The Impact Of Efficient Distribution System In Manufacturing Company (A Case Study Of Coca Cola Bottling Company Plc, Owerri)
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I sincerely dedicate this work to the Almighty God and my beloved wife Mrs. Chioma Duru and my brothers and sisters for their wonderful support and encouragement to make sure that the fulfillment of my Higher National Diploma (HND) programme become reality.
Finally, to God be the glory for leading me to this extent in my programmes with Federal Polytechnic Nekede Owerri.
My immense gratitude goes to Almighty God the giver of wisdom and knowledge who gave me success to the conclusion of my Higher National Diploma to him be the glory. I acknowledge my indebtedness to my supervisor Mr. Obuseh Rapheal who had made his effort for the supervision of this project to be successful. And also my HOD Mr. A. Uzor for his sincere encouragement kept me on the right track through the exercise.
My gratitude also goes to my younger brother Chijioke Duru and my wife Mrs. Chioma Duru.
I cannot forget my Late mother Nwaozichi Duru for her motherly advice when she was alive, my brothers and sisters. Above all I remain indebted to Mrs. Chidinma Nlemadim for her relentless assistance all through my stay in the school and my bosom friend Engr. Kenneth Ezekwe, may the good Lord bless and protect them.
Finally, to God Almighty for his wonderful love and protection.
This research set out to the impact of efficient distribution system in manufacturing company using the Nigerian Bottling Company (NBC) Owerri as a case for analysis. Management and staff of Nigerian Bottling Company were considered in the investigation. Relevant data were collected through the use of questionnaires and oral interviews designed to elicit useful information for this purpose.
Major research finding were that:
- To determine exactly how too many channel members raise the cost of moving goods to the consumers.
- Find out if the distribution system of the Nigeria Bottling company Plc is standard and effective one.
Based on the findings of the study, the following recommendation was made:
- The company should impracing the distribution system of the company.
- The marketing / sales department should be properly be reorganized.
- The company should examine its objective plans and policies as they relate to distribution.
Table Of Content
- Title Page i
- Approval Page ii
- Dedication Iii
- Acknowledgement iv
- Abstract v
- Table Of Content vii
- 1.0 Introduction 1
- 1.1 Background 4
- 1.2 Statement of the problem 10
- 1.3 Objective of the Study 12
- 1.4 Research Question 13
- 1.5 Scope of the study 13
- 1.6 Significance of the study 14
- 1.7 Hypothesis
- 1.8 Limitation of the study 15
- 1.9 Definition of terms 16
- 2.0 Literature review 18
- 2.1 Definition and meaning of physical distribution 18
- 2.2 Activities involved in physical distribution 21
- 2.3 Management of physical/cost trade-offs between physical distribution sub-functions 27
- 2.4 Factors affecting choice of distribution channels 33
- 2.5 Tackling the problem of cost trade off between physical distribution sub-functions. 38
- 3.0 Research methodology 41
- 3.1 Research Design 41
- 3.2 Population of study 42
- 3.3 Sampling procedure & Technique 42
- 3.4 Data collection method ` 43
- 3.5 Questionnaire Design 44
- 3.6 Description of Data Analysis/Technique 45
- 4.0 Presentation Design and Administration 47
- 4.1 Presentations and Analysis of Data 47
- 4.2 Testing of Hypothesis
- 4.3 Discussion of the Findings 55
- 5.0 Summary of finding conclusion and recommendation 57
- 5.2 Summary of Findings 57
- 5.3 Conclusion 58
- 5.4 Recommendation 60
- Appendix 69
- Questionnaire 70
- Bibliography 73
A quick glance at the project topic:the impact of efficient distribution system of materials in an organisation a case study of Coca-cola Plc, Owerri or Nigeria Bottling Company, Owerri shows that it is topical both in times and place. The reason is not far fetched frankly speaking and in the interest of mankind, the image of soft drink organization in the country today has been nothing to write home about of be proud of their materials have been most chaotic.
Production is deemed not complete until the product reaches the consumers in the right quality, at the right place and in good condition. The impacts of distribution system of materials show the linkage between the producers and the consumer in this regard. Organization area fast springing up in Nigeria and there is need for distribution system; so that goods produced can get to the consumers even at grassroots level.
Basically, the term marketing has two divergent but related processes and this should be taken npte of the first of the processes deals with the search for and stimulation of buyers of material while the second deals with physical distribution of materials. Experience has own that owing to the increased competition for consumers, most entrepreneurs and industrialists as well as their marketing executives have devotes the bulk of their not only in the search and stimulation function as was done in the past, but also in the second function which emphasises on the physical distribution of materials. With only search and stimulation function in mind, their attention was focused on developing a mixture of products, prices and promotion, channels that would keep demand high and growing. They have therefore viewed physical distribution or the logistics of getting materials to the buyers as supportive and subsidiary activities.
But more recently, several marketing developments have rekindled most management’s interest in the logistics problem and these developments led them to wonder whether they were not neglecting many opportunities to increase customers view.
An effective customer services is not without distribution system. According to a well known management expert Peter Drucker, he said that “Physical distribution management is the last frontier of cost reduction” what he meant is that by looking at of distribution a complete system, a manufacture can make a much more significant level savings which are so available to him within the organization area. Physical distribution and logistics for instance, a nations Army cannot afford to have a unit or a battalion in position with guns but no communication. By the same toekn, business like Nigeria Bottling Company, Owerri is a weak position when it has order for soft drinks but nothing to deliver or slip or when it has a depot full of crates of beverages in Owerri, Imo State but insist no customers within Owerri Metropolis only.
In essence non-availability of transportation has made the company to at time forgets their distributor outside Owerri Imo State thereby concentrating on those within lmo State.
The above example, points up the importance of location of marketing, especially as regards merchandise like soft drink.
Peter Drucer (1990) page 25th edition.
1.1 Background Of Nigeria Bottling Company
The research cannot conclude the general introduction without giving brief description of the companies used this research.
The NBC, Ltd. Owerri, producers soft drinks or beverages is one of the numerous groups of companies owned by the leventis Nigerian and with their headquarter at Ikeja Lagos State which is controlled by an overall general manager.
The company’s business activities are now grouped into three divisions namely bottling division, the agricultural division and the allied industries division.
The company has more than eighteen (18) bottling plants spread over the country and more than fifty-two (52) depots in all stats of the Federation over one hundred thousand (100,000) registered dealer most whom operate retail outlets spread to cover the entire country. The Owerri plant, which is the researches, is of concentration located along Owerri- Onitsha road express. The organization assorted types of soft drinks, ranges from coca-cola, fanta orange, tonic krest, sprite etc.
This organization operates three department stores as follows:
- The warehouse for housing the various raw materials.
- The finished product stores.
- The spare and equipment stores.
The Chief raw materials are sugar, chemicals grown corks and concentrates the products are distributed through two types of distributorship system; group one are those appointed right from Lagos and are called “first class” while the manager as “second-class distribution”
The Organizations background information will further be treated under the following headings. For instance administration, production, raw materials sourcing, finance section, the sales/finished product/distribution, stores respectively.
The organization is made up of five (5) sections namely the production section, the works section; the personnel section, the accounts section and the finished/sales section. There are headed by a plant manager as the administrative officer.
Production/raw materials sourcing:
The production division that is under production manager plants the production processes and controls the inventory analysis.
The organization has an import license allocation of more than N50, 000 for the year 2005.
This is meant to procure the raw material requirements of the organization. Although their raw material needs are in the interim foreign oriented. This source of raw material accounts for 75% of their total raw material while the remaining 25% is locally acquired. They also acquired most of their foreign raw materials through outright chase from companies within the country.
Their raw materials requirement at full capacity is more than 1,000,000 kilogram of sugar, more than 1,000,000 quantities of crown corks, more than volume of chemicals and concentrates. Their cost of raw materials at full production is n2million only.
The works section, which is under the spare parts manager, performs the following functions:
- Maintenance and Founding
- Laboratory and quality control
- Industrial Safety and Auxiliaries department.
The account manager is at the helps of affairs and he reports to the plant managers and in addition performs the following functions:
- Plans “the financial aspects of the company”.
- Plans budgets and controls.
The Sales/Finished Products/Distribution
- Plans the marketing and sales of products.
- Logistics planning.
- Sales forecast.
The aim of this division is for efficient operation. Though is same organization, this does not obtain. Thus the purpose of operating a storehouse for these materials is distinctly different from that for saleable finished goods. Most of finished products are stored in the stockyard mainly because of lack of space in the warehouse.
The company uses middlemen in distributing its products and at times it sells directly to the customers/consumers especially when circumstances call for that market surveys, interviews and so on are used collecting information from its distributors and consumers and these methods have been working for the company.
The company’s competitors are 7up Bottling Company Plc and Limca Bottling Company Plc and NBC has continued to have market shares of 60% while its competitors have the remaining 40%.
This section also has the function of employing suitable mode of transportation for distribution of the company’s product, advertisement of the company’s product and making sure that distributors and consumers are treated equally. Also, different sizes for the company’s products like 35cl, 25cl and 1 litre coca-cola are taken care of by this section in views of their distribution. The company in a bide to solidity its leading position in the market recently slashed it’s retail price from N25 to N30 in case of 35cl and N25 in case of 25cl while crete price fail to N510 from N620 in case of 35cl and N360 for 25cl liquid content only. About 200,000 beverages are produced weekly.
The stores management covers the following activities:
Holding, controlling and issuing stocks control of all store houses, materials handing functions quality control activities. Administration of store operation.
1.2 Statement Of Problem
The need for efficient soft drink distribution within the system and the growing need for proper logistics have become very necessary. It is obvious that the market within which Nigeria bottling company operates is a competitive market with other bottling companies around; Nigeria bottling company is confronted with a lot of internal and external problems bordering on political, social, economic factors. These problems, which they encounter, are found under the broad aspect of distribution of material method and distribution logistics. They include:
- The problem of adequate transportation and storage facilities for effective distribution.
- The problem of not embarking on thorough market research, as it’s absence militates against the standard marketing practice of identifying target markets, consumers and their needs.
- The problem of how the organization should cope with the staff competition in the soft drinks market due to proliferation and consequent over flooding of product by other bottling plants in the country.
- Method of selection of distributor is another problem.
- Finance is another problem militating against the company’s to execute most of it’s planned promotional programmers like advertising, sales promotion, publicity and personal selling which collectively is one aspect of the firms marketing strategies and directions made it’s product, price and distribution.
- The problem of machine breakdown due to lack of machinery spare arts has adversely affected the company.
- The problem of increasing cost of raw materials in the long run affects the cost of production and other services like distribution. It is note worthy to mention here that the researcher does at this claim that the problems outlined above are the only problems. Far from that, it is clear that more problems may exist. But since the sole and of this project is not more identification of problems but to find the possibilities of getting Nigeria bottling company soft drinks play its role in the light of these problem as their problem and that of those yet to be identified will be traced in the data analysis, with recommendations.
1.3 Objective Of The Study
It is very important that every study must have objectives and this one is not an exemption it has following objectives:
- To determine exactly how too many channel number raise the cost of moving goods to the consumers.
- Find out if the distribution system of the Nigeria bottling company PLC is of standard.
- To make recommendation on improving the distribution system of company.
1.4 Research Questions
- Does it determine exactly how too many channel member raise the cost of moving goods to the consumers
- Does distribution system of NBC, PLC is of standard?
- What distribution system will be appropriate for improving organization performance?
- Does the production capacity enhance more sufficient satisfaction to human need?
1.5 Scope Of The Study
The researcher will focus the study on the activities of physical distribution in Nigeria Bottling company PLC. Owerri Imo State in trying to identify the impact of physical distribution of material, in depth study will be taken on the present of transport, warehouse, material handling the order processing and industrial packaging etc.
Formulation Of Hypothesis
- HO 1: The company has warehouses outside their plant location
- HO2: They have sufficient number of distribution van
- HO3: The company has dependable source of raw materials.
- HO4: The physical distribution management of the company is effective.
1.6 Significance Of Study
Since the problems listed are real- life problem this research will benefit rumours individuals organization.
First and foremost, it will improve researcher knowledge in lacking real-life purchasing problem as well as the course of academic chase.
Secondly, it will be beneficial to students who are given on research and also to organizations because it will help them to know places of deficiency
Thirdly, managers of various businesses will equally benefit from this research, as it will now be a basis for achievement of profit in their various disciplines.
Lastly, planners and decision makers will also benefit from this research, as it will be a basis for their future forecast for their organization.
1.7 Limitation Of Study
This work which is aimed at the impact of efficient distribution system of materials of coca-cola PLC, is a study based purely on the company. It therefore, behaves on the researcher to restrict herself on this particular industry, but not without the knowledge of their various distributor and consumers scattered all over it’s geographical area of sale in the eastern zone.
Owing to very limited time, the present economic situation and finance available for this study, the researcher or writer instead of travelling to all the distributors who came from the researcher would have travelled to the plant at the time I want, there to collect data relevant for this research.
To a large extent, bureaucracy or official protocol was a hindrance the elicitation of vital information. for instance, the question of market to department giving me their list of Distributors meet with such data.
My interviews with so many officials were to the plant or factory.
These were among the problems the researcher encounter in this research work.
In effect, these difficulties encountered necessitated the solely depend on answers obtained from the interview with sales / marketing manager of the plant.
1.8 Definition Of Terms
– These represent those materials, which go directly into finished product.
– refers to the activities of the higher lake of the management group who determine major aims and policies.
– is money required to acquire space, buy raw materials, pay for service etc. with-out finance, it is difficult to implement a business idea.
– Is an integrated set of activities that deal with managing the movement of product within firm and through marketing channels.
– Is techniques that are available, which can be easily adapted to the most efficient utilization of resource during the study.
– These are those parts or a map showing supply points and customer locations.
– This is a process when a product or item of goods been stored, before it will undergo process distributing to the final consumer.
– This is system where all items or materials be held physically in the store.
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