ASSESSING THE EFFECT OF MATERIAL HANDLING ON THE PROFITABILITY OF A MANUFACTURING COMPANY
ABSTRACT
This study examined the effect of material handling on the profitability of an organisation, taking KRPC Kaduna Nigeria as the case study. The study was guided by the following research objectives; to examine the relationship between materials handling and the profitability of KRPC; to examine the types of Materials Handling systems used by KRPC and to examine the factors affecting the profitability of KRPC.
Using a sample of 40 respondents, a case study design, involving the use of both qualitative and quantitative methods of data collection was employed to assess the effect of materials handling on the profitability of an organisation.
A cross-sectional research design that employed both quantitative and qualitative techniques was employed in data collection and analysis purposive and simple random sampling techniques were employed to attain responses from 40 respondents which comprised of the staff of KRPC… (Scroll down for the link to get the Complete Chapter One to Five Project Material)
INTRODUCTION
Background of the Study
Material Management, as practiced in business today, can be defined as “a confederacy of traditional material activities bound by a common idea. The idea of an integrated management approach to planning, commision flow and distribution of products materials form the raw materials state to the finished state. (Oranum, 2007). The above definition implies that material management is generally concerned with the flow of materials from the source of supply through the production line to the final consumers.
This means that material management includes such function as the primary responsibilities of purchasing plus other major procurement responsibilities like Inventory Control, traffic, receiving, warehousing as well as production planning and control. Cater Douglas also defined material handling as the aggregate of those ordinary courses of business which are in the process of production of goods or services to be available for sale.
Material are significant portion of most firms of assets which accordingly requires substantial investment in order to keep these inventories from becoming unnecessarily large, material must be managed effectively. In modern business greater emphasis have being put in material handling. It concern in material management is to provide materials in the right condition at the right time. It implies that the handling procedures should be able to:… (Scroll down for the link to get the Complete Chapter One to Five Project Material)
Statement of the Problem
Material handling in manufacturing organization is an important aspect of production process. Many companies engage diverse strategies to achieve organizational goal through material handling. The control of material handling as it affects Kaduna Refining and Petrochemical Company (KRPC) is the unavailability of material in store…(Scroll down for the link to get the Complete Chapter One to Five Project Material)
Objectives of the Study
The following are aimed at realizing the following objectives:
- Analyzing the impact of material handling in KRPC… (Scroll down for the link to get the Complete Chapter One to Five Project Material)
Relationship between Material Handling and the Profitability of an Organization
According to Ondiek (2009) materials handling refers to the process of moving, controlling, protecting as well as storing materials such as goods, items, etc. for manufacture, disposal, and distribution or even for consumption. This process is very crucial because all the materials should be handled well in order to keep it safe, to reach its destination safely and to maintain their quality and condition. In other words, good materials handling is important. Good materials handling is important because it will help you.
According to Zanto (2008) Materials handling eliminates accidents. If good materials handling is applied, accidents can be prevented and eliminated as this means proper and careful handling is performed. This enhances the profitability of an organization in a sense that its workforce shall attain optimum output and the organization shall not incur expenses on compensating the injured employees since accidents are eliminated (Johnson, 1993)… (Scroll down for the link to get the Complete Chapter One to Five Project Material)
Types of Materials Handling Systems
Material handling equipment is mechanical equipment used for the movement, storage, control and protection of materials, goods and products throughout the process of manufacturing, distribution, consumption and disposal. The different types of handling equipment can be classified into four major categories: transport equipment, positioning equipment, unit load formation equipment, and storage equipment (Ondiek, et al 2009).
- Transport equipment
According to Johnson 2003, transport equipment is used to move material from one location to another (e.g., between workplaces, between a loading dock and a storage area, etc.), while positioning equipment is used to manipulate material at a single location. The major subcategories of transport equipment are conveyors, cranes, and industrial trucks. Material can also be transported manually using no equipment.
- Conveyors
Conveyors are used when material is to be moved frequently between specific points over a fixed path and when there is a sufficient flow volume to justify the fixed conveyor investment (Okpara, 2008). According to Lyson (2006)… (Scroll down for the link to get the Complete Chapter One to Five Project Material)
The Challenges to the profitability of Organizations
According to (Hines, 2004) the essence of profitability is a firms revenue – costs with revenue depending upon price and quantity of the good sold. These factors will all determine the profitability of firms
- High Competition
If a firm has monopoly power then it has little competition, therefore demand will be more inelastic. This enables the firm to increase profits by increasing the price. For example, very profitable firms, such as Google and Microsoft have developed a degree of monopoly power, with limited competition (Lee et al 2007).
However, in theory, government regulation may prevent monopolies abusing their power e.g. the OFT can stop firms colluding (to increase price) Regulators like OFGEM can limit the prices of gas and electricity firms. If the market is very competitive then profit will be lower. This is because consumers would only buy from the cheapest firms.
Also important is the idea of contestability. Market contestability is how easy it is for new firms to enter the market. If entry is easy then firms will always face the threat of competition; even if it is just “hit and run competition” – this will reduce profits (Lyson, 2006)… (Scroll down for the link to get the Complete Chapter One to Five Project Material)
METHODOLOGY
Research Design
The study was both qualitative and quantitative in nature:
- Quantitative Design
Quantitative design was used to process data which could be quantified and was numeric in nature. For example the respondents’ age, income, costs and revenues related to material handling. According to Creswell et al. (2003), quantitative research helps in getting an in-depth analysis of the problem under investigation.
- Qualitative Design
This was used to describe qualitative data which could not be quantified in numbers. This included respondents’ opinions and ideas. Qualitative research was also applied in order to describe current conditions or to investigate relationships, including effects relationships. In addition, it helped in answering questions concerning the current state of the subject under study… (Scroll down for the link to get the Complete Chapter One to Five Project Material)
Sample Size and Composition
The sample size was 40 respondents of which 20 were stores staff, 10 were finance staff and 10 were managers of KRPC.
Table 3.1: Sample Size and Selection of Respondents
| Category | Population | Sample Size | Percentage |
Method of Selection |
| Managers |
30 |
10 | 25% |
Purposive |
| Finance department |
40 |
10 | 25% |
Cluster and Simple Random |
| Stores |
50 |
20 | 50% |
Cluster and Simple Random |
| Totals |
120 |
40 |
100% |
Source: Technique Purposive, Cluster and Simple Random Sampling
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RESEARCH FINDINGS AND DISCUSSIONS
Introduction
This chapter analysis interprets and presents the findings gathered from KRPC. In order to achieve the main objective of this research specific objectives and research questions had to be answered
The study targeted 40 respondents and managed to obtain responses from all of them thus representing a 100% response rate as shown in table 1. This response rate has been achieved because the researcher gave the respondents enough time to fill the questionnaires. Babbie (2003) explains that a 50% response rate is adequate, 60% good and above, while 70% rated very good. This collaborates with Mugenda and Mugenda (2003) recommendation of a response rate of 50% based on the rule of thumb. Therefore, this study considered the response rate adequate for analysis and generalization since it exceeded the minimum recommended.
Table 1 Response Rate
| Response |
Frequency |
Percentage |
| Returned |
40 |
100 |
| Not returned |
0 |
0 |
| Total |
40 |
100 |
Source: Primary data 2017
These findings are also presented in the graph below:
Figure 1: Response Rate
Source: Primary Data
SECTION A
General Information
This section showed the general information of the respondents. All sampled respondents were staff of KRPC Kaduna Nigeria. They were asked to fill the questionnaires. Sampled characteristics of the respondents included gender, age, education level, and experience.
Table 2: Gender characteristic of respondents
| Sex of respondents |
Frequency |
Percentage |
| Male |
25 |
62 |
| Female |
15 |
38 |
| Total |
40 |
100 |
Source: Primary Data 2017
From table 2 above, the response indicated that the majority of respondents were male who accounted for 25(62%) and female respondents accounted for 15(38%). This implies there is a marginal majority of males over the females among the staff of KRPC… (Scroll down for the link to get the Complete Chapter One to Five Project Material)
SUMMARY, CONCLUSION, AND RECOMMENDATIONS
Summary
Material handling facilitates a shorter operating cycle and reduces the handling costs. It also eliminates unproductive handling of materials and reduces idle time for labour, eliminates factory hazards and maintains the quality of materials. This is consistent with the findings of Ondiek (2009) who emphasized the role of materials handling in reducing handling costs and unproductive handling of materials.
The study also revealed that material handling enables optimum usage of space, it facilitates better customer care, facilitates better quality of products and facilitates timely production. This too is consistent with the findings of Zanto (2008) who noted that materials handling facilitates customer care and better quality products… (Scroll down for the link to get the Complete Chapter One to Five Project Material)
Conclusions
Finding reveals that there is a positive relationship between materials handling and the profitability of the organisation and the researcher therefore concludes that:
- Material handling aids the profitability of an organisation in a way that it facilitates a shorter operating cycle, reduces the handling costs, eliminates unproductive handling of materials, reduces idle time for labour, eliminates factory hazards, maintains quality of materials, enables optimum usage of space, facilitates materials issues, facilitates better customer care, facilitates better quality products and timely production. Thereefore for a company to ensure its profitability, it has to take deliberate measures to improve and standardize its material handling system through mechanisation of this department… (Scroll down for the link to get the Complete Chapter One to Five Project Material)
Recommendations
The researcher recommends that organizations should invest in material handling equipment like cranes, conveyors, industrial trucks and others so as to enhance operational efficiency. This will lead to profitability
The researcher also recommends that organizations should prioritize the material handling function since it is a very vital cost center… (Scroll down for the link to get the Complete Chapter One to Five Project Material)
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