Impact of physical distribution on organization and it's profitability

Thesis Overview

<p> </p><p><b>Introduction</b></p><p><b></b></p><b><p><b>1.1 &nbsp; &nbsp; Background<br>of the Study</b></p><p><b></b></p><b><p>Business<br>organization must deal with distribution to achieve a set goal. Distribution is<br>not completed until the goods gets to the final consumers.</p><p>Physical<br>distribution comprises the tasks that is involved in planning and implementing<br>the physical flow of materials and good from the manufacturing point to the<br>distributors or the consumer for their own consumption purpose or the aim of<br>making profit.</p><p>Physical<br>distribution on profitability depends the effective strategy to maintain and<br>generate more input. The term profitability implies the ability to continuously<br>generate profits over the sustained period of time. Harper (1984), and Sink and<br>Tuttle (1989) suggest the likely impacts on profitability of an organization</p><p>Distribution<br>of materials is one of the functions of material management in procurement and<br>stores. The over all objectives of distribution is to provide a service to the<br>procurement, marketing, stores and the production function by holding and<br>delivering of goods and services (products) efficiently and economically.</p><p>Further<br>more, it can also be related to warehousing, delivering and planning the<br>distribution system. Warehousing is principally a service or production, being<br>designed to hold products for manufacturer to transform stock from production<br>units to marketing (Sales) units and to assemble loads for delivering to<br>consumers/customers.</p><p>Distribution<br>also makes the best used of the resources that are available and to keep<br>investment of a reasonable levels of products.</p><p>Planning<br>the distribution system, it must be designed to coordinate warehousing with<br>delivering to advice on the location of the factories, warehouses and depots to<br>route delivering vehicles to schedule deliveries and to control operations in<br>accordance with requirements.</p><p>The<br>supply site, must be designed and decided, (to suit the type of business)<br>routes are needed to develop for supplying of good to the customers.</p><p>The<br>different types of transportations or routes are rail, road, sea, air and<br>pipeline. These routes must be considered so as to select the one that provides<br>the best services.</p><p>Purchasing<br>by Kenneth Lysons 4th editions logistics management which is the<br>same as distribution the author defined it as “the process of strategically<br>managing the acquisition, movement and storage of materials, parts and finished<br>inventory (and the related information flows) through the organization and its<br>marketing channels in such a way that, the current and future profit ability is<br>maximized, through the cost effective fulfillment of orders (Gattona).</p><p>Supply<br>chain management (purchasing by Mallam Hassan Mohammed) defines distribution as<br>a “concept that involves the integration of all the value creating elements in<br>the supply, manufacturing and distribution processes of an organization, from<br>the raw materials extraction, through the transformation process to end users<br>consumptions” (pp.16).</p><p>Distribution<br>is also a system which is to provide a service to customers who pay to receive<br>goods as ordered.</p><p>Distribution<br>channel is the path a product takes as it moves from the producer to the user.<br>The objectives generally, is to select the most effective, efficient and profitable<br>pathway.</p><p>The<br>term physical distribution is part of the working vocabulary of every business<br>many finds it difficult to defines its meaning because a wide range or variety<br>of interpretation are available in the literature of the subject.</p><p><b>1.2 &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; <br></b><b>Statement<br>of the Problem</b></p><p><b></b></p><b><p>Most<br>organization adopt indirect marketing strategy because of its size. The number<br>of products were too many and the organization described to apply the funds to<br>something else.</p><p>Indirect<br>marketing is defined “as a process of marketing that uses personal media with<br>or the influence of sale’s man to influence and effect sale’s product –<br>wholesaler – retailer – consumer.</p><p>The<br>organization makes use of this strategy effectively and efficiently because of<br>the following reasons:</p><p>1. &nbsp; &nbsp; &nbsp; <br>It has a narrow product line</p><p>2. &nbsp; &nbsp; &nbsp; <br>It has unable to finance, distribution<br>direct to retailers or decides to apply the fund to something else</p><p>3. &nbsp; &nbsp; &nbsp; <br>Retail outlet are many and widely<br>disperse that is with a low concentration</p><p>4. &nbsp; &nbsp; &nbsp; <br>The wholesaler are willing to carry the<br>product and give promotional support</p><p>Organization<br>who have a poor relationship within any link of the supply chain or<br>distribution channels can have a disastrous consequence for all other chain.<br>Therefore informal interaction and information sharing should be giving<br>priority in physical distribution to make it more efficient and effective.</p><p><b>1.3 &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; <br></b><b>Objectives<br>of the Study</b></p><p><b></b></p><b><p>The<br>major rationale behind this study is to assist us to compare how physical<br>distribution is carried out in different business organization.</p><p>The following could be raised:</p><p>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; <br>i. &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; <br>To find out why physical distribution is important to the<br>organizations profit and consumers.</p><p>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; <br>ii. &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; <br>To examine the future of the economy on the sales with<br>physical distribution.</p><p>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;<br>iii. &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; <br>To identify the effectiveness and efficiency of the depot of<br>the organization.</p><p>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;<br>iv. &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; <br>To identify the problems faced in the transportation cost on<br>physical distribution</p><p>1.4 &nbsp; &nbsp; <b>RESEARCH<br>HYPOTHESIS</b></p><p><b></b></p><b><p>Hypothesis<br>is a very important scientific tool in enquiry that enables us to relate theory<br>to observation and observation to theory.</p><p>Research<br>work cannot be undertaken unduly without some hypothesis and hypothesis<br>(unproved assumption) always have</p><p>significant<br>effect on every study.</p><p>For<br>this research work, these hypotheses are formulated for proving.</p><p>Ho &nbsp; &nbsp; –<br>&nbsp; &nbsp; &nbsp; Physical distribution has no significant<br>impact on organization and it’s profitability</p><p>H1 &nbsp; &nbsp; – &nbsp; &nbsp; &nbsp; Effective<br>physical distribution has significant impact on organization and it’s<br>profitability.</p><p><b>1.5 &nbsp; &nbsp; Scope<br>of the Study</b></p><p><b></b></p><b><p>The<br>research work encompasses the entire of physical distribution activities on<br>organization and its’s profitability on UAC Nig. Plc. as a focal point.</p><p>It<br>went further to appraise the extent or embrace of physical distribution<br>activities by UAC Nig. Plc and evaluate its effect on the achievement of the<br>organisations’ objectives.</p><p>In<br>carrying out research of this nature, certain constraining factors are obvious;<br>the research encountered some problems, which limited the capacity of the<br>study.</p><p>Prominent<br>among the militating factors are:</p><p><b>TIME</b>:<br>A research of this kind requires time to cover the scope, but as a student with<br>both academic and official activities contesting for the little time, the time<br>frame was inadequate for effective coverage of the scope of the study.</p><p><b>FINANCE</b>:<br>To effectively carry out this research requires good financial commitment,<br>thus, as fund was not always readily available, the pace of this study was<br>dawdled.</p><p>Finally,<br>the research demands interaction with the consumers and intermediaries of the<br>firm to extract information to put in place this research work. But, most of<br>the firm’s trade links are those with little or no formal education, which<br>limited the effective use of questionnaires and subjected the researcher to an<br>intensive use of observational method to extract the information required.</p><p><b>1.6 &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; <br></b><b>Definition<br>of Terms</b></p><p><b></b></p><b><p>Physical<br>Distribution: Is the activities involved in the flow of products as they move<br>physical goods from the producer to the consumer or industrial users.</p><p><b>Logistics</b>:<br>Is the total management of the key operational functions in the supply<br>chain-procurement, production and distribution, procurement includes purchasing<br>and product development.</p><p>The<br>production function includes manufacturing and assembling, while the<br>distribution function involves ware-housing, inventory, transport and delivery<br>(Knight Wendling/Mallam Hassan)</p><p><b>Ware-housing:</b><br>a broad range of physical distribution activities including storage, assembling<br>and preparing product for shipping.</p><p><b>Product</b>:<br>A set of tangible and intangible attribute that include colour, price, packing<br>and repetition and services of the manufacturer and the middlemen. A product<br>may be physical goods, a service and idea, a place, an organization or even a<br>person.</p><p><b>Storage</b>:<br>This involves receiving and keeping of materials and issuing them to production<br>department. It also inovles storage of work in progress components and finished<br>goods before being transferred to the ware house.</p><p><b>Packaging</b>:<br>This involves the methods of wrapping up of materials packing and presenting<br>them in good containers to retain the quality ultimately to the consumers.</p><p><b>Routing</b>:<br>it is the systematic study of the detail of the supply sites, customer’s<br>location of delivery of vehicle and operating conditions</p><p><b>Delivery</b>:<br>Is a marketing services being designed for transporting products according to<br>orders and delivering them into the hands of customers</p><p><b>Schedule</b>:<br>is the planning of vehicles journey’s so that order are delivered at the right<br>time, right days, at the right place to the ultimate consumers or users and<br>vehicle are utilized efficiently</p><p><b>Stock/ Inventory Control:</b><br>This involves the physical control i.e checking, counting and racking of<br>stocks. It also involves, clerical control i.e. keeping records of receipts,<br>issues and balances of all inventories.<b></b></p><b><p><b></b></p><b><p><b>Distribution requirement planning (DRP):<br></b>This<br>is an inventory control and scheduling techniques that applies MRP principles<br>to distribution inventories, which may also be regarded as a method of handling<br>stock replenishment in a multi-echelon environment.</p><p><b>Supply Network:</b><br>Is the flaw of materials and services into and within the firm starting from<br>extraction, right down t consumption and conversion end products or services.</p><p><b>Planning</b>:<br>Is the preparation of materials budgets product research and development value<br>engineering and analysis and standardization of specifications.</p><p><b>Materials management: </b>Is<br>the total of all those tasks, functions activities and routines which concern<br>the transfer of external materials and services into the organization on the<br>administration of the same until they are consumed or used in the process of<br>production, operations or sale.</p></b></b></b></b></b></b></b></b></b> <br><p></p>