The Effect Of Material Handling On The Profitability Of An Organization
1.1 Background of the Study
Material handling is an aspect of management which is concern with the safety of material in transit with the regularity of delivery as well as the flow of materials.
Materials handling is actually the process of moving through a full cycle of operations from the procurement of raw materials, include reception and storage prior to use, handling into and between processes and the handling of the finished goods packaging storage and distribution.
According to Badi (2004) material handling refers to the movement of materials inside the work premises from raw materials stage to finished product storage, maximum movement activity takes place on work in process.
Materials handling must therefore be controlled and carried out properly if a high standard of efficiency and cost effectiveness is to be achieved through managing:
- Handling cost
- Space cost
- Damage for poor handling and storage
- Labour cost
- Production waiting time on one hand
But materials handling increases:
- Effectiveness and quality control
- Safety level
- Production capacity level
- Efficiency in receipt, storage and dispatch.
Proper materials handling requires a lot of pre-planning which should begin with a systematic analysis of the nature of the handling problems at hand.
In fact materials are the main input in any production system it is the importance attached to raw materials that calls for a proper management of raw materials in an organization.
Materials today, are life blood of any industry and no government industry or organization or private organization operates without them. Materials must available at the proper time, in proper quantity, at the proper place and at the right time. Failure of any of these responsibilities concerning materials, add to organization profit.
1.2 Background Of The Study
During the Second World War after the industrial revolution, industries sprang up in hundreds every day. As a result of the increase in industries, raw materials became scare. This made production to be complex. Accounts needed to be prepared and customers needed to be attended to within a short period of time. Alternative sources were required and new product needed improvement and development. With this problem in mind, the material management concept was introduced with the view to solving them in a scientific manner to achieve, optimal success and reduce production cost. By the 1950s and 1960s and uneven transition from the old concept of material management as clerical function to a newer function or concept of material management emerged which embraced inventory control, distribution and buying function.
By later 1960s material management was recognized as an important function in an organization. Thus, the importance of material management lies in the fact the any significant contribution made by the material manager in reducing material cost will go along was in reducing production cost and improving the profitability and the rate of return on investment.
Today, materials are the livelihood of any industry, no industry can operate without them, they must be made available at the proper time, in proper quality, at the proper place and at the proper price.
1.3 Statement Of Problem
Material handling in manufacturing organization is an important aspect of production process. Many companies engage 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 and proper reconciliation of possible loss to business through interruption of production of failure to met orders with the handling cost of stock. Here in Nigeria a cursory look at our economic problem will appear to suggest the non adaptation of materials management which is a product of our industrial philosophy that has made out manufacturing sector over important depended through 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 Objectives Of The Study
The following are aimed at realizing the following objectives
- Analyzing the impact of material handling in KRPC
- To know the importance of material handling in an organizational performance as a whole.
- To provide useful recommendation as related to the study
- To give future research room to improve on where the present research stops.
1.5 Research Questions
Ho: Material handling has no effect on the profitability of a manufacturing company
HI: Material handling has effect on profitability of a manufacturing company.
1.6 Significance Of The Study
The significance of the study is to assess the impact of materials handling in KRPC and also to suggest and make recommendation to the problem that they may likely encounter in material handling is not properly managed in organization.
The following are the significance of this study:
- It will provide a broad idea to the production company on how they can effectively manage their material handling and minimize losses.
- It will be idea for organization and enterprises in the aspect of material handling
- It is highly pointed out that the cost material handling involves 40% of 50% of total production cost. Therefore considerable attention must be taken in the material handling.
- Material handling also reduce accidents greater job satisfaction increase produce and saves time.
1.7 The Scope Of The Study
The scope of these study is restricted and confined to the material handling system in public institutions from 2007-2008 with the population of 250 staff drawn from production, materials management, power plant and utility units and a sample size of 50 which represent 20% of the population be the major responsibility of single department (material department) therefore such responsibilities has to be shared to various departments in the materials under one umbrella known as material management for better accountability, better control, better handling, maximum efficiency necessary recording of data required and reduction to various acquisition cost.
1.8 Limitation Of Study
Material handling operations are designed based upon principles as discussed above material handling equipment consists of cranes, conveyors and industrial trucks. Manual materials handling ranges from movement of raw material, work in progress, finished goods, rejected, scraps, packing material, etc, these materials are of different shape and sizes as well as weight. Material handling is a systematic and scientific method of moving, packing and storing of material in appropriate and suitable location. The main objectives of material handling are as follows:
- It should be able determine appropriate distance to be covered. Facilitate the reduction in material damage as to improve quality. Reducing overall manufacturing time by designing efficient material movement.
- Improve material flow control. Creation and encouragement of safe and hazard-free work condition improve productivity and efficiency. Better utilization of time and equipment, it is critical for manufacturing organization to identify importance of material handling principles as the critical step in promoting the job.
- Improvement process. Manual material handling scientifically increases health hazard for the workers in from lower back injuries.
- In the current competitive and globalize environment, it is important to control cost and reduce time in material handing. As efficient material handling process promotes.
- Design of promotes development of method which improves and simplifies the work process.
- It improves overall production activity
- Efficient material handling reduces total cost of production.
1.9 Definition Of Terms
It encourages study of all available system relationships before moving towards preliminary planning. The study includes looking at existing methods, problems etc.
It established a plan which includes basic requirements, desirable alternates and planning for contingency.
It integrates handling and storage activities which is cost effective into integrated system design.
Unit load principle handle product in a unit load as large as possible.
Space utilization principle:
Encourage effective utilization of all the space available.
It recognizes human capabilities and limitation by design effective handling equipment.
It considers consumption of energy during material handling.
It encourages mechanization of handling process wherever possible as to encourage efficiency.
Encourages of methods and equipment which are possible to utilize in all types of condition.
Encourages simplification of methods and process by removing unnecessary movements.
Encourages usage of gravity principle in movement of goods.
Encourage provision for safe handling equipment according to safety and rules and regulation.
Encourages of computerization of materials handling and storage systems.
System flow principle:
Encourage integration of data flow with physical material flow.
Encourage preparation of operational sequence of all system available.
Encourage cost benefit analysis of all solutions available.
Encourage preparation of plan for preventive maintenance and scheduled repairs.
Encourage preparation of equipment policy as to enjoy appropriate economic advantage.
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