and financial aims.
Agro Marketing is an integrative force in the agriculture sector that aligns output with customer needs and satisfaction.
Delivery occurs when the items are made accessible to the primary or entitled party after the physical distributor has completed the agreed-upon work.
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