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Chapter I: Introduction
1.1 Background
of the Study
Business
organization must deal with distribution to achieve a set goal. Distribution is
not completed until the goods gets to the final consumers.
Physical
distribution comprises the tasks that is involved in planning and implementing
the physical flow of materials and good from the manufacturing point to the
distributors or the consumer for their own consumption purpose or the aim of
making profit.
Physical
distribution on profitability depends the effective strategy to maintain and
generate more input. The term profitability implies the ability to continuously
generate profits over the sustained period of time. Harper (1984), and Sink and
Tuttle (1989) suggest the likely impacts on profitability of an organization
Distribution
of materials is one of the functions of material management in procurement and
stores. The over all objectives of distribution is to provide a service to the
procurement, marketing, stores and the production function by holding and
delivering of goods and services (products) efficiently and economically.
Further
more, it can also be related to warehousing, delivering and planning the
distribution system. Warehousing is principally a service or production, being
designed to hold products for manufacturer to transform stock from production
units to marketing (Sales) units and to assemble loads for delivering to
consumers/customers.
Distribution
also makes the best used of the resources that are available and to keep
investment of a reasonable levels of products.
Planning
the distribution system, it must be designed to coordinate warehousing with
delivering to advice on the location of the factories, warehouses and depots to
route delivering vehicles to schedule deliveries and to control operations in
accordance with requirements.
The
supply site, must be designed and decided, (to suit the type of business)
routes are needed to develop for supplying of good to the customers.
The
different types of transportations or routes are rail, road, sea, air and
pipeline. These routes must be considered so as to select the one that provides
the best services.
Purchasing
by Kenneth Lysons 4th editions logistics management which is the
same as distribution the author defined it as “the process of strategically
managing the acquisition, movement and storage of materials, parts and finished
inventory (and the related information flows) through the organization and its
marketing channels in such a way that, the current and future profit ability is
maximized, through the cost effective fulfillment of orders (Gattona).
Supply
chain management (purchasing by Mallam Hassan Mohammed) defines distribution as
a “concept that involves the integration of all the value creating elements in
the supply, manufacturing and distribution processes of an organization, from
the raw materials extraction, through the transformation process to end users
consumptions” (pp.16).
Distribution
is also a system which is to provide a service to customers who pay to receive
goods as ordered.
Distribution
channel is the path a product takes as it moves from the producer to the user.
The objectives generally, is to select the most effective, efficient and profitable
pathway.
The
term physical distribution is part of the working vocabulary of every business
many finds it difficult to defines its meaning because a wide range or variety
of interpretation are available in the literature of the subject.
1.2
Statement
of the Problem
Most
organization adopt indirect marketing strategy because of its size. The number
of products were too many and the organization described to apply the funds to
something else.
Indirect
marketing is defined “as a process of marketing that uses personal media with
or the influence of sale’s man to influence and effect sale’s product –
wholesaler – retailer – consumer.
The
organization makes use of this strategy effectively and efficiently because of
the following reasons:
1.
It has a narrow product line
2.
It has unable to finance, distribution
direct to retailers or decides to apply the fund to something else
3.
Retail outlet are many and widely
disperse that is with a low concentration
4.
The wholesaler are willing to carry the
product and give promotional support
Organization
who have a poor relationship within any link of the supply chain or
distribution channels can have a disastrous consequence for all other chain.
Therefore informal interaction and information sharing should be giving
priority in physical distribution to make it more efficient and effective.
1.3
Objectives
of the Study
The
major rationale behind this study is to assist us to compare how physical
distribution is carried out in different business organization.
The following could be raised:
i.
To find out why physical distribution is important to the
organizations profit and consumers.
ii.
To examine the future of the economy on the sales with
physical distribution.
iii.
To identify the effectiveness and efficiency of the depot of
the organization.
iv.
To identify the problems faced in the transportation cost on
physical distribution
1.4 RESEARCH
HYPOTHESIS
Hypothesis
is a very important scientific tool in enquiry that enables us to relate theory
to observation and observation to theory.
Research
work cannot be undertaken unduly without some hypothesis and hypothesis
(unproved assumption) always have
significant
effect on every study.
For
this research work, these hypotheses are formulated for proving.
Ho –
Physical distribution has no significant
impact on organization and it’s profitability
H1 – Effective
physical distribution has significant impact on organization and it’s
profitability.
1.5 Scope
of the Study
The
research work encompasses the entire of physical distribution activities on
organization and its’s profitability on UAC Nig. Plc. as a focal point.
It
went further to appraise the extent or embrace of physical distribution
activities by UAC Nig. Plc and evaluate its effect on the achievement of the
organisations’ objectives.
In
carrying out research of this nature, certain constraining factors are obvious;
the research encountered some problems, which limited the capacity of the
study.
Prominent
among the militating factors are:
TIME:
A research of this kind requires time to cover the scope, but as a student with
both academic and official activities contesting for the little time, the time
frame was inadequate for effective coverage of the scope of the study.
FINANCE:
To effectively carry out this research requires good financial commitment,
thus, as fund was not always readily available, the pace of this study was
dawdled.
Finally,
the research demands interaction with the consumers and intermediaries of the
firm to extract information to put in place this research work. But, most of
the firm’s trade links are those with little or no formal education, which
limited the effective use of questionnaires and subjected the researcher to an
intensive use of observational method to extract the information required.
1.6
Definition
of Terms
Physical
Distribution: Is the activities involved in the flow of products as they move
physical goods from the producer to the consumer or industrial users.
Logistics:
Is the total management of the key operational functions in the supply
chain-procurement, production and distribution, procurement includes purchasing
and product development.
The
production function includes manufacturing and assembling, while the
distribution function involves ware-housing, inventory, transport and delivery
(Knight Wendling/Mallam Hassan)
Ware-housing:
a broad range of physical distribution activities including storage, assembling
and preparing product for shipping.
Product:
A set of tangible and intangible attribute that include colour, price, packing
and repetition and services of the manufacturer and the middlemen. A product
may be physical goods, a service and idea, a place, an organization or even a
person.
Storage:
This involves receiving and keeping of materials and issuing them to production
department. It also inovles storage of work in progress components and finished
goods before being transferred to the ware house.
Packaging:
This involves the methods of wrapping up of materials packing and presenting
them in good containers to retain the quality ultimately to the consumers.
Routing:
it is the systematic study of the detail of the supply sites, customer’s
location of delivery of vehicle and operating conditions
Delivery:
Is a marketing services being designed for transporting products according to
orders and delivering them into the hands of customers
Schedule:
is the planning of vehicles journey’s so that order are delivered at the right
time, right days, at the right place to the ultimate consumers or users and
vehicle are utilized efficiently
Stock/ Inventory Control:
This involves the physical control i.e checking, counting and racking of
stocks. It also involves, clerical control i.e. keeping records of receipts,
issues and balances of all inventories.
Distribution requirement planning (DRP):
This
is an inventory control and scheduling techniques that applies MRP principles
to distribution inventories, which may also be regarded as a method of handling
stock replenishment in a multi-echelon environment.
Supply Network:
Is the flaw of materials and services into and within the firm starting from
extraction, right down t consumption and conversion end products or services.
Planning:
Is the preparation of materials budgets product research and development value
engineering and analysis and standardization of specifications.
Materials management: Is
the total of all those tasks, functions activities and routines which concern
the transfer of external materials and services into the organization on the
administration of the same until they are consumed or used in the process of
production, operations or sale.
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