ABSTRACT
This research examined the Effect of Physical Distribution on Organiasational
Performance with reference to Agro marketing firms in Lagos State. Survey
design was employed with the use of a well structured questionnaire.
Respondents were selected based on simple random sampling technique. Fifty (50)
staff were selected from five agro marketing firms in Lagos. Two hypotheses
were formulated and tested with the use of Chi-Square analysis. The analysis
resulted to rejecting both null hypotheses and hence accepting the two
alternate hypotheses. Based on decisions of the tested hypotheses conclusions
were reached that there
exist relationship between product availability and sales turnover; also, there
is correlation between product delivery flexibility and cost efficiency.
The agro
marketing firms of study were recommended to take fresh look at physical
distribution and focus
on time as a source of competitive advantage
TABLE OF CONTENTS
Pages
Title Page i
Certification ii
Dedication iii
Acknowledgment iv
Abstract vi
Table of Contents vii
CHAPTER ONE: INTRODUCTION
1.1
Background
of the Study 1
1.2
Statement
of Problem 3
1.3
Aim and Objectives of the Study 3
1.4 Relevant
Research Questions 4
1.5 Relevant
Research hypotheses 4
1.6 Scope of
Study 5
1.7 Significance
of Study 6
1.8 Definition
of Terms 6
References 8
CHAPTER TWO: LITERATURE REVIEW
2.1 Preamble 10
2.2 Theoretical Framework of the Study 13
2.2.1 Customer Service Levels 13
2.2.2 Physical Distribution Concept 16
2.2.3 Dimensions
of Physical Distribution 20
2.2.4 Elements of Physical
Distribution System 25
2.2.5 Types
of Distribution System 27
2.2.6 Procedural Steps in A Physical Distribution
Analysis. 32
2.3 Empirical Review of
Previous Work in the Area of Studies 33
2.3.1 Physical Distribution and
Organisational Performance 35
References 37
CHAPTER THREE: RESEARCH METHODOLOGY
3.1
Preamble 39
3.2
Research Design 39
3.3 Population of the Study 40
3.4 Sampling,
Procedure and Sample Size 40
3.5 Data Collection Instrument and Validation 41
3.6 Method
of Data Analysis 42
3.7 Limitations of
the Methodology 42
CHAPTER FOUR: DATA PRESENTATION AND ANALYSIS
4.1 Preamble 43
4.2 Presentation
and Analysis of Data According to
Research Questions 43
4.2.1 Biodata
of the Respondents 43
4.2.2 Response of Respondents to the Problem Areas. 46
4.3 Test of Hypotheses 55
4.4 Discussion
of Findings 59
CHAPTER FIVE: SUMMARY, CONCLUSION AND
RECOMMENDATIONS
5.1 Summary 60
5.2 Conclusion 60
5.3 Recommendations 61
References 62
Appendix
CHAPTER ONE
INTRODUCTION
1.1 BACKGROUND
TO THE STUDY
As competition in the 1990s
intensified and markets became global, so did the challenges associated with
getting a product and service to the right place at the right time at the
lowest cost. Organizations began to realize that it is not enough to improve
efficiencies within an organization, but their whole supply chain has to be
made competitive (Tan, Lyman and Wisner 2002).
The understanding and practicing of physical
distribution management has become an essential prerequisite for staying competitive
in the global race and for enhancing profitably,(Moberg, Cutler, Gross, and
Speh 2002). Council of Logistics Management (CLM) defines physical distribution
management as “the systemic, strategic coordination of the traditional business
functions and tactics across these businesses functions within a particular
organization and across businesses within the supply chain for the purposes of
improving the long-term performance of the individual organizations and the
supply chain as a whole”.
The goal of physical distribution
system is to integrate both information and material flows seamlessly across
the supply chain as an effective competitive weapon (Childhouse and Towill
2003, Feldmann and Müller 2003).
The concept of physical distribution has
received increasing attention from academicians, consultants, and business
managers alike (Tan, Lyman and Wisner 2002, Feldman and Müller 2003, Van 1998).
Many organizations have begun to recognize that physical distribution is the
key to building sustainable competitive edge for their products and/or services
in an increasingly crowded marketplace (Jones 1998).
In the transportation and
distribution (T&D) sector, as in many others, it is important to have a
good performance in operations. In order to achieve high performance, it is
necessary to know which operational factors are critical for success and which
are less important. Only then can management focus attention on those factors
that have a strong effect on performance.
Challenges exist in terms of
identifying appropriate performance measures for the analysis of supply chain
(Arzu Akyuz, & Erman Erkan, 2010; Beamon, 1999). Researchers have thus far been
content in limiting their choice of performance measures. Customer
responsiveness has also been recognized as an important dimension of physical
distribution management performance (Christy & Grout, 1994). In addition,
Lee and Bullington (1993) identify supply chain flexibility as an important
measure of physical distribution management performance.
In order to capture the construct of
performance measure, all the different dimensions of physical distribution
management performance need to be considered simultaneously. In addition, it is
recognized that since physical distribution has firm level implications and it
becomes imperative to measure effects of physical distribution management
performance on organizational performance measures (Green, McGaughey &
Casey, 2006).
The purpose of this study is
therefore to empirically test the effect of physical distribution on
organizational performance. Identifying the relationships among physical
distribution practices, competitive advantage and organizational performance.
1.2
STATEMENT OF THE PROBLEM
Distribution
firms have always researched for methods to minimize the cost and maximize flow
of shipping each unit of commodity to and fro across the supply and demand
nodes. Though, warehousing has smoothen out the fluctuations in demand and
supply at market place yet major constraints are been faced in assigning supply
and properly matching orders placed during redistribution to final retailers
outlets. In recent times logistics firms are faced with greater problems of
optimizing the whole system so as to develop strategies that minimizes cost and
maximizes flow.
Some of the
constraints affecting effective physical distribution in Agro marketing firms
are Setting geographical coverage area for each warehouse to avoid conflicting
customer coverage; efficiently utilizing space, resources and capacity of
warehouses that will be optimal to avoid diseconomies of scale from under-utilization
of warehouses and allocation of the flow of products and balancing of routes
from each salesman to retailers’ outlets.
This research study tends to address
the above issues and challenges facing organizations as they strive to maximize
effectiveness and efficiency of their distribution processes and activities.
1.3 AIM
AND OBJECTIVES OF THE STUDY
The aim of this research project is
to examine the effect of physical distribution on organizational performance in
marketing firms. The objectives of this study include the followings;
i.
To
ascertain the relationship between product availability and sales turnover.
ii.
To
evaluate the correlation between product delivery flexibility and cost
efficiency.
iii.
To
determine the relationship between customer responsiveness time and reduced
inventory cost.
iv.
To
examine if warehousing has any influence on market share of agro marketing
firms.
1.4 RELEVANT
RESEARCH QUESTIONS
In
order to achieve the purpose of this research study, the study will attempt to
provide answers to the following research questions in order to
arrive at a logical conclusion.
i.
Does
any relationship exist between product availability and sales turnover?
ii.
Is
there correlation between product delivery flexibility and cost efficiency?
iii.
Is
there any significant relationship between customer responsiveness time and
reduced inventory cost?
iv.
Does
warehousing have any influence on market share of agro marketing firms?
1.5 RELEVANT
RESEARCHHYPOTHESES
The following tentative statements
can be related to the work study and they will be tested later.
HYPOTHESIS ONE
Ho: There do not exist any significant relationship
between product availability and sales turnover.
HYPOTHESIS TWO
Ho: There is no correlation between product
delivery flexibility and cost efficiency.
1.6 SCOPE
OF STUDY
The premise on which this study is
based is the effect of physical distribution on organizational performance in
agro marketing firms. The study is limited to organizational performance with
respect to physical distribution. The scope of the study will cover five (5)
agro marketing firms at Agege area of Lagos State. The companies are also limited to companies
dealing in poultry products.
These firms are:
FIRM ADDRESS
1. Poultry Support Service Ltd 309, Old Abeokuta Expressway, Abattior,
Lagos.
2. Soleace & Moxie Inv. Ltd. 309, Old Abeokuta
Expressway, Abattior,
Lagos.
3. Solution Feeds Ltd. 305, Old Abeokuta
Expressway, Oko-Oba,
Lagos.
4. Sabina Pad Ent. Nig. Ltd. 311 Old Abeokuta Expressway,
Oko-Oba,
Lagos.
5. Cervi – Plus. Abibatu Mogaji Market, Old
Oko-Oba Road,
Oko-Oba, Lagos.
1.7 SIGNIFICANCE
OF STUDY
The study is relevant to managers of
agro marketing firms to expose them to systematic means of distributing their
products for greater performance.
This study is also of paramount
importance to academicians and practitioners as the proposed framework is
expected to uncover many neglected relationships that are of interest to
managers. In addition, specific patterns of physical distribution practices
would also be revealed which would further encourage managers to implement this
technique and possibly improve both physical distribution management and
organization performance.
Finally, the study is a contribution
to knowledge which could serve as a springboard for students, businessmen and
managers who are interested in pursuing a career in the field of physical
distribution.
1.8 DEFINITION OF TERMS
Physical Distribution: Handling, moving, and storage of
goods from the point of origin to the point of consumption or use, via various
channels of distribution.
Postponement: The practice of moving forward one
or more operations or activities(making, sourcing and delivering) to a much
later point in the supplychain.
Physical Distributor:
The provider of services who has entered into a physical distribution agreement
with the principal and accordingly has agreed to undertake physical
distribution.
Wholesalers:
Makes marketing
systems more efficient by buying a variety of products, in fairly large
quantities, and selling these items on to other businesses that require
relatively small quantities of a variety of goods.
Agricultural
Marketing: This
involves on-farm and off-farm activities from the production to the commercialization
of agricultural products, such as post-harvest handling, processing, marketing
and related commercial activities.
Agricultural
marketing firms: consist
of interdependent sets of enterprises, institutions, activities, and
relationships that collectively develop and deliver material inputs to the
farming sector, produce primary commodities, and subsequently handle, process,
transport, market, and distribute food and other agro-based products to
consumers.
Acquisition
Performance: This is
perceived performance indicator that measures performance of organisations
based on new customers generated, increase in sales growth and market share of
such organisations.
Retention
Performance: This is
perceived performance indicator that measures performance of organisations
based on customer retention ability of such organisations.
Organizational Performance: refers to how well an organization achieves
its market-oriented goals as well as its financial goals.
Agro Marketing: An
integrative force that matches production to customer needs and satisfaction in
the agricultural sector.
Delivery:
The moment in which the goods, after the agreed work has been carried out by
the physical distributor, are made available to the principal or entitled party.
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