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THE EFFECTS OF PHYSICAL DISTRIBUTION ON SALES OF CONSUMABLE GOODS

 

CHAPTER ONE

1.0   INTRODUCTION      

Manufacturing firms are increasingly becoming aware, that the production of goods is meaningless without its availability to the consumers at the right time. During the past few years, fast technological development, growing globalization of market and higher customer requirement have driven and transformed organisations from their traditional view of physical distribution to the embrace of a more broadened concept of the subject.

Organizations now see logistic (physical distribution) management as the only route to the achievement of organisation goals, profitability, growth as well as effective marketing.

Thus, UAC Nigeria Plc. a manufacturer of consumer goods has been at the fore front of the orchestration crusade of logistic as the only solution to sustained consumer satisfaction through product availability. Right from its inception, the organisation has always seen physical distribution as the key to meeting customer requirement hence its achievement of an edge over its competitors and consumer acceptance and patronage of its products.

Products are of no use and possession utility is not possible until time and place utilities have been provided, and most often, selling a product is much easier than making it available to the consumers.

The movement and availability of the right products at the right quantity and at the right time is core-marketing decision/planning that requires laudable and workable strategies.  This is because, physical distribution creates time and place utility and consumers satisfaction are basically defined by the two marketing variables, which are place and frequency of availability.

Thus, logistic (physical distribution) concept has been broadened from the earlier myopic concept limiting its scope to transportation (trucks) and warehousing.  Today, the modern manager has a more complete view of physical distribution which encompass planning, implementing and controlling the physical flow of materials, final goods and related information from points of origin to points of consumption to meet customer requirement at a profit.

Physical distribution has been defined and discussed more elaborately by many marketing experts.

Physical distribution is one of the most important marketing activities because, physical distribution always involve cost and the most costly function of marketing which include movement of goods, receiving and shipping,  warehousing, inventory, carrying cost and including insurance”.

Physical distribution (logistics) “is the task that involved planning, implementing and controlling the physical flow of materials, final goods and related information from points of origin to the points of consumption to meet consumers requirements at a profit”

Here, he laid credence on the indispensability of physical distribution activities in any organisation life because without physical distribution, goods will remain at the point of its production without yielding and profit/benefits.

Physical distribution may be taken to include operational and managerial activities associated with the following:-

The physical storage and transportation of goods or physical process of making service available. The holding base or “buffer” stocks via distribution warehousing and goods in transit to smoothen the relationship between production and demand from intermediaries. Stock held by intermediaries within the channel of distribution Customer ordering procedure Warehouse picking and order collection system Distribution control system”

Mordern above highlighted the broadened scope of physical distribution, which integrates the total marketing strategy, and validates it importance in the achievement of organisation’s objectives.

1.1 HISTORICAL BACKGROUND OF UAC FOODS

UAC food is one of the divisions of UAC Nigeria Plc. UAC of Nigeria Started operations in Nigeria as the Royal Niger Company during the colonial era. However it metamorphosed through series of names from United Africa Company of Nigeria in 1950 to United Africa Company Limited in 1973 and United Africa Company Nigeria Plc. in 1991.

The company since 1973 has been 60% owned by Nigerian shareholders and 40% owned by Unilever (An Anglo-Dutch Conglomerate). Its activities range from manufacturing, technical services, trading to Agro industrial activities.

UAC Foods is one of the manufacturing divisions of the company, which began operation in 1940 under the name West Africa Cold Storage Company Limited. However, it’s operation then up to the 50s was importation of perishable foods such as ice-cream frozen meat, fish fruits and vegetables

Ice cream manufacturing started in 1961 at Ijora and was registered under the name WALLS. This was followed by slaughtering, meat processing and baking of snacks in 1962.

After the indigenization decree of 1973, the company dropped its name West Africa cold storage and adopted foods division of UAC Foods of Nigeria limited. In 1986, the divisions name was again changed to UAC Foods and fast foods activities of former Kingsway division with the Popular MR. BIGGS and KINGSWAY RENDEZVOUS fast Food Outlets.

UAC Foods has four factories located in different parts of the country (at Strategic areas) these are: Ojoto Factory (Lagos), which basically is a bakery factory for the production of snacks, fast foods such as sausage rolls, meat-pie, etc. Maya factory (oyo), which engages in meat products e.g. Satis, Ham, Bacom and also has facilities for slaughtering. Onitsha factory (anambra) for ice-cream production viz impulse and bulk” Take Homes” lines under the Brand name WALLS.

1.2    STATEMENT OF GENERAL PROBLEM

Before The advent of powered vehicles, transportation activities were slow and limited. The movement of goods was reduced to what a person can carry. People lived where the goods were, on self-sufficient farms and traded their surpluses in nearby market.

But as time progressed, there were changes overtime in production of commodities, thus a more reliable and faster means of making goods available to consumers was sought by manufacturers.

Upon much search, the marketer now discovered that the only means achieving-these utilities is by adopting the “systems” perspective, which means integrating the series of physical distribution activities. This trend tried to down turn the traditional concept of physical distribution which see it as starting from the plant, rather, modern marketers prefer the market logistic thinking which starts from the market place and move backward to the plant (KOTLER 1996:410).

More emphasis was laid on physical distribution because customer service and satisfaction has become a cornerstone of marketing strategy in businesses and distribution an important customer service element and a source of winning and keeping customers.

Again, logistic is a major cost element, and improved physical distribution management necessary as a result of the explosion in product variety and evolution of information technology, which have created opportunities for major gains in distribution efficiency. The increased use of computer system for ordering, inventory control and handling and transportation routing and scheduling has stressed the need for value added flows of materials, final goods and related information through coordination of forecasting and planning, hence effective physical distribution becomes pertinent in the achievement of organisation objective through consumer satisfaction.

1.3    AIMS AND OBJECTIVES OF THE STUDY

The aims of this study is to identify, analyze and annunciate the problems encountered when moving a product from a point of production to the point of consumption. The following could be raised:

To find out why physical distribution is important to the organizations and consumers. To examine the future of the economy on the sales of these consumable goods. To identify the effectiveness and efficiency of the depot of the organization. To identify the problems faced in the transportation of these consumable goods.

1.4    SIGNIFICANCE OF THE STUDY

This research work is meant for the partial fulfillment of the requirement for the award of Higher National Diploma in Business Administration and Management Studies.

It also attempts to all the concept of physical distribution management to effective marketing especially in consumer goods market as it includes an overview of logistic activities (system approach) needed to excel in today’s business world. It also highlights the importance of logistics and its impact on effective marketing.

The research work will be beneficial to UAC Nig. Limited and other firms in the Fast Food Industry because consumers are the cornerstones of survival in the market place and availability of goods increases the satisfaction consumers derive from product consumption/utilization.

Finally, as a contribution to knowledge, there may be relevance of this research work to theory development by providing some basis for further thinking, deep learning and constructive actions on the subject matter.

1.5    RESEARCH HYPOTHESIS

Hypothesis is a very important scientific tool in enquiry that enables us to relate theory to observation and observation to theory.

Research work cannot be undertaken unduly without some hypothesis and hypothesis (unproved assumption) always have

significant effect on every study.

For this research work, these hypotheses are formulated for proving.

Ho    –       Physical distribution has no significant effect on in sales of         consumer goods

H1    –       Effective physical distribution has significant effect on in sales of consumer goods.

1.6    SCOPE AND LIMITATION OF THE STUDY

The research work encompasses the entire of physical distribution activities in consumer goods market using UAC Nig. Plc. as a focal point.

It went further to appraise the extent or embrace of physical distribution activities by UAC Nig. Plc and evaluate its effect on the achievement of the organisations’ objectives.

In carrying out research of this nature, certain constraining factors are obvious; the research encountered some problems, which limited the capacity of the study.

Prominent among the militating factors are:

TIME: A research of this kind requires time to cover the scope, but as a student with both academic and official activities contesting for the little time, the time frame was inadequate for effective coverage of the scope of the study.

FINANCE: To effectively carry out this research requires good financial commitment, thus, as fund was not always readily available, the pace of this study was dawdled.

Finally, the research demands interaction with the consumers and intermediaries of the firm to extract information to put in place this research work. But, most of the firm’s trade links are those with little or no formal education, which limited the effective use of questionnaires and subjected the researcher to an intensive use of observational method to extract the information required.

1.7    DEFINITION OF TERMS USED

The following terms are defined as they are used in this study:

Physical Distribution: This is the task that involves planning, implementation and controlling of physical flow of goods from point of origin to point of consumption. Distribution: This is the movement of goods from production point to the consumers. This is the route which central bakeries food passes from production plant to the tea table (consumption point). Channel Of Distribution: These are those distribution institutions, which partake in distribution of the product to the consumers. Customers: These are people willing and are able to purchase the product of a firm either for consumption or for resale. Producers: These are manufacturers of goods. In this context, the producer is referred to as Central Bakeries Limited. Distributors: These are those who are appointed to buy directly from the organisation and sell to the consumers. The Wholesalers: These are those primarily engaged in buying goods for resale from the producer to the retailer. Retailer: These are those selling goods to the final consumers. Warehousing: This means storage facility for produced goods between time of production and time of final use. Transportation: This is the means of conveying goods from one place to another.

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