ASSESSING THE MATERIAL HANDLING EFFECT ON PROFITABILITY OF MANUFACTURING INDUSTRY

1.1 Introduction

Materials management refers to the process of organizing and supervising all the actions required guaranteeing that the right kind and amount of materials are requested on time, are acquired at a fair price, and above all are readily available at the point of use. When a requirement is identified on the job site, the material management process gets started. The store department receives this information, orders materials, and an invoice is created (Patil and Pataskar, 2013). Material management is similarly defined by Zeb et al. (2015) as a process for carrying out, organising, and overseeing site operations in building projects. One of the most expense components of any building project is construction material.

This chapter will address the background information that motivated this study, the challenges that prompted it, its aim, and its objectives as a preface to subsequent sections of the study. Additional factors include the study's significance, scope, limitations, research questions and hypotheses, and the definition of technical terms.

1.2 Background of Study

In modern companies, material management is characterized as a coalition of traditional material processes bound together by a common idea. The notion of a comprehensive management approach aimed at organizing, allocating, and converting raw resources into finished goods from their raw condition (Iornum, 2007).

According to the description given above, material management is primarily concerned with the movement of materials from the point of supply through the manufacturing process and into the hands of ultimate customers. This implies that material management include functions like inventory control, transportation, receiving, warehousing, and production planning and control in addition to the basic buying tasks.

Material handling, according to Cater Douglas, is the culmination of routine business activities that are involved in producing items or services that will be sold. 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 has 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:

1. Retain appropriate stock level
2. Ensure proper use of stock
3. Ensure that inventory is fully amounted for

Jonny Ater – defines material handling as the movement and protection of materials goods and products through the process of maintaining, distribution, consumption and disposal. Material handling should be controlled and carried out properly if a huge standard of efficiency and cost effectiveness is to be achieved.

B.K Bharabo defines material handling as the art and science of moving, packing and storing of material in any form.

Therefore, in Nigeria where the research was carried out, the activities that was conducted is to know the Material Handling Effect on Profitability of Manufacturing Industry.

1.3 Statement of Problem

Investigation revealed that handling materials is a crucial part of the production process in industrial organizations. By using a variety of tactics, many businesses use material handling to accomplish organisational goals. Regarding Kaduna Refining and Petrochemical Company (KRPC), material handling control involves making sure that materials are available in stock and accurately balancing the expense of managing stock with any potential losses to the company from production halts or unfulfilled demands.

The lack of materials management adaptability in Nigeria appears to be a result of industrial mindset, which has rendered most manufacturing sector overly reliant. This is evident from a superficial examination of economic issues. Though, the organization (KRPC) under the study has advanced stores and way of obtaining their materials, but lack proper personnel to handle the material is a problem.

1.4 Aim and Objectives of Study

The aim of the study is to assess the Material Handling Effect on Profitability of Manufacturing Industry. In achieving this aim, the following specific objectives were laid out as follows:

1. To know the importance of material handling in an organizational performance are as a whole in the area under study;
2. To analyze the impact of material handling in the area under study;
3. To provide useful recommendation as related to the study; and
4. To give future research room to improve on where the present research stops.

1.5 Research Questions

The study came up with research questions so as to be able to ascertain the above stated objectives. The specific research questions for the study are stated below as follows:

• What type of materials management is in use?
• What is the impact of material handling in the area under study?
• What is the importance of material handling in an organizational performance are as a whole in the area under study?

1.6 Research Hypothesis

In order to pursue the objective of this study, the following generalized statements have been designed to guide and aids in obtaining the result for the experiment to be conducted. For this work, the null hypothesis will be represented with H0 while the alternative hypothesis will be represented with hypothesis H1.

Hypothesis One

• H0: Material handling has no effect on the profitability of a manufacturing company
• H1: Material handling has effect on profitability of a manufacturing company.

1.7 Significance of Study

The significance of the study will help in suggesting and making recommendation to the problem that they may likely occur is material handling is not properly managed in an organization. The research is of relevance to the researcher for the following reasons:

1. It will provide a broad idea to the production company on how they can effectively manage their material handling and minimize losses.
2. It will give ideas for organization and enterprises in the aspect of material handling.
3. It is highly pointed out that the cost material handling involves 40% to 50% of total production cost. Therefore, considerable attention must be taken in the material handling.
4. Material handling also reduce accidents, greater job satisfaction, increase production and saves time.

1.8 Scope of Study

The scope of this research is focused on Assessing the Material Handling Effect on Profitability of Manufacturing Industry using Kaduna Refining and Petrochemical Company (KRPC) in Nigeria as the case study.

This research work is based on the existing literature. Secondary data and equally information from primary source is obtained. The secondary data formed relevant to the subject matter which are standard textbooks, journals, internet and the company's management guide.

The primary data collected include questionnaire, observation are obtained by sampling from the total population of the entire staff of KRPC management. The aspects to be covered in this study are how organizational material handling objectives are to be achieved.

1.9 Limitations of the Study

During the course of this study, there were some problems encountered which stood as limitations to the research work. Some of the limitations include:

1. Time Constraint:The time frame given to accomplish this project was very short due to school academic calendar and it was carried out under pressure which made the researcher not to implement some necessary features.
2. Research Material: availability of research material is a major setback to the scope of the study.
3. Financial Constraint: Insufficient fund tends to impede the efficiency of the researcher in sourcing for the relevant materials, literature or information and in the process of data collection (internet, questionnaire and interview).
4. Initial Cooperation Delay from Respondents: A particular limitation of this work came as a result of the respondent refusal to offer their cooperation at the initial time they were contacted. This contributed in making the success of this research study difficult.

1.10 Historical Background of the Case Study (KRPC)

The decision to construct the third Nigerian National Petroleum Corporation (NNPC) Refinery in Kaduna was taken in 1974 along with that of the second (NNPC) refinery located at Warri. However, it was decided that work would commence on the construction of refinery whenever the project of consumption petroleum projects justified it. By early 1975, the view of the fuel shortages experienced then, the federal government decided that work on the third refinery should be advanced. It was envisaged that refinery that refinery in order to meet up with the fuel demand then, based on the feasibility studies carried out which took into the consideration the consumption of the various petroleum products within the Northern Zone and adequate means of disposal for the surplus products. A Crude Oil Capacity of 42,000 barrel per stream a day (BPSD) could be easily justified.

Hence, the refinery was designed for a capacity of 60,000 barrel per stream daily it was much later that the Federal Government decided that the capacity for any refinery in Nigeria should not be below 100,000 BPSD. However, this would have led to the production of large quantity of heavy fuel and on one hand the practical and viable solution is reprocessing of the heavy fuel. In order to do this, the whole project plan has to be modified so that what initially was planned to be a simply hydro-skimming type of refinery was now developed into integrated refinery.

The refinery would now be able to produce wider variety of petroleum products some of which should be lubricating base oils. Hence, it became necessary to import suitable paraffin base crude oil from Venezuela, Kuwait or Saudi Arabia.

Products from KRPC are to include fuel such as diesel, kerosene, premium motor spirit (PMS) and sulphor and those from the lubricating oil complex are base oil, asphalt and wakes. The lubricating out complex of KRPC is the first of its kind in West Africa and one of the largest in Africa. The consulting firm King Willkinson of Hague, Holland in conjunction NNPC engineers, developed the plan for the refining. The contract for construction of KPRC was awarded to Chiyoda Chemical Engineer and Construction Company of Yohohama, Japan in 1977. The project was completed and commissioned in 1980. However, the lube plants and petro chemical plants were commissioned in 1983 and 1988 respectively.

1.11 Definition of Terms

Material Management:

It is a concept that advocates or tries to bring together the combination of al materials related activities under one concept so that efficiency and effectiveness will be attained.

Materials:

Goods held by organizations that are used for operation activities. This includes scraps, packages, finished goods ready for dispatch etc.

Stock Taken:

This is a complete process of verifying the physical quantity or balance with a view to ascertain the actual balance in the store.

Material Handling:

It is a part of material management that concern with the safety of material in transit, the regularity in delivery and also the flow of the materials.

Specification:

It is a detailed description of the materials, parts and component used in making a product.

Profession:

It refers to as an occupation of group at which entrance is only open for those that are qualified though training and development that is to that group.

Purchasing:

It is the process of identifying and acquiring or obtaining the right quality of materials, in the right quality which must be procures at the right price from the right source and at the right time.