A Study Of Effective Distribution Channel, Its Evaluation And Importance On Manufacturing Goods

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A Study Of Effective Distribution Channel, Its Evaluation And Importance On Manufacturing Goods


Abstract


This study was conducted to critically evaluate. The effective distribution channels, its evaluation and importance on manufacturing goods. In view of this, the study considered Nestle Foods Nigeria plc as a case study. The company’s financial strength helps in the possession of different channels or means by which goods can be distributed to the customers. This study therefore, examined the effective distribution channel on manufacturing goods.

This study therefore, examined the effective distribution channel on manufacturing goods. The investigation was undertake using the sample size of fifty respondents consisting the sales department of the company and some selected distributors of the company’s products. The purpose of selecting such a survey is to explore attitude of users and their untouched problems in our society. Such a survey calls for the use of questionnaire approach as the main tool of research. Using the questionnaire; the researcher obtained quantitative as well as qualitative data.

Through the use of questionnaire to check information about their opinion on the company distribution system; the study discovered that the means of distribution affect the level of productivity in the sense that goods produced are distributed through the appropriate channels and this gives room for incorporated productivity.

Based on the findings, it was recommended that adequate measure should be taken to improve communication between the company and its distributors. For instance, regular meeting could be embarked on the company (Nestle Foods Nigeria Plc) should build adequate facilities storage to enhance the level of production.


Chapter One


Introduction

1.0 Background to the Study

Customers are becoming harder to please. They are smarter, more price conscious, more demanding, less forgiving, and they are approached by many more competitors with equal or better offers.

The challenge , according to Jeffery Gitomer (2004), is not necessarily to produce the goods or provide one service but take these goods or services nearer to the consumers in a more satisfactorily means better than the several competitors can do. Companies seeking to expand their profits and sales have to spend considerable time and resource searching for new customers. To generate leads, the company develops aids and places them in away that will reach the new products, current buyers and so on.

However, the importance of effective distribution channels in a modem business world especially as regards a manufacturing industry cannot be over-emphasized. The problems of distribution have dwelt with man for ages: the problem is so universal because it cuts across industries and firms despite attempt by management to resolve these problems.

Although the physical transfer of merchandize is traceable to the most primitive peoples as wide spread need to overcome the special separation between production and consumption did not exist untilthe specialization of labour became common and did not become a primeimportance until the industrial revolution.

On the other hand, the producer may want to see the whole route as an outgrowth of itself. The route through which the commodity moves from the producer to the consumer is what is referred to as distribution. Every definition of distribution has a lot of controversy surrounding it. National Council of Physical Distribution Management of America which defines as “A term employed in manufacturing and commerce to describe one broad range of activities concerned with the efficient movement of finished products from one end of the production line to the consumer and in some cases include the movement of raw-materials from the source of supply to the beginning of production line. The channels of distribution are as follows;

Agent:- These are people who buy or sell on behalf of a firm without selling or buying anything outside the agreement made by him and the firm. They normally earn their profits from commission payment made in return to them in negotiating business transaction.

Wholesalers: These are independent traders who sell at wholesale to other business organization either for the purpose of resale or for business use.

Retailer: These are independent traders who sell or operating outlets “selling at retail” to household consumers. Source (American Marketing Association (2006): Journals of Mark.


1.1 Statement of the Problem

Effective distribution of goods is essential if the nation is to function as expected. The problems that directly or indirectly influence the distribution system are as follows:-

Firstly, the increase in the price of goods, as goods move from manufacturers to the consumers. They are handled by various distributors and as a result of the cost involved such as transport and handling costs and the distributive profit.

Also, unfavourable economic situation do affect the distribution system of the manufacturing sector. However, the non-availability of raw-materials: which serve as material needed by the manufacturing sector in producing the products the company will distribute. Consequently, it is very important that these problems facing effective distribution System are tackled and suggest measures to improve on the distribution system. On these, the study sought to investigate the effective distribution channels; its evaluation and importance on manufacturing goods.


1.2 Research Aim and Objectives

The aim of this study is to examine and evaluate the importance of distribution channel on manufactured goods.

However, the objectives of this study would be to:

  1. Find out and critically examine the various channels of distribution of the firm’s products.
  2. Determine the effects of effective distribution in the level of productivity of the company.
  3. Find out factors that promote the effective distribution of the company’s product.
  4. Identify weaknesses and take corrective measure on the distribution system of the company.

1.3 Research Questions

This research work was designed to address the following research questions:

  1. What is the profile of the respondents to effective distribution channel?
  2. What are the effective channels of distribution as viewed by the respondents?

1.4 Justification of the Study

The study is not meant for the successful completion of this programme alone but also to familiarize the manufacturing sector with the importance of effective distribution channels on manufactured goods.

The research work is also important because:- ,

  1. The study will examine how the manufacturers are taking the challenges given them by the use of effective distribution channels.
  2. The study will investigate the importance of effective distribution of manufactured goods.
  3. The study will examine the usefulness or the importance of distribution in maintaining the level-of productivity of the company.
  4. The study will enable us to carefully consider the problem of effective distribution channels to the manufacturers.
  5. The study will ascertain the activities of the middleman (distributors) in relation to manufactured goods.

1.5 Scope of the Study

This study will be limited to scope to cover the importance of effective distribution system of the manufactured goods considering Nestle Food of Nigeria Plc as a case study,because of its leading position in the industry. It is envisaged that results that may emanate from the choice of NESTLE FOODS OF NIGERIA PLC may fairly be representative of the other manufacturing company’s distribution system.

In view of this, the study shall be concerned with the investigations of:

  1. The distribution of various products from their company to the final consumers.
  2. The channel of distribution being employed to effect and enhance distribution system.

1.6 Distribution Assumptions

In undertaking the study, the following assumptions will be regarded concerning the effects of distribution channels on manufactured goods.

  1. Distribution channel increases consumer’s demand if well applied.
  2. Where effective distribution channel is in place, the consumers are forced to get related with the manufactured goods.
  3. Effective distribution channels help force trade agreement between the producer’s goods and the end users.
  4. Effective distribution channels establish the best technique for gaining trial among non-users virtually assures widespread trial usage of product.

1.7 Definition of Terms

The definitions of terms used in this study are as follows:

a. Channels:

This means the way or system by which goods travels form the original producers to the ultimate consumer. It could be seen as the course in which goods and service move from one place to another.

b. Distributors:

These are organization which have contract to buy a firm’s goods and services and sell them to third parties.

c. Distribution:

It is the transfer of goods from the producer to the consumer. It can be said to be the movement and handling of goods form the point of production to the point of consumption or use.

d. Agent:

These are people who buy or sell on behalf of a firm without selling or buying anything outside the agreement made by him and the firm. They normally earn their profits from commission payment made in return to them in negotiating business transaction.

e. Retailer:

These are independent traders who sell or operating outlets “selling at retail” to household consumers.

f. Wholesalers:

These are independent traders who sell at wholesale to other business organization either for the purpose of resale or for business use.

g. Evaluating:

This means to assess the effect of the different distribution channels on manufactured goods.

h. Effective:

The word “Effective” mean to bring the desired effect or producing the intended result thereby making a striking impression on something.


1.8 Overview of Nestle Foods Nigeria Plc

Before July 1991, Nestle Foods Nigeria Plc operated under the trade nameof Food Specialist (Nigeria) Ltd as the organizations corporate presentation booklet claims, the organization is part of the Nestle group known world-wide for its top quality products which stated simple trading operations in Nigeria over 50 years ago.

Today, the organization has diversified into both manufacturing and marketing of food products which include Mico, Nutrend, Cerelac, Golden Morn, Nescafe, Nescao, Maggi Cubes, Maggi Chicken.

The headquarters of the Nestle Foods Nigeria plc is located 20-24 Industrial Avenue, Ilupeju. The main factory of the organization is situated at Agbara in Ogun State. The organization has a distributing Centre in Otta, Ogun State. The Nestle Foods Nigeria Plc as a national distribution network at the headquarter that stretches from Lagos to Sokoto.

This organization via these distribution outlets seems to be present in most every state of the country. The product of the Nestle Foods Nigeria Plc reaches the final consumer through an army of distributors who are registered with the organization.

The Nestle Foods Nigeria PLC has gone into backward integration and now produces a considerable percentage of her raw materials via it agricultural subsidiary, Agro development Nigerian Ltd, Kaduna.

The Nestle Foods Nigeria Plc is a joint venture between Nigerian who own 60%of the organization shares and Nestle S.A. Switerland which owns 40% of the shares. The staff figured of the organization as at October 31st 2000 was 10,371. The organization has an apprenticeship training school located at Agbara, Ogun State where its main factory is located.


Chapter Five


Summary, Conclusion and Recommendation

5.0 Introduction

The concluding chapter of this research work is based on three objectives: the first objective will reflect a summary of the findings of the investigation made on the effectiveness of distribution channels on manufactured Goods, Secondly the problems that emerged from the study coupled with the policy implication of the problem and finally, recommendations and suggestion for further investigations studies are made towards improving the company’s distribution channel.

5.1 Summary

The study of effective distribution channel, its evaluation and importance on manufacturing goods was measured by investigating the selected members or staff of the sales department and’ distributors of Nestle Foods Nigeria Plc products, through the use of questionnaire to elicit information about their opinions on the company distribution system and the study came out with the following findings:

It was discovered that the means of distribution affects the level of productivity in the sense that goods produced are distributed through the appropriate channels and this gives room for increased productivity.

Also, the financial strength of the company has an impact on process as revealed by the study. The company’s financial strength helps in the possession of different channels or means by which goods can be distributed to the customers.

The establishment of depots also affects the distribution of goods because it promotes quick distribution and sales. This helps in proper distribution of goods and promotes productivity.

Finally, it was discovered that the use middlemen (Wholesales and Retailers) also promotes effective distribution and thereby increases the production level and rate of turnover.


5.2 Conclusion

Nestle Foods Nigeria Plc should not relent because there is still room for improvement in the physical distribution of products. This is because of some constraints that were discovered in the course of the study.

Problems such as insufficient finance, inadequate depots, insufficient advertising, ineffective communication, ineffective transport system and absence or inadequate of distribution personnel were all found to be obstacles to effective distribution in the company.


5.3 Recommendation

Although distribution system in the company so far, has been found to be fairly good, yet the recommendations below could be of immense use to improve its effectiveness.

  1. Adequate measure should be taken to improve communication between the company and its distributors. For instance, regular meetings could be embarked on.
  2. The company (Nestle Foods Nigeria Plc) should build adequate facilities storage to enhance the level of production.
  3. There should be provision for additional trucks and delivery vans to promote the distribution of the company’s products neededby the consumers.
  4. The company should create additional depots and also have more number of distributors to enhance smooth distribution of the company’s products to areas where the demand are being required.
  5. The company should make use of more sales personnel who can take the products nearer to the consumers residing in an area which is not accessible or memorable.
  6. The company should appeal to the government to come to their aid by providing necessary infrastructural facility like good roads that will enhance distribution, since they collect -tax which forms parts of government revenue from the company.

5.4 Suggestion for Further Studies

Further research on effective distribution system of manufactured goods is advocated.

Studies could still be carried-out on the impact of management, transport and advertising on distribution system.

Finally, studies could be carried out on the effect of channel conflict management and profit maximization of a manufactured company.


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