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IMPACT OF EFFECTIVE PHYSICAL DISTRIBUTION IN BREWERY INDUSTRY

CHAPTER ONE

1.0 INTRODUCTION

Since most commercial producer cannot sell directly to the final consumer without passing through the distributor or other market intermediaries. The reason for effective distribution process is aimed at getting the product from the manufacturer to the final consumer. Additionally, the organization should identify certain factors before adopting the type of distribution process it will use for its product. It is known that every product seek to link together the set of marketing intermediaries that conform on the firm’s objective. Here are some factors that must be considered by the firms before setting any distribution process and these are: 1. Finally capacity of the organization 2. The type of competitive environment in which firm operate.  3. The nature of their product 4. Geographical location of producer and its consumer. The manufacture must be able to analyze the reason of choosing one particular distribution process to the other.

1.1 BACKGROUND TO THE STUDY 

Production is the creation of goods and services, the goods and services can be produced in factories, industries, firms or companies. Production is not complete until the products/services get to end users or consumers. This can be obtained through the distribution process and that complete the production cycle. The distribution activity is equally referred to as physical distribution management (PDM), marketing logistics and material management. Physical distribution system includes; transportation, material handling, order processing, inventory control, warehousing and packing into a complete distribution strategy.

McCarthy described the place component of marketing mix (distribution) as “the situation and use of marketing specialist middlemen, transportation and storage agencies to provide target customers with place and possession utilities. Distribution channel is regarded as a bridge that spans various gaps between producers and customers. Kotler on his own stated that “physical distribution is defined as the planning, implementing and controlling the physical flows of materials and final goods from one point of origin to point of use to meet customer’s needs at a profit. It is concerned with the efficient movement of raw materials, from the suppliers to the factory site where they are processes into finished product and passed to the final consumers.

The procedure of getting the right quantity of the right product to the right place at the right time and at the least cost is no simple job because complainers like the brewery industries with their great diversity of customers spread over vast geographical areas must integrate the systems components to avoid dissonance (dissatisfaction). As stated earlier, there exist a gap in the firm of place and time between manufacturers and the ultimate consumer or user for whom the manufacturer is producing and this gap can only be bridged by distribution. Many problems are confronting the distribution system of brewery industries, these problems ranges from lack of channel members, to physical distribution problems such as lack of adequate, transportations, poor inventory management, inadequate warehousing facilities and lack of sophisticated method of communication.

The problem in distribution network starts with selection of mode of distribution, selection of inexperienced personnel’s with little or no business acumen as distribution. The continuous increase in the cost transportation due to decoration of our roads, high cost of vehicles and spare parts and currently increase in cost of petroleum products poses a serious problem in the effective coverage of territories in the distribution of bear both in rural and urban areas in the country. In the area of inventory, modern management is rarely practiced; this is partly caused by insufficient storage facilities and inappropriate storage methods which invariably results to high rate of spoilage, breakage and waste of products. Besides, warehouses are very few and far, sophisticated material handling equipments like fork lift, cranes, convey or machines etc. are lacking in some of these companies. So in the light of these marginal or problems and the fact that there are many brands of beer in the market from which the consumer has to choose with little or no difference among them in terms of quality and other characteristics. It then follows that there is a need for the individual brewery firms to management the physical distribution system and engaged in proper manipulation of other marketing mix variables in order to keep a float in the present day competitive beer market in Nigeria.  In this study, the researcher shall consider the physical distribution management from the point of view of Ama Plant, Enugu State.

1.2 STATEMENT OF THE PROBLEM 

There is a common problem in the brewery industries (Ama Plant inclusive) which hampers the effective and efficient movement of their products from point of production to the final consumers, this is the problem of physical distribution is the problem of physical distribution which (if not attended to may be a barrier to a company’s effort to satisfy its customers as well as meeting its marketing goals and objectives. A well modeled distribution channel is basically a pre-requisite for proper integration of the activities that will eventually lead to attainment of the organizational goal. When the consumers are not well linked through an organizational distribution channel, the problem of where, when and at what price the company’s product will be available will be difficult to ascertain.

1.3 OBJECTIVE OF STUDY 

The primary needs for the study are:

1. To find out if the Ama plant have warehouses outside their plant location.

2. To ascertain whether the company has sufficient number of functional distribution van.

3. To determine if the company have dependable source of raw materials. 

4. To proffer recommendations that are in line with the researcher objectives.

1.4 RESEARCH QUESTION

The researcher discovered some questions in the course of the research work.

a. Do inadequate warehousing facilities affect the physical distribution?

b. Does the effect of inadequate routing and scheduling affect the physical distribution system?

c. Is the effective of doubling handling affecting effective physical distribution?

d. Does the lack of transport and infrastructure affect the distribution system?

e. Does ineffective communication affect the distribution?

1.5 STATEMENT OF HYPOTHESIS 

In carrying out this research work, the researcher made use of the null (Ho) and alternative (Hi) hypothesis.

HO: Inadequate warehousing facilities have no negative effect on physical distribution.

HI: Inadequate warehousing facilities have negative effect on physical distribution.

HO: Double handling of material has no negative impact on effective physical distribution.

HI: Double handling of material has negative impact on effective physical distribution.

1.6 SIGNIFICANCE OF THE STUDY 

The study of channels of distribution of brewery industries and its associated problems would be benefits to brewery industries and Ama Brewery (plant) in particular. This research is aimed at finding the suitable situation that will guide the members of the industries in designing effective and efficient channels of distribution to effectively reach the target consumers. The research is also aimed at providing Ama plant management with important and identified variables that are necessary to the development of good channels. The alarming rate of physical distribution cost in the brewery industries made this study more significant as the research tends to determine the possible way of reducing the cost and providing effective and efficient solution to the problem of physical distribution management.

The coordination of the activities of physical distribution is indispensable to any firm that is engaged in production to goods or services because distribution is a course that be managed effectively and efficiently to control an organizational system. The significance of this study is more apparent and appreciated when we understand the importance of physical distribution in the brewery industries like Ama plant. Moreover, in the brewery industries, distribution cost is the killer cost or the killer disease variable cost. Since profit is the goal of every business, this important variable cost has to be intensively managed in order not to eat deep into the company operation cost. Marketing manager and management in general must give high level of attention to physical distribution because its cost alone can detrimental to the entire organization.

1.7 SCOPE AND LIMITATION OF THE STUDY 

The scope of this study is very wide if the researcher is to cover all the geographical areas were the Ama plant (Nigerian Breweries), have establishment, distributors and outlets. This study is therefore limited to (Enugu Urban and some towns near Enugu) and the findings not reflect the situation in order tons of the state not included in the researcher and other Nigerian Brewery Plants in other states of the country. But by and large without happened in Enugu urban and its environs can be said to apply to other states and locations.  The researcher has limited the study to areas mentioned above base on time constraints, financial, constraints and limited materials resources at his disposal.

1.8 DEFINITION OF TERMS 

The following terms used in this study should be taken to mean the following:

1. Physical distribution channel: The movement of goods from the point of production to point of consumption.

2. Logistics: This implies to the procurement of sourcing raw materials to the production unit, movement of the finished product/goods to the warehouse then to the distribution intermediaries before the final consumer.

3. Efficient and effective: This means being able to achieve a company’s goals and objective as at when required at the minimum expenses. 

4. Channel Strategy: This is the adoption of an appropriate means of distribution that will serve efficiently and effectively from the available distribution options.

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