Impact Of Effective Material Management On Production In Manufacturing Companies

Project and Seminar Material for Accountancy / Accounting

Project and Seminar Material for Accountancy / Accounting

Chapter One


1.1 Background Of The Study

Material Management: The manufacturing sector plays on important role in Nigeria economy and has many benefits that are crucial for her economic transformation, in a typical advanced economy the manufacturing sector is a loading. If not the only leading sector in many aspects it is an avenue for increasing productivity related to import replacement and export expensive creating foreign exchange earning capacity? Raising employment and per capital income which result in unique consumption pattern. Before independence agricultural production dominated the Nigeria economy and acquainted for the major share of its foreign exchange earning, initially, inadequate capital investment permitted only modest expansion of manufacturing activities.

Early effort in the manufacturing sector were oriented towards the adoption of an import substitution strategy in which light industry and assembly related manufacturing ventures were embarked upon by the former trading companies,

The structured adjustment program(SAP)OF 1986 was partly designed to revitalize the manufacturing sector of the economy by shifting emphasis from sourcing through monetary and economic policies.

Deregulation of the foreign exchange market was also effect to make non-oil exports more competitive.

Although, this equally result in massive escalation of input cost. The over all fading and the simple truth is that the Nigeria economy is still in the woods the business environment is particularly hostile productivity putting into consideration the past decade and even the present one, would see that the economic variables of the external business environment which are uncontrollable in nature has had negative effective on production activities.

Therefore, for a business to survive remain profitable and enhance it production activities. it must adopt strategic aimed at effective and efficient management of its resources to kept it on course. These resources are mainly human and materials, but for the purpose of this project we are concerned with the raw materials varies from the initials sourcing to the final utilization in order to get the final goods.

Material management is the act of coordinating all material resources available within the organization in the most economic way that guarantee the right quality so as to make goods available costumers as at when needed in an attempt to a achieve the overall broad objectives of the organization the management these material aims at making optimum use of them by ensuring availability of material needed at the right time and place the price quantity, quality, time and source already mentioned environment of the belonging to the internal environment of the business that can be managed with proper of the business that can be managed with proper plans put in price never the less they greater challenge facing a business as it effects material management in production as it effects material management in production deal with the incontrollable variable of the external environment which need to be efficiently manipulated, particularly in a battered economy like ours.

1.2 Statement Of The Problem

The importance of the subject material management cannot be our emphasized in manufacturing company today. A failure to take cognacs of it has resulted in the winding up of so many companies to in recent time because if proper management of material was not done this would lead to typing down of capital, break down in production activities, reduced sales and profit, increase waste and scrap loss of customers, to competitors and eventually fall in our foreign exchange earning.

Since this problem is true of many manufacturing companies in one economy question that comes to monad are;

  1. How far material management has on the employees company and their output?
  2. What effect has materials management had in solving organization problem?
  3. What are the cost techniques organization employ in the management of materials?
  4. How manufacturing companies in Nigeria have been coping with the limited sources of raw materials?

1.3 Research Hypothesis

The following postulations were made in the course of this study. These assumptions were validated with data gathered from filled work and analyzed in chapter four. Therefore the working hypothesis employed in the course of this study are;

  • H0; There is no significant relationship between effective materials management and production efficiency.
  • H1; There is a significant relationship where H0 denote null hypothesis and H1 alternative hypothesis.

1.4 The Purpose Of The Study

This study aims at achieving the under the under-listed objectives.


  1. To examine how raw material can be made available locally so as to arrest the problems encountered in the course of sourcing from abroad
  2. To highlight strategies and sub-strategies that can be adopted in order to develop alternative means of getting raw materials so as to guarantees availability as and when needed.
  3. To identify the role of material control in effective management of raw material such that material can be produced and store at an economic quantity that guarantees a fair price and sand quality.


1.5 The Scope Of The Study

These project cover relevant elements and aspects of material management and is limited to its relationship with the current situation of our economy the specific are sources availability and utilization of raw materials the case study is limited to a manufacturing industries for the collection of data

1.6 Limitation Of The Study

In the course of this study, the following constants were encountered such as getting information from primary and secondary source as well as in documenting them, finance that is needed to carry out a research of this type is such that a student may not be able to get all material as cost of transportation typing and photocopying of relevant material is high.

Also all in formation thus this will limit the researcher from handling the topic in a statutory manner lawstly,since most of the staff, it might be difficult to get them on seat and even they are on seat, they may be too bush to give one the needed attention.

1.7 The Significance Of The Study

All participants of the manufacturing sector are being affected by battered nature of our economy, even the consumers are not spared. The significance of this study lies in the fact that its will attempt to provide solution to some of these problems. This study will reveal alternative means of raw material thereby solving the problem of dependence on foreign source. Economically, producers can plan adequately in order to guide against higher than maximum stock level as well as lower that minimum stock level.

These two situations have some negative implication o0n the business working capital and cooperate image respectively.

The study will bring to light the place of material management as an indispensable function this will help to eliminate shortage of materials, which cause poor market performance in cases where organization cannot met market.

This will able production specialist to become more conscious about the economics order quantity (EOQ) it the quantity at which cost can be reduced to the barest minimum, this will encourage organization to handle stock control with great caution.

It is also hoped that this work would be a reference materials for further study on this subject.

1.8 Definition Of The Terms:

This section aims at defining some registers the research, has used in the course of writing this project that may not be easily understood by persons who are not in this field.


order quantity the economic order quantity refers to the level of stock that will resoling the lowest total of ordering and carrying cost


this is a system of production and distribution of needs in order to satisfy the material needs of people in the environment.

Lead Time:

This is the time between on order place and when they are eventually received.


Management is the process undertaken by one or more individuals to coordinate the activities of others in order to achieve result not achievable of others in order to achieve result not achievable by one individual alone it is the act of coordinating the activities of people working together in a group order to achieve organizational aims and objectives


This is the transformation of raw materials into consume able goods that will be available to consumers.

Raw Materials:

these are substance in their natural state partly manufactured or already manufactured from which other goods can be gotten for either domestic or industrial resumption.


This term applies to materials or equipments which is no longer serviceable or what is discarded another form of scrap refers to by products such as fly from cotton spinning wrap ends from weaving and metal scrap from boring and planning.

Re-order Level:

This is the level of materials at which the firm places order for more material to prevent stock out.

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