An Evaluation Of Distribution Channel In The Logistics Management Of Petroleum Products

Project and Seminar Material for Business Administration and Management BAM

An Evaluation Of Distribution Channel In The Logistics Management Of Petroleum Products


Abstract


This research was motivated to appraise the evaluation of distribution channel in the logistics management of petroleum product using Oando plc as the case study. There was a problem of the tendency of distribution of those petroleum products to the Northern & Southern which effect to a scarcity of the product in other areas of the country. On the contrary to the problems of this research work, an objective came to be as to ascertain whether there is an effective and efficient distribution of petroleum products, all round the country.In the process of solving and pursuance on the problems and the objectives, both primary and secondary data were sourced. The targeted respondents were mainly the staffs were statistically determined for the purpose of both questionnaires administration and personal interview. In organizing and presentation of data collected, tables and percentages were used and various hypotheses were tested using chi-square. The tests of the hypothesis made the researcher to conclude that Oando plc cannot improve on the distribution channel in the logistics management of petroleum product in our country, as the critical value was greater than the expected value on both tests.


Chapter One


Introduction

1.1 Background of to Study

As a result of petroleum products being the major exporting product among others, of our country. Our country solely depends on it as the highest percentage revenue on the overall percentage of the total exportation products or items. In the 1979s after the civil war, Nigerians have Agricultural products as the dependent product in both domestic and international uses. But today due to greater lucrative of this product all over the world, abandoned the former for the latter. As the uses is universal, the extractive regions which are at South east and South west encountered a difficult impact to be supplied or distribute to various areas of other regions of the country, due to mainly mismanagement and other opposing factors. The transportation of these extracting products from the originated area to the refinery was a great problem in the country, because of its form bulky and channel of distribution. The government then employed foreign bodies to refine this product in order to reach to the hook and of the country. The refinery built and managed by government admitted a foreign firm to have a part in the refinery for the bases of their services as regards to importation. Still not adequate as the dealers divert this product to their own perspective regions where they expect to dispose it in a high value. At times, this petroleum products i.e. fuel, kerosene, diesel, bitumen to mention but few do change totally the generic colour used to it to another unpredicted colour thereby caused a harm to human body. These dealers were formerly the staffs of one firm and another for years, left their various perspective offices for the marketing of these products thereby formed one organization and another to impose the prices on this products. The region that is basically not interested in the use of this product by their majority because of their belief or customs has low cost and optimal quantities than other regions. From the facts, it becomes clear that if the left cream of the nation is to be feasible accordingly, a great percentage or rate of the standard of living would have been a something if smile to the populace.

History and Business of the Company (OANDO)

The company commenced business operations as a petroleum marketing company in Nigeria in 1956 under the name of “ESSO West Africa Incorporated” a subsidiary of Exxon Corporation of the United States of America. In 1969, the company was incorporated as ESSO Standard Nigeria Limited, and in 1976, the Nigerian Government acquired all of ESSO’ s shareholding interest, thereby fully indigenizing the company whose name was subsequently changed to Unipetrol Nigeria Limited. It became a public limited liability company in 1991, when the federal government divested 60% of its shareholding to the general public, and was quoted on the Nigerian Stock Exchange in February 1992. In 2000, the Federal Government divested its remaining 40% shareholding in the company, 30% of which was acquired by ocean and oil investment limited whilst the balance of 10% was taking by the Nigerian Public.In 2002, the company acquired Agip Petroli International BV’s 60% shareholding in Agip Nigeria Plc (Agip) and subsequently merged with Agip to become the second largest player in the downstream petroleum marketing industry. In December 2003, the company announced the launch of “Oando PLC” its new corporate identity to signify the creation of a proudly West Africa brand. The new corporate identify and branding exercise portrays the values and brand essence of the company service excellence, performance – driven, dynamic and progressive, consistent quality experience and proudly West African.


1.2 Statement of the Problem

Petroleum products have a numerous problems on logistics management on its distribution, it is the only and major exporting product of our country, which is disposed in a high rate to another country thereby expect the citizening to do the same the tendency of distribution channel to the Northern and Southern regions of the country is much more sufficient than other regions, which causes scarcity of the product in these areas. Some quantities of these products are being diversified to other different stations for a tremendous income, impact on hoarding which reveals the control is not effective.Many of the distribution channels are being vandalized by unscrupulous individuals in the area which stagnantly affects its distribution and transportation. Moreover, there is weights and measures on the quantities of this petroleum products making the dealers to have different prices of disposing this product in their various areas. Finally, the Boards that deal on the marketing of this petroleum products (NUPENG, PENGASIN, etc) do impose some requisitions from the federal government which may not come forth, affect its distributions.


1.3 Objective of the Study

The objectives of this study are;

  1. To ascertain whether there is an effective and efficient distribution of petroleum products, all round the country.
  2. To determine if sufficient production of petroleum products are sold at a cheaper rate and curls the trend of scarcity on the country as the sixth oil producing ration of the world, and the first in Africa.
  3. To find out whether the various refineries of the country are put in shape thereby limiting the services of other countries in refining our own petroleum products in terms of trade.
  4. To ascertain whether what we produce is satisfying the citizen
  5. To identify a post mortem to the present situation, and that of the future, and many years to come..
  6. To determine how the supervision of distribution of petroleum product is done to curls for outbreak, and the cost of resuscitating the damages.
  7. Moreover, to identify the availability of petroleum product to minimize traffic hold ups, queuing for a long time, unavailable means of transportation, wastage of hire in transporting one self, and its high cost.

1.4 Research Hypotheses

For the successful completion of the study, the following research hypotheses were formulated by the researcher;

  1. H0: there is no effective and efficient distribution of petroleum products, all round the country
    H1: there is no effective and efficient distribution of petroleum products, all round the country
  2. H02: there is no supervision of distribution of petroleum product is done to curls for outbreak, and the cost of resuscitating the damages.
    H2: there is supervision of distribution of petroleum product is done to curls for outbreak, and the cost of resuscitating the damages

1.5 Significance of the Study

It requires a little reasoning to discover that this research will be of immense benefits to the public government, Oando and its numerous branches, and as well other petroleum dealers. It will enable them to discover the disequilibrium on the effective. Logistics management on various petroleum dealers in the country and outside. It will enable them also to monitor the petroleum marketers on their channel of distribution in order to reach the purposely masses.The Niger – Delta populace will benefit through the establishment of various facilities in their area. The public will discover the information of the petroleum dealers as regards to the rate of its consumption and the standard of living in the country. Furthermore, this research will be immense benefits to Oando on improving their management functions or activities in all ramifications. It will also help in the offer for future benefits.Finally, many forming will benefit for easy mobility of their business activities and operation especially on those that have petroleum dump in their environment (UNEC, IMT etc).


1.6 Scope and Limitation of the Study

The scope of the study covers an evaluation of distribution channel in the logistics management of petroleum products. The researcher encounters some constrain which limited the scope of the study;

a) Availability of Research Material:

The research material available to the researcher is insufficient, thereby limiting the study

b) Time:

The time frame allocated to the study does not enhance wider coverage as the researcher has to combine other academic activities and examinations with the study.

c) Organizational Privacy:

Limited Access to the selected auditing firm makes it difficult to get all the necessary and required information concerning the activities.


1.7 Definition of Terms

Logistics:

Supply, Distribution, and Replacement of materials.

Management:

The process of applying managerial functions for effective operation.

Post-Mortem:

Review of the past occurrences or events.

Circumvent:

Present a plan from being carried out.

Bitumen:

Black, sticky substance (from petroleum) used for making road e.t.c.

Lucrature:

Profitable; bring in money.


1.8 Organization of the Study

This research work is organized in five chapters, for easy understanding, as follows

  • Chapter one is concern with the introduction, which consist of the (overview, of the study), historical background, statement of problem, objectives of the study, research hypotheses, significance of the study, scope and limitation of the study, definition of terms and historical background of the study.
  • Chapter two highlights the theoretical framework on which the study is based, thus the review of related literature.
  • Chapter three deals on the research design and methodology adopted in the study.
  • Chapter four concentrate on the data collection and analysis and presentation of finding.
  • Chapter five gives summary, conclusion, and recommendations made of the study

Chapter Five


Summary, Conclusion and Recommendation

5.1 Introduction

It is important to ascertain that the objective of this study was to ascertain an evaluation of distribution channel in the logistics management of petroleum products

In the preceding chapter, the relevant data collected for this study were presented, critically analyzed and appropriate interpretation given. In this chapter, certain recommendations made which in the opinion of the researcher will be of benefits in addressing the challenges of an evaluation of distribution channel in the logistics management of petroleum products


5.2 Summary

This study was on an evaluation of distribution channel in the logistics management of petroleum products. Seven objectives were raised which included:To ascertain whether there is an effective and efficient distribution of petroleum products, all round the country, to determine if sufficient production of petroleum products are sold at a cheaper rate and curls the trend of scarcity on the country as the sixth oil producing ration of the world, and the first in Africa, to find out whether the various refineries of the country are put in shape thereby limiting the services of other countries in refining our own petroleum products in terms of trade, to ascertain whether what we produce is satisfying the citizen, to identify a post mortem to the present situation, and that of the future, and many years to come, to determine how the supervision of distribution of petroleum product is done to curls for outbreak, and the cost of resuscitating the damages, moreover, to identify the availability of petroleum product to minimize traffic hold ups, queuing for a long time, unavailable means of transportation, wastage of hire in transporting one self, and its high cost.In line with these objectives, two research hypotheses were formulated and two null hypotheses were posited. The total population for the study is 200 staff ofOanda plc Enugu State. The researcher used questionnaires as the instrument for the data collection. Descriptive Survey research design was adopted for this study. A total of 133 respondents made up project engineers,account officers, project managers and marketers were used for the study. The data collected were presented in tables and analyzed using simple percentages and frequencies


5.3 Conclusion

An attempt has been made to emphasize on an evaluation of distribution channel in the logistics management of petroleum products. As Abraham Maslow’s hierarchy of needs says that shelter forms the second step in the need of man, suggestions have been advanced on how to sustain, maintain and improve the petroleum industry so that it can complement the effort of Federal Government. There is need for constant appraisal and reappraisal of the Company’s corporate objectives so that there will not be a deviation from stated goals. This study as established the effectiveness of the company distribution strategies and also way on improving on the problem of the company have been advanced.


5.4 Recommendation

It is recommended that the downstream sector of the industry be completely deregulated, and the apparent subsidy be removed such that the prices of the products will be determined by the market forces of demand and supply. It is argued that the private investor and entrepreneurs should be allowed full participation in the sector, a situation that will lead to effectiveness in the distribution of the product. In effect, as discussed by Adeleke (2002), this will create job opportunities for Nigerians and promote further, the development of small and medium scale enterprises in the oil sector of the economies


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