CHAPTER ONE
INTRODUCTION
BACKGROUND OF THE STUDY
Material, in the context of this study, refers to inventories held by business outfits for production purposes. Umeyi and Obi (2013) define materials as the stock of items kept in a business's storage or warehouse at any given time. Manufacturing organizations often maintain various types of materials, including raw materials, work-in-progress, finished goods, products intended for resale, and service items like spare parts. Materials are the lifeblood of a manufacturing organization and typically constitute a significant portion of its assets, particularly in terms of working capital. Satami and Adeyeni (2010) emphasize the critical importance of material control in the functioning of manufacturing organizations. Therefore, it is imperative to manage materials effectively to ensure they are available for production while also preventing the adverse consequences of overstocking, such as storage costs, spoilage, pilferage, and obsolescence. The primary objective of inventory control is to strike a balance between the desire not to hold excessive stock and the need to ensure the availability of quality and quantity of raw materials to meet internal and external demand. Given the substantial presence of materials in a manufacturing organization's financial position, it becomes essential to adopt appropriate material control techniques. Material control encompasses overseeing the procurement, supply, storage, and accessibility of stocks to ensure efficient and effective operations. Ogbo and Ukpere (2014) assert that material control involves various activities related to the procurement, storage, utilization, and disposal of stocks. In the operations of manufacturing organizations, managers need to maintain adequate stock levels when required while efficiently using available storage space to avoid overstocking. As per Ibegbulem and Okorie (2015), material control includes elements like quality control, stocktaking, material issuance control, and the establishment of stock levels. The purchasing function traditionally involves the process of buying, which encompasses identifying the need, selecting vendors or suppliers, negotiating favorable prices, specifying terms and conditions, issuing contracts or purchase orders, and ensuring proper delivery. Okoronkwo (2003) defines purchasing as the control function responsible for obtaining equipment, materials, supplies, and service items through purchase, lease, or other legal means to support an organization in achieving its objectives. To buy the required quantity of materials suitable for production, manufacturing organizations must adopt quality control techniques to ensure the purchased materials meet the desired standards. In the present era of intense competition, it has become imperative for businesses to maintain strict control over the quality of materials they purchase. Once materials are procured, the organization must be satisfied with their quality. Gupta (2012) notes that quality control involves the use of various measures, both statistical and non-statistical, to enhance the quality and standards of manufacturing processes. One of the techniques for controlling materials is stocktaking. Stocktaking is a systematic process that allows for the periodic comparison and verification of actual stock levels against what is recorded in stock record cards (bin cards). Abobi (2003) describes stocktaking as the process where a proportion of all stock items is checked at least once a year. Another critical aspect of material control is pricing materials upon issuance. Material pricing, according to Obi and Umeji (2013), involves assigning costs to inventories to determine their current value before using them in the production process. Economic Order Quantity (EOQ) is a concept commonly employed by many manufacturing organizations to determine the most economical quantity to reorder for any item held in stock. Okoronkmo (2003) explains that EOQ is based on the idea that the appropriate quantity to order is the one that minimizes all costs, including ordering and holding costs. Materials constitute a substantial portion of a production outfit's assets. If they are purchased in insufficient quantities, the manufacturing organization may face stockouts, leading to production difficulties. Conversely, if they are purchased in large quantities and held in storage until needed, a significant amount of capital may be tied up in these materials, and they may deteriorate due to factors like evaporation, shrinkage, and obsolescence. This study aims to examine the extent to which material control techniques influence the operations of manufacturing organizations in Cross River State.
1.2 Statement of the Problem
Manufacturing organizations typically invest a substantial amount of capital in materials, making it essential for managers to exercise diligence and expertise in material management. When materials are purchased in small quantities, it can lead to production difficulties. Conversely, purchasing materials in large quantities can result in issues like pilferage, evaporation, shrinkage, obsolescence, and increased storage costs, all of which negatively impact the organization's operations. The reduced profit-earning capacity of the organization can hinder its ability to meet financial obligations such as salaries, audit fees, rent, utilities, and other essential expenses. As a consequence of this undesirable situation, many factory workers have lost their jobs because their organizations lacked the necessary profits to sustain their employment. Some organizations have even faced liquidation. Observations suggest that many of these organizations did not implement appropriate practices in purchasing, quality control, stocktaking, material pricing, and the economic order quantity model in their operations. It is within this context that the researcher aims to investigate the influence of material control techniques on the operations of manufacturing organizations in Cross River State.
1.3 Purpose of the study
The purpose of the study is to examine in influence of material control techniques on the operations of manufacturing organizations in Cross River State.
Specifically, the study seeks to determine:
- The extent to which purchasing control influence the operations of manufacturing organizations in Cross River State.
- The extent to which quantity control influence the operation of manufacturing organization in Cross River State.
- The extent to which stocktaking control influence the operations of manufacturing organizations in Cross River State.
- The extent to which metarial issues control influence the operations of manufacturing organization in Cross River State.
- The extent to which establishment of stock levels control influence the operations of manufacturing organization in Cross River State.
1.4 Significance of the Study
The finding of this study would be of great benefit to owners of business organizations, managers, researchers as well as students. The findings on various material control techniques would be of great benefit to owners of business organizations in that they would be aware of various material control techniques such as purchasing control techniques, quality control techniques, material issues control techniques and establishment of stock levels control techniques. This knowledge would help owners of business organization purchase the night materials that will be used in the production process that will guarantee high quality finished products.
The finding of this study would help managers of business organizations to get familiar with material control techniques such as Economic order quantity and stocktaking. This would provide them with the knowledge of operating their business at a profitable level through production management of materials.
Researchers and students especially those in business related fields would find the findings that would be recorded in tis study useful. The literature on various material control techniques and recommendations of the study could serve as a resource material for them.
1.5 Research Questions
The following research questions will guide the study.
- What is the extent to which purchasing control influence the operations of manufacturing organization in Cross River State.
- What is the extent to which quantity control influence the operations of manufacturing organization in Cross River State.
- What is the extent to which stocktaking control influence the operations of manufacturing organization in Cross River State.
- What is the extent to which material issues control influence the operations of manufacturing organization in Cross River State.
- What is the extent to which establishment of stock levels influence the operations of manufacturing organization in Cross River State.
1.6 Null Hypothesis
The following null hypotheses will be formulated and tested at 05 level of significance.
- There is no significant difference in the mean responses of factory workers on the extent to which purchasing control influence the operations of manufacturing organizations in Cross River State.
- There is no significant difference in the mean responses of factory workers on the extent to which quantity control influence the operation of manufacturing organization in Cross River State.
- There is no significant difference in the mean responses of factory workers on the extent to which stock taking control influence the operations of manufacturing organizations in Cross River State.
1.7 Delimitation of the Study
This study will be delimited to the influence of material control techniques on the operation of manufacturing organizations in Cross River State using 222 factory workers. Specifically, the study will focus on the following material control techniques purchasing control, quality, control, stocktaking, material pricing of issues and Economic order quantity as they influence the operations of manufacturing organizations.
material control techniques and operations of manufacturing organizations in Cross River State.
