PHYSICAL DISTRIBUTION MANAGEMENT IN BREWERY INDUSTRIES (A CASE STUDY OF NIGERIA BREWERY PLC)
This project work was on the distribution management in brewery industry (A case study of Nigeria Brewery Plc).
The objectives of the study were:
To ascertain whether the company has sufficient number of functional distribution vans.
To find out if the company have dependable source of raw material from the objectives of the study for hp were formulated.
Literature review was carried out on related materials, handbooks and journals.
The population of study were the staff, distributors and customers to the company.
Simple randomly sampling technique was used to determine the sample size in order to reduce the error of bias and every member of the population have equal chance of being selected. Questionnaires were used to elicit data from respondents, simple tables and percentages were used to analysis data.
From the analysis it was discovered that:
Nigeria breweries maintained only one central warehouse in the factory promises which permit more rapid adjustments to changes.
The major problems facing the company is in the area of transportation in view of this:
1) It was recommended that top management should ensure that a distribution system is predicated upon clearly defined aims and objectives.
2) The need for periodic critical appraisal of their distribution state with a view to identifying the factors that inhibits their effectiveness was suggested.
These measures will help improve the distribution system of the company.
TABLE OF CONTENT
Title Page II
Approval page III
List of tables
Table of content VIII
1.1 Background of the study 1
1.2 Statement of problem 10
1.3 Objectives of the study 11
1.4 Formulation of hypothesis 11
1.5 Significance of the study 12
1.6 Scope of the study 14
1.7 Limitation of the study 15
1.8 Definition of terms 18
2.0 Development and growth of the brewery industry in Nigeria 26
2.1 Physical distribution objectives and policies 30
2.2 Development distribution strategy 35
2.3 Major components/decisions in physical distribution 38
2.4 Physical distribution efficiency and profit. 43
2.5 Control of physical distribution in the brewery industries. 45
3.0 Research design and methodology 48
Area and design of the study 48
3.1 Sources of data 54
3.2 Population of the study
3.3 Determination of the sample size
4.0 Data presentation, analysis and interpretation 69
4.1 Presentation and interpretation of data 69
4.2 Test of hypothesis 86
5.0 Summary of findings, recommendation and conclusion
5.1 Summary of findings 100
5.2 Recommendation 103
5.3 Conclusion 107
1.1 BACKGROUND OF THE STUDY
In any economy, there is always the basic element of production and marketing problems in general and distribution problems in particular receive increasing emphasis. The task of marketing technical excellence of mass production with parallel progress in mass distribution become crucial to any confronting management. Customers and consumers cannot enjoy the benefit of mass production without efficient distribution systems.
The distributive activity of a firm is as much a part of its marketing mix as are pricing, promotion and product decisions. The key to the development of the firms distribution effect is the adoption of a total system approach whereby an integrative view is taken of the various activities involved in that distribution effort.
This distribution activity is referred to a physical distribution management (PDM), marketing logistics and material management. Simply part, physical distribution system, transportation, material handling, order processing, inventory control, warehousing padeaging into a complete distribution strategy effective physical distribution management represents a balance between product delivery capacities and related cost. This assertion is clearly understood as the researcher proceed in this work.
To produce a comprehensive work of his project topic, it would be deemed necessary to have an over view of physical distribution which also often refers to as logistics. According to Philip Kotler, physical distribution is defined as the planning implementing and controlling the physical flows of materials and finished or final goods from the point of origin to the point of use to meet customers needs at a profit. It is concerned with the efficient movement of raw materials from the suppliers to the factory site where they are processed into finished products and passed to the middle men rather called the distributors who finally passed the product to the final consumers.
The procedure of getting the right amount of the right product to the place of the right time with the least cost is no simple job because companies like the brewery industries with their great diversity of customers spread over vast geographical areas must integrate the system components to avoid dissonance (dissatisfaction).
Thee exist a gap in the firm of place and time between manufacturers and the ultimate consumers or user for whom the manufacturer is producing. It is the distribution that comes in between to reduce this gap.
Many problems are confronting the distribution system of the brewery products. These problems range from lack of channel members to physical distribution problems such as lack of adequate transportation, poor inventory management, inadequate warehousing facilities and lack of sophisticated method of communicating. The problem in distribution net work start with the mode of selection of distribution, often selected as distributors are inexperienced businessmen with little or no capital.
Invariability, the ever increasing cost of transportation due to detoriation of our road, high cost of vehicles and spare parts and currently increasing cost of petroleum products poses a serious problem in the effective coverage territories in the distribution of beer in the rural and urban areas in the country.
In area of inventory, modern management is rarely practiced. This is partly caused by insufficient storage facilities and inappropate storage methods, spoilage, breakage and waste of products therefore tend to be high. Bides this warehouse are very few and far between, sophisticated materials handling equipment like fork lift, crames, conveyer, machines etc. are lacking in some of these companies.
So in the light of these infried of problems and the fact that there are to many brands of beer in the market from which the consumer has o choose with little or no difference amongst them in terms of quality and other characteristic and also in view of the fact that the consumers buys only not of this discretionary income because they do not consider beer as necessary (except the very few habitual drinkers). It the follows that thee is a need for the individual brewery firms to manage the physical distribution system and engage in proper manipulation of other marketing min variables in order to keep a that in the present day competitive beer market in Nigeria.
In this study, the researcher shall consider the physical distribution management from the manufacturers point of view Nigeria Breweries Plc. Although the physical distributors management exhibited here applies to firms at nay lend of distribution.
PROFILE AND HISTORICAL BACKGROUNDS OF NIGERIA BREWERIES PLC
Nigeria Breweries plc as the name implies is a public limited liability company with registered head office in Lagos. Although there is a minimum representation of foreign interest in the ownership structure, the company is largely owned by Nigeria (including employers of the company).
Nigeria Breweries Limited as (it was then called) was established in November, 1945 for the main purpose of brewing. It has become the first brewery concern to be set up in the country for logistic reasons, production did not start until 2nd June 1949 when the first bottle of Star Lager rolled out of its only plant in Lagos. Then in 1949, the company had it only bewaring plant in Lagos and only one product Star lager beer but presently, it has brewing plants in Aba, Kaduna, Ibadan and Enugu and a wider product range which includes Gulder Maltina, Legend Extra Stout and Amstel malta brands and also the newly introduced Crush drink. It also owns a farm at Gbakogi near Bida Nigeria state.
The Enugu plant which was bought over from the Monarch Breweries limited in September 1992 is sited in a piece of land measuring approximately twelve tractates at Ninth mile, in Udi local government Area of Enugu state, Nigeria. The factory is easily accessible by road from the Northern and Western parts of Nigeria.
Beer is an alcoholic beverage traditionally made with the following major ingredients- barely, sugar, teast, Hops and water. However, due to a change in government policy as regards importation of barely matt, the company through sheer pioneering efforts, has successfully led in the production of beer and matt drinks from locally sourced across such as sorghum and maix, the beer and matt drinks thus produced have been widely accepted by consumers as comparable in quality to those made from barely. The company rigorously pursues a nation – wide distribution policy to ensure that its products are made available at every major retail outlets where the consumers are or can be found. In this regard the location of the brewery plant at different regions in the country is a deliberate intention to facilitate supply of products efficiently in the service of customers.
In line with its philosophy of good corporate citizenship, the company is committed to a culture of excellence in all its activities hence, it all time strives to be above board in its relationship with employee, customers, suppliers, shareholders competitors, government and its agencies, the general public etc.
Progress so far made could not have been possible without a dedicated, efficient and responsible workforce. Thus the company does not take for granted, and as such has set a clear policy in personnel matters the company’s personnel policy effective manpower training and development at all level of the business. When new employees are engaged, their training needs are planned and judiciously pursued, taking into consideration the particular needs of he business and the individual qualities of the employees concerned this system has helped the company to establish a pool of skilled and knowledgeable personnel.
The company has a board of directors. At the apex of the company’s management is the versatile chairman/managing director. Mr. Felix Chiverel directly under him are department heads who themselves has well experiences professionals in their respective fields.
These heads of department are marketing directors, Mr. Bola Akingbade, Director of Finance, firm operation manager, industrial relation manger, and personnel manager. The board of directors from the policy of the organisation.
In the Enugu plant (like other existing plants the company’s management is under the general control of the Brewery manager Mr. W. A. Nubi, distribution manager Mr. T. Mogbgu, the chief accountant, packaging manager Mr. a Okofor, sales manager Mr. M. C. Dim and personnel manger Mr. J. C. Nnaji.
The Brewery manager manage the day to day activities of the plant assigned to him, he is responsible to manage or ensure efficiency in different departments. He also interprate and manage the activities of the company every day hence most people see him as the general manger or managing director of his branch (plant). Distribution department is changed with the sole responsibility of distributing the brewery’s finished products for on transmission to other smaller outlets. The responsibility of the distribution department was tagged with the direct system (DDS) whereby customers order for products and delivered directly to them from the factory. According to the distribution manager, the company have no plan of establishing deports.
However, the Chief accountant is responsible for all financial transaction of the firm. He is responsible for the receive and processing or order seat in by customers. Since there is no separate purchasing department, the chief accountant is also assigned with the purchasing responsibilities. The company exercise centraliase purchasing department whereby the order to purchase came directly from the headquarters Lagos packaging manager by his responsibility in the plants assumed the function of the production manager. He designed package suitable for the products in order to avoid damages. While the sales manager is responsible for the management of sales force organisation, he effectively uses the sales force to various territory dealing directly within the customers, creating the image of the company in the mind of the customers.
1.2 STATEMENT OF PROBLEM
No research is necessary unless there are researchable problems in a given situation, there are common problems in the brewery industries that hampered the effective and efficient movement of beer from the point of production to the final customers, where the problem of physical distribution are glaring, a company may not be able to satisfy its customers or rather its marketing objectives.
The price of products of Nigeria breweries plc tend to be higher in those towns further away from the location of the plants and it is known that the warehouse in the plants location are often over stocked where as the same products experience sporadic shortages. The specific problems to be address include the following:
1. Do Nigeria Breweries Plc have warehouse outside the areas in the location of their plants.
2. Do they have sufficient number of functional distribution vans.
3. Do Nigeria Breweries plc have dependable sources of raw materials.
1.3 RESEARCH OBJECTIVES
The objectives are:
1) To find out if the NB Plc has warehouse outside their plants location.
2) To ascertain whether the company has sufficient number of functional distribution vans.
3) To determine if the company has dependable sources of raw materials.
4) To prefer recommendation that are in line with our observation.
1.4 FORMULATION OF HYPOTHESIS
1. The company has warehouse outside their plant location
2. They have sufficient number of distribution vans.
3. The company has dependable sources of raw materials.
4. The physical distribution management of the company is effective.
1.5 SIGNIFICANCE/IMPORTANCE OF THE STUDY
The co-ordination of the activities of physical distribution are indispensables to any firm that is engaged in production distributive and services because physical distribution is a cost that must be managed effectively to control the efficiency of the system used.
The alarming rate of physical distribution costing the brewery industries made this study more significant as the researcher intend to determine the possible want of reducing the cost and providing effective and efficient solution to the problem of physical distribution management in brewery industries.
Therefore the significant of this study is more apparent when we understand the importance of physical distribution in the brewery industry like Nigeria Breweries.
In the brewery industry, distribution cost is the killer cost, it is indeed the killer disease variable cost. Since profit is the good of every business this important variable cost has be intensive watched in order net to eat deep into the company operation cost.
Marketing managers and management in general must give high lead of attention to physical distribution because its cost alone can rine the entire organisation, management has therefore become more concerned about the total cost of physical distribution which amount to 13.6 percent of sales for manufacturing companies.
Export believe that substantial savings can be effected in physical distribution area, which has described as the last fronties for cost economic and economy’s daed contiment”.
It will determine whether the high prices of the brand influenced by the distribution management is location of warehouse if any distribution vans and dependable supply sources.
It would ensure customer a just in time (JIT) delivery system and complete shipment of order.
Late delivery and for incomplete shipments are externally irritating to organisation buyers. The Nigerian Breweries plc will attract more customers by reducing high interest rate and cost such as obsolescence, shrinkage, insurance, storage and taxes through improvement of physical distribution that will enable the customers to get the product at the right time, right place, right quantity and at the right price thereby ensuring customers satisfaction.
1.6 SCOPE OF THE STUDY
In this study the researcher intend to cover all the geographical area where the Nigeria Breweries has establishment, distributions and outlets. But at the take off of this research work, it was not possible to cover all the areas because of the time constraint and limited resources at his disposed. To produce a comphernsive work the researcher hast forces his study on a part of the company business portfolios where physical distribution is actually practiced.
Hence, the researcher narrows the study to cover the such zone territories are Nsukka, Ninth Mile, Abakpa and Emene (all in Enugu state) in order to see how the product get to the ultimate consumers, for a greater coverage the firm group its operating plants in some selected cities in the federation.
Any research work carried out to enrich human knowledge is certainly a difficulty task this study is not on exception to this rule. The researcher being a student had limited this study to the area mentioned is the scope of study, the researcher also in the course of the study encouraged a number of obstades. While other difficulties persisted, the researcher managed to riggle out good number of them which could have otherwise completely paralysed the work.
The following are the limitation
1. Time constraint
2. Financial constraint
5. Psychological constraints
Time was limiting factor as the available for the research work was very short coupled with the other academic works which obstructs the researchers schedule. This point lies on the fact that the researcher was undertaking this study simultaneously with attending his regular classroom lectures. Inspite of this prevailing condition, the researcher was able to scriabled with the time to collect relevant information required in this work, this conclusion imposed a serve limitation on the scope of coverage.
1.7.2 Financial Constraint
This is another major factor worthy of note. As a result of limited fund, the frequency of visits to the company promise was reduced, the cost of running around for materials. For this study was search time over and above what the researcher envisaged at the beginning stage of this study, working alone being a student and the present economic sabotage in the country, made the financial barder of this study on the researcher quite considerable.
The effect of high illiteracy is a limiting factor to this study, the literacy level of some of the correspondence is below primary six. As a result of this, most of them could not even read and or complete the questionnaire by themselves. Based on this fact, the researcher upon distributing the questionnaires had to read and translate must of the questions to many of the result before they could response.
It is starching to note that in the organisation some of the personnel do not keep proper recoding. There exist the problem of lack of interest on the part of the top management staff of the brewery concerning the study. Invariably that are so pre-occipital with profit making that they hardly get sufficiently interested in matters that do not translate into immediate revenue to their companies. Where that get mudued at all, they tend to be sting with the information hey given especially as far as monetary facts and figures about their companies are concerned. That were uncooperative in relealising some basic information for fear of having some political implication.
1.7.5 Physiological Constraint
In a work like this that required facilities study, the researcher is bound to experience some psychological constraints. At the process of visiting the company promises, the researcher is faced with a lot of representations and annoyance from the non-challant attitude of security men and secretaries who have the notion that the researchers are spies seeking the secret of the company. Each when the researcher is all to find his way, he has to visit for a long period before being attend o.
1.8 DEFINITION OF TERMS
Physical distribution: This is the process of managing all activities required to strategically move raw materials, pars and finished goods inventory from vendors between enterprise facilities, and to consumers.
Physical distribution: This is also planning, organizing and controlling of all store activities that facilities product flow from the point of raw material acquisition to the point of final consumption of the purpose of providing a sufficient level of customer service (and associated revenues) consistent with the cost incurred for over coming the resistance of time and space in providing the services.
Physical distribution: This is also seen as “the planning, implementation, and controlling the physical flow of materials and finished goods from the point of origin to the point of use to meet customer requirement at a profit.
Management: This is the efficient and effective use of company’s resources to achieve the aims and objectives of the organisation.
1. Bowersox (1974)
2. Ronald Ballon (1973)
3. National Council of Physical distribution management of America
4. Kotler P. (2000 A. D)