The Effect Of Store Design On Materials Handling

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The Effect Of Store Design On Materials Handling


Abstract


This study examined the effect of Store design on the material handling of an organisation, taking PHCN Kaduna as the case study. The study was guided by the following research objectives; to examine the relationship between materials handling and the Store design of PHCN; to examine the types of store design systems used by PHCN and to examine the factors affecting the Store design of PHCN. 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 Store design on the materials handling of an organisation. A cross sectional research design which 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 PHCN.

The findings revealed that there is a positive relationship between materials handling and the Store design of PHCN since materials handling facilitates a shorter operating cycle, reduces handling costs, eliminates unproductive handling of materials, reduces idle machine capacity, reduces idle time for labour, eliminates factory hazards, maintains quality of materials, enables optimum usage of space, facilitates materials issues, facilitates better customer care and better quality products and ensures timely production.

The study recommended that organisations should invest in store design equipment. The study also recommended that organisations should prioritize the material handling function since it is a very vital cost center. The study concluded that every successful organisation must have an efficient materials handling department and also give keen interest on the other factors that influence the profitability of the organisation.


Chapter One


Introduction

1.1 Background of the Study

A store is an essential limb of an organization. It is the depository of all materials required by the organizations in the organization and supplies materials as an when required.

It is important to note that the store is an area of great expenditure in manufacturing and assembling plant. It is true that store function is a major cost centre which make use of 70-75% annual budget of the firm (Dangana 2005) and thus it can affect saving and therefore contribute significantly and therefore contribute significantly to the profit of the organization.

However, in today’s highly competitive and globalized business world, store design is of great importance as a substantial number of instances have show that people charge with the function and responsibility of designing and managing the store are given little or no attention in the organization. This may be as a result of poor understanding store design or inappropriate application of it.

More so, the variety of items sometimes, store is so large that a planned system is necessary to keep the secured and in order. The stored items should be identified and issues with minimum effort and minimum time. Thus this calls for a store structure suitable to carry on various activities efficiently and productivity and developing a system that ensure safety of men and materials.

Most often the design of a store house determiners to a large extent the materials movement pattern and the limited type of handling equipment that can be used. This result in fact that most customers demand for goods and services within and outside the organization are incremental in nature as they opt for speedy, convenient and reliable delivery of materials and service.

However, the need to curtail the amount of waste and improve the level of customer’s service within such organization has brought the use of the term store design ad its impact in materials handling. It should also be noted at this junction that any knowledge of how a store should be designed must incorporate the knowledge of how a store should be designed must incorporate the knowledge of how materials would be moved.

Therefore, the research work develops the effective utilization of store design and it prospect in the organization with reference to enhancing and ensuring effective materials handling in the organization.


1.2 Statement of the Problem

One vital decision that firms make is how to design and where locate their storage facilities. This decision goes a long way in determining the extent to which the firm will achieve its objectives. That is to get products and services to customer faster and at lesser cost to the firm and customers.

Neglecting to manage the activities effectively can result in inefficiencies that out weigh gains or benefit in good management of such vital activities as transportation materials handing, inventory management and maintenance and information flow.

However, organizations are faced with various problems to design a store house. Some of these problems may include; construction cost, cost of installation, cost of land, rate levied upon the new building by local authority and cost of survey, planning designing. Other problems may also include cost of materials handling i.e (equipment needed to load and off load materials and also for transporting materials), cost of storage equipment needed, and payment to building contact and for other incidental cost.

As a result, a poor storage design will result in poor performance such as materials damages and obsolescence, theft and pilfering, poor communication network, difficulties in the movement of materials within and outside etc regardless of the firms position in the industry or its product acceptability in other location.


1.3 Objective of the Study

  1. To examine the effect of store design on materials handling
  2. To ascertain difficulties associated with store design on materials handing.
  3. To identify necessary solution to curb these difficulties.
  4. To determine the degree of importance of placed to store building in PHCN.

1.4 Significance of the Study

The findings of the research will be useful to power holding company of Nigeria (PHCN) Kaduna as it will enhance or improve the store design system and techniques effectively and efficiently.

Prospective researchers may find findings of the researcher as a reference point particularly for those who may wish to carry out further research on the related field under study.

To the entire populace, that come across this research work, the research work will provide them with the knowledge on the important store design on material handling is to an organization and it will also add value to their knowledge. Also it will serve as pre-requisite for the award of Higher National Diploma (HND) in Purchasing and Supply management.


1.5 Scope of the Study

This research work is based on the effects of store design on materials handling with consideration to power holding company of Nigeria (PHCN) Kaduna. Ali Akilu road Kaduna north local government. The research work will be centered on the effect of store design on materials handling in the organization with regard to the management and staff of PHCN.

The findings of this research work will primarily base on the data from the stores, distribution, marketing and production management of power holding company of Nigeria located at Ali Akilu road kaduna north local government kaduna.


1.6 Research Questions

  1. Does store design have any effect on material handling?
  2. What are the difficulties associated with store design?
  3. What are the solution to curb these difficulties?
  4. What is the degree of importance placed on store building in PHCN?

1.7 Definition of Terms

Store:

Is a place where items may be accumulated or routinely kept. It is set up in order to receive, inspect, hold and issue all assets of an organization while helping to maintain its original quality and balance flow of materials as well as achieving the very important roles of store function.

Design:

The way that something has been planned or made to draw or plan something that will be made, done or built in other to permit a smooth handling and storage of materials at the lowest possible cost.

Store Design:

Could be described as the planning and layout of store house structure to permit smooth handling and storage of store at the lowest possible.

Material Handling:

As that operational activity involving manuals or automated movement of materials and other goods from one location to another within an organization or time in good condition and efficiently.

Shelves:

A board for laying thing on or this is pieces of woods or iron that are placed on the wall where goods and other office materials are kept. In some places they are designed in cubes.

Pallets:

A sample device that place mechanically operated forks under a load so that it can be raised up from grounds and are usually made of woods.

Gangways:

This is a long and normally a narrow way in store house and environment for operating of handling equipment to facilitated movement of materials in and out of the store.

Stockyard:

This is an open storage space with an organization in other words. It is a type of store not housed but segregated purposely for storage not of non perishable.

Receipt:

Is the process of accepting from all resource all materials and parts which are used in the organization including supplier for manufacturing, plant maintenance officer, capital installation and finished products.

Effect:

Change produced by an action or the result produced from the collusion of two or more variables.

Organization:

Are artificially continued structure with procedures and objectives defining responsibilities and highlighting who does what they of job task.

Dispatch:

Refer o terms being selected from stock and when marshaled documented loaded and subsequently delivered to their given destination.


Chapter Five


Discussion of Findings, Conclusion and Recommendations

5.0 Introduction

This chapter gives a discussion of findings, a summary, conclusion and recommendations which are in line with the objectives of the study as well as suggestions for future research.


5.1. Discussion of findings

5.1.1 Relationship between Materials Handling and the Store design of the Organisation

From the table 4.5, it can be observed that there are a number of ways that material handling relates with the store design of the organisation.

Material handling facilitates a shorter operating cycle and reduces the handling costs such that the stores and materials handling department, as a cost center, does not inflict a heavy cost burden upon the finances of the organisation. This serves to check on the total operating cost of the organisation, as confirmed by the 40% and 50% of the respondents who strongly agreed and agreed respectively to this assertion. It also eliminates unproductive handling of materials which is highly associated with manual handling, alongside the delays in the operating cycle and therefore this reduces idle time for labour thus enhancing operational efficiency in the organisation. 62% and 33% of the respondents agreed strongly and agreed respectively to the effect of materials handling in reducing the handling costs in the long run. As highlighted by 75% and 20% of the sample strongly agreeing and agreeing respectively, materials handling eliminates factory hazards like accidents and damages on the products and other assets of the company and thus maintains the quality of materials. For example, where the company is dealing or handles bulky materials or products like machines or delicate heavy items like electronics, proper materials handling helps to reduce a good deal of accidents and damages.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 in such a way that materials can be packed from the floor to the ceiling of the store house using material handling machines like Grid Store Layout and others. 40% and 50% of the sample strongly agreed and agreed respectively that indeed material handling enables optimum use of space. Materials handling facilitates better customer care such that customers’ orders are quickly handled. Dispatches are promptly organized with minimum damages and delays. Materials handling further facilitates better quality of products and facilitates timely production. With a reduction in the process or production cycle, the quality of products is enhanced and the time of production is significantly reduced. This too is consistent with the findings of Zanto (2008)who noted that materials handling facilitates customer care and better quality products. Materials handling is further significant in facilitating quick and efficient materials issues. As can be observed that 62% and 33% strongly agreed and agreed respectively that machine automated system making the issue of materials very quick and safe thus reducing on the order processing time. This is also very important in situations where materials to be issued are bulky and would require much labour force to handle. However, a crane machine operated by one or two personnel can quickly and safely issue bulky materials in a very short time.

5.1.2 Types of Materials Handling Systems

The findings in table 4.6 revealed that DHL uses a number of material handling systems including Forced-Path Store Layout which are usually used for intermittent materials handling and when materials 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. As noted by 75% and 25% strongly agreeing and agreeing respectively that Forced-Path Store Layout can be of different types for example the roller and flat-belt, power-and-free and trolley are unit-load Forced-Path Store Layout are designed for example to provide the accumulation capability lacking in the trolley conveyor.

Likewise 80% and 20% of the respondents strongly agreed and agreed respectively that companies use Grid Store Layout as one of the material handling systems. Grid Store Layout are normally used to transport loads over variable (horizontal and vertical) paths within a restricted area and when there is insufficient flow volume such that the use of a conveyor cannot be justified. This is consistent with the findings of Jacobs et al (2009) who further noted that Grid Store Layout provide more flexibility in movement than Forced-Path Store Layout because the loads handled can be more varied with respect to their shape and weight.

Loop Store Layout were identified by 90% and 10% of the respondents who strongly agreed and agreed respectively that Loop Store Layout are used to transport heavy items especially in companies that hold heavy cargo. The respondents noted that Loop Store Layout are more flexible in movement than Forced-Path Store Layout and Grid Store Layout because there are no restrictions on the area covered, and they provide vertical movement if the truck has lifting capabilities. This is consistent with the findings of Ademeyi (2010) who further highlighted that Loop Store Layout are designed for different tasks like manual lifting travel capabilities etc. The findings also reveal that PHCN uses Diagonal Store Layout to handle its materials and Angular Store Layout like rackets. This is consistent with the findings of Ademeyi (2010) who identified that companies use a number of materials handling systems like Forced-Path Store Layout, Grid Store Layout, Loop Store Layout and others.

Positioning of equipment were identified by 95% and 5% of the respondents strongly agreeing and agreeing respectively. They noted that Straight Store Layout is used to handle materials at a single location and can also be used at a workplace to feed, orient, load/unload, or otherwise manipulate materials so that they are in the correct position for subsequent handling, machining, transport or storage. These findings agree with Lee, et al (2007) who emphasized that Straight Store Layout is very important to reduce on damages and human fatigue, and reduce on injuries or accidents at work and in the stores.

Similarly 75% & 25% of the respondents identified Diagonal Store Layout as one of the materials handling systems. Respondents noted Diagonal Store Layout is used to restrict materials so that they maintain their integrity when handled a single load during transport and for storage. For example if materials are self-restraining, then they can be formed into a unit load with no equipment. This agrees with Hornby (2005) who further identified pallets, skids, slip sheets, tote pans, bins / baskets, cartons, bags and crates as some of the examples of Diagonal Store Layout used in materials handling.

Finally, all the respondents (100%) identified Angular Store Layout as one of the materials handling equipment. It was noted that Angular Store Layout is used for holding or buffering materials over a longer period of time. Examples identified included cartons, racks, pallets, drawers, bin shelving, carousels, A-frames among others. This was consistent with Guinea (2012) who also highlighted the possibility of using an automated storage / retrieval system (AS/RS) as an integrated computer – controlled storage system that combines storage medium, transport mechanisms and controls with various levels of automation for fast and accurate random storage of products and materials.

5.1.3 Factors affecting the store design of PHCN

Table 4.7 indicates that the Flow of materials in the industry affects the store design of the organisation. 40% and 50% of the respondents strongly agreed and agreed respectively that firms with monopoly power have little competition and therefore the demand for their products will be more inelastic leading to higher store design. This is however only true where the entry into the industry is restricted because in an industry where there is free entry of firms, the firms’ profits attract other players into the industry as noted by Lee et al (2007).

Respondents also identified the general economic conditions like inflation, interest rates and exchange rates as a significant factor affecting the store design of companies. For example 75& and 20% strongly agreed and agreed respectively that inflation and high interest rates reduce on the store design of the company, just as Marta (2008) stressed that if there is economic growth, then there will be increased demand for most products especially luxury products with a high income elasticity of demand.

The level of advertising which brings about the awareness of the company’s products to the customers and the relative costs of operation incurred by the company in the production was noted by 70% and 20% of the respondents strongly agreeing and agreeing respectively. Respondents noted that a successful advertising campaign can increase demand and make the product more inelastic in demand. This agrees with Adeloye (2008) who further noted that the increased revenue will need to cover the costs of the advertising though.

Selling, administrative and other overhead costs were identified by 50% and 40% of the respondents strongly agreeing and agreeing respectively to it as a major factor affecting the store design of PHCN. These findings agree with the findings of Marta (2008) who highlighted among others the Flow of materials, level of demand, economic conditions, advertising costs and the relative operational overheads as the main determinants of the store design of the organisation. The study further revealed that the store design of an organisation is highly affected by the level of economies of scale, the level of production and management efficiency, the firm’s objective and the effectiveness of the organisation’s price discrimination campaigns. These findings relate to the findings of (Okpara, 2008) and Ademeyi et al (2010) who both emphasized that for a company to ensure its store design, it has to be operating the economies of scale, with a highly efficient operational management departments, its objective must be a profit motive and should have a successful price discrimination strategy.

At least 90% of all the respondents identified a number of factors including price discrimination, the Types of operations, management efficiency, level of production, economies of scale, relative costs of operation, Space available, general economic conditions and Flow of materials faced by the firm


5.2 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.

The findings in table 4.6 revealed that DHL uses a number of material handling systems including Forced-Path Store Layout which are usually used for intermittent materials handling. It also identified Grid Store Layout and Loop Store Layout to transport heavy items especially in companies that hold heavy cargo. The findings also reveal that PHCN uses Diagonal Store Layout to handle its materials and Angular Store Layout like rackets. This is consistent with the findings of Ademeyi (2010) who identified that companies use a number of materials handling systems like Forced-Path Store Layout, Grid Store Layout, Loop Store Layout, positioning of equipment, unit load formation and Angular Store Layout.

Table 4.7 indicates that the Flow of materials in the industry affects the store design of the organisation. Others include the demand trends, the general economic conditions like inflation, interest rates and exchange rates, the level of advertising which brings about the awareness of the company’s products to the customers and the relative costs of operation incurred by the company in the production, selling, administrative and other overhead costs. These findings agree with the findings of Marta (2008) who highlighted among others the Flow of materials, level of demand, economic conditions, advertising costs and the relative operational overheads as the main determinants of the store design of the organisation. The study further revealed that the store design of an organisation is highly affected by the level of economies of scale, the level of production and management efficiency, the firm’s objective and the effectiveness of the organisation’sprice discrimination campaigns. These findings relate to the findings of (Okpara, 2008) and Ademeyi et al (2010) who both emphasized that for a company to ensure its store design, it has to be operating the economies of scale, with a highly efficient operational management departments, its objective must be a profit motive and should have a successful price discrimination strategy.


5.3 Conclusions

Finding reveals that there is a positive relationship between materials handling and the store design of the organisation and the researcher therefore concludes that:

Material handling aids the store design 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 store design, it has to take deliberate measures to improve and standardize its material handling system through mechanisation of this department.

The researcher further concludes that a company can use a number of materials handling systems available in the industry. These include Forced-Path Store Layout, Grid Store Layout, Loop Store Layout, Straight Store Layout, Diagonal Store Layout and Angular Store Layout among others. These can be used depending on the capital investment of the organisation in the mechanisation of the materials handling function.

Finally the researcher concludes that there are a number of factors affecting the store design of PHCN. These include among others the Flow of materials, the level of demand for the company’s products, the general economic conditions, Space available, relative costs of operation, economies of scale, level of production and management efficiency, the firms’ objective and the level of the effectiveness of the company’s price discrimination strategy.


5.3 Recommendations

  1. The researcher recommends that organisations should invest in material handling equipment like Grid Store Layout, Forced-Path Store Layout, Loop Store Layout and others so as to enhance operational efficiency. This will lead to store design
  2. The researcher also recommends that organisations should prioritize the material handling function since it is a very vital cost center
  3. The researcher further organizations should ensure prudent management of materials to minimize wastage of materials.
  4. Material supply should be optimum to avoid “stock outs” while work in process.
  5. Organizations should always take into cognizance the cost of production or price of raw materials before arriving at selling price
  6. There should be good record system of materials for the operations of the organization particularly as it affects production.
  7. Rate of spoilage and wastages should be minimized as much as possible and ensure that products pass quality control.
  8. There is the need to train staff in the area of material management to further enhance the knowledge of the job.
    Organizations should computerize their material management system in line with the global changes in order to be able to track the movement of materials in the store.

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