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The study examined the contributions of Materials Management to organizational effectiveness, determined all the areas covered in the materials management functions, ascertained the level of attention given to the materials management functions in the telecom industry, and found out how appropriate materials management strategies could lead to cost savings and profitability. To realize the stated objectives of the study, the researcher sought to answer six research questions. Three hypotheses were formulated to guide this study. Correlation co-efficient and Chi-square were used to test the Null hypothesis. The researcher prepared and distributed a total of fifty five (55) questionnaires comprising of twenty four (24) open ended/close ended questions each. Out of these, fifty (50) ere received and analyzed. At the end of the study, it was found that effective and efficient materials functions contributes to the improvement of performance, leads to a significant reductions in the total materials cost, and helps to enhance the profitability of the telecom industry. It was recommended that the organizational structure of the Telecom industry should be redesigned to consolidate the existing Materials Management department, The Materials Manager should be given the free hand to carry out his functions, He should be made to report to an officer not below the rank of General Manager, The process of competitive bidding should be made more transparent, and various cost reduction strategies should be used where necessary.
Materials are all the things we use for production of goods and services. e.g. raw materials, spare parts, stock items. The management of materials refers to all the functions of the various departments that coordinate materials in and out of the organization.
Materials Management is the branch of logistics that deals with the tangible components of a supply chain. Specifically, this covers the acquisition of spare parts and replacements, quality control of purchasing and ordering, the standards involved in ordering, shipping and warehousing situation, the demand for raw materials, components, sub assemblies, is dependent on the production plan for the final product. It is therefore, possible to determine how many parts or components will be needed in each future time period in the planning horizon. Materials management method also known as materials planning, uses this information about dependence of demand in managing inventories and controlling the production lot sizes of the numerous parts that go into the making of a final product.
The management objectives of material management is to avoid inventory stock-out and overstocking, so that production runs smoothly according to plan, and investment in raw materials and work-in-process inventories are achieved at a reduced cost.
Materials Management systems in part or in whole, are used in manufacturing firms both large and small. The reason is that it provides a logical and ready understandable approach to the problem of determining the number of parts, components and raw materials needed to produce each end product. Material management also provides the time schedule specifying when each of these materials, parts and components should be ordered or produced.
Materials Management and the need for it to be more efficient became more pronounced because materials now account for three quarters of the total amount of money invested by many manufacturing service Industries. Telecommunications firms manufactures recharge cards and other accessories as well as procure generators and other items used for its numerous basestations, which enables it to provide quality services to its millions of customers. Materials in this case must be effectively managed or taken care of to avoid incurring losses and administrative costs, which affect the organizational profitability.
According to Monk (1987), as production activities became highly automated and use less direct labour was required, the materials proportion of the product cost tends to increase. For this reason, effective and efficient materials management procedures are used to control the flow of materials.
Another factor in the success of any business as a whole in attaining efficiency is the application of the concept of materials management activities under one department, headed by a materials manager. It also assigns materials management activities to all major departments in the organization that contribute to materials cost. This if carried out effectively, forces control and coordination between purchasing, production control and all other functional units that contribute to materials cost.
Efficient performance of the materials management functions is vital to the smooth operation of the organization. It is the basic responsibility of the materials management function to plan, organize and control the flow of material distribution of finished goods. All the major departments under materials management should strive to perform their own functions diligently so as to create and develop awareness for the critical area of operations and the need to be responsive to timing.
Despite the significance of materials management, its functions have been continuously neglected, both in the public and the private sectors of the economy. This normally stems from the wrong notion of non-professionals. To a non-professional, materials management is simply the functional responsibilities of all the units of the organization together, without each having a specified or defined function or role to play, thereby creating disorganization, confusion and inefficiency in its management. An effective and efficient management of materials goes beyond the profit earning contributions to the organization. Materials management functions should be unified and coordinated to enable the entire process achieve its target of minimum cost.
According to Monk (1987), for there to be a good materials management system in any organization, it is necessary that there should be an officer at a very senior level who takes responsibility over the control of materials from the point of leaving the suppliers, passing through the organization and finally reaching the customers. He ensures that the right materials are available at the right time, at the right place and in the right quantity and quality. This will help avoid holding excess stock and its attendant costs. Apart from this an efficient materials management helps in the effective utilization of storage space and avoids shortage “out of stock syndrome” which might cause production stoppage especially when the process is automated.
Suffice it to say at this point that effective and efficient use of materials has been the bane of both the public and private sectors.
But the realization of the fact that materials cost between 50-70% of the entire expenditure in the public sector and the realization in the
private sector that materials costs account to a very high extent to the profitability or otherwise of any organization. Further being aware that an item well bought is an item well sold, has changed the entire perception organizations have about the management of materials. This reason formed the basis for the passage into law of the public procurement act of 2007 by the National Assembly and its subsequent passage of the same law by some states and the setting up of the Bureau of public procurement popularly known as “Due process office”, to supervise procurement activities in the various levels of government. The private sector on its part, having realized the profit centre of materials are now reorganizing and restructuring their systems to accommodate a functional purchasing/procurement, materials/supply chain department, to manage the entire materials activities of their organizations. Thus, this department is usually headed by a manager or director depending on who he/she reports to in the organizational structure.
According to Lee and Dobler (1977), the paramount objective of materials management is to reduce cost. More precisely, the total costs associated with the acquisition and management of materials. They also referred to materials management as a confederacy of traditional materials activities bound by a common idea, and of an integrated, management approach to planning, acquisition, conversion, flow and distribution of production materials from the raw materials state to finished product state. From the above definition, for materials management to be efficient, it cannot be performed in isolation.
Materials management may be said to be an activity, integrated, coordinated and concerned with such widely dispersed functions of management as budgeting, purchasing, production scheduling, receiving inventory, manufacturing maintenance and materials quality control. An effective and efficient materials management system is concerned with the whole process from a need for material services, right through to the supply of them to the users and in many cases, the product thereby being made available to the customer. It encourages the final disposal of scraps, obsoletes and decisions such as ‘make or buy’, value analysis and value engineering, standardization, optimum specification, product development and new product pricing, quality of materials and continuity of supply. The implications are that materials management must be prepared to play a number of different roles. The fortunes of a company may be affected adversely, depending on how well these roles are played. So the materials manager is required to cope with technological development, new material and process as well as economic conditions. In line with the above reasoning, Compton (1981), averred that the materials manager is essentially a leader, an organizer and an administrator and must have a sound management training, as this would enable him to effectively and efficiently manage the organization towards achieving set goals and objectives.
1.1 BACKGROUND OF THE PROBLEM
In Nigeria, being a developing country, management of various aspects of our live have been haphazard. So also is our industry which has been operating in an environment characterized by risks and uncertainties resulting from the downturn present in the economy.
This was the situation in the telecommunication industry which was originally weighed down by monopolistic tendencies whereby only Nigeria Telecommunications Ltd (NITEL) was solely in charge in the rendering of all Telecommunications Services within the country. The fact that NITEL was able to sustain its services to the entire country was as a result of government patronage and yearly budgetary allocations as well as not having any form of competition. Thus, the need to attain effectiveness and make profit from its operations was absent.
The liberalization of the telecommunication sector and the subsequent entry of other firms such MTN Nig Ltd, Econet (now Zain Nig Ltd), Glo Nig Ltd, visafone, etisalat etc, whose objectives are to attain effectiveness and efficiency in the rendering of quality services to numerous customers and make reasonable returns on investment a sine quo non, has now brought the need to manage every material well so as to enhance the achievement of set goals.
1.2 STATEMENT OF PROBLEM
Materials management as perceived has not been widely recognized in Nigeria by all and sundry, as a management activity which is capable of enhancing the effectiveness of organization as well as contributing to its overall profitability. This belief has inspired the researcher into conducting this work on the materials management effectiveness in the telecommunication industry.
Against this backdrop, the problem of effective management of materials in the telecommunication industry is as follows:
i) Wrong interpretation of materials management concept.
ii) The profit potential of materials management has not been fully realized.
iii) There is the lack of separate materials management department in the telecommunication industry.
iv) There us the problem of use of non-professionals to handle materials management functions.
v) Materials management has not been given its rightful place as a management activity in the telecommunication industry.
1.3 PURPOSE OF STUDY
The purpose of this study is to highlight the essentials of materials management effectiveness in the telecommunication industry.
The researcher also seeks to achieve other objectives including:
i) To determine the relationship between Materials Management effectiveness and organization profitability.
ii) To determine all the areas that are covered in the Materials Management function.
iii) To ascertain the level of attention given to the materials management function in the Telecommunications Industry.
iv) To ascertain whether the right persons are allowed to handle the materials management function.
v) To ascertain how appropriate materials management strategies can lead to cost reduction.
1.4 SIGNIFICANCE OF STUDY
To demonstrate that a research is worthwhile, it must be relevant to the society being studied. This study is relevant in respect of the following:
i) Researchers: It will serve as a reference point for would be researchers who will be interested in this area of study.
ii) Organizations: It will help both public and private organizations to be conscious of the extent to which materials management effectiveness can lead to costs reduction and the achievement of profit objectives.
iii) Society: It will enable government to make appropriate policies and laws on materials management activities.
iv) Telecommunication Industry: It will also be useful to firms in the Telecommunications Industry who may have interest in the progress of their firm and the need to engage the services of professionals in this area.
1.5 SCOPE OF STUDY
Considering the fact that there are a great number of telecommunication firms in Nigeria coupled with the fact that the concept of materials management activities covers a very broad area, the researcher therefore, focuses the study on the four major telecommunication firms namely: MTN, Zain, Glo and Starcomm since all of them are fully established in Delta State.
1.6 LIMITATION OF STUDY
The researcher encountered a number of constraints which hindered an in-depth research on the topic.
First, is the conservative attitude of workers towards releasing necessary information about their organizations. This is probably because they want to hide certain information from their competitors. This conservative posture is also reflected in their websites.
Secondly, is the time factor. The time is relatively short and did not allow for a very detailed investigation to properly carryout the study in order to obtain sufficient information needed by the researcher.
Thirdly, is the unavailability of adequate and related texts in the library. This might be attributed to the reason that materials management, though old, is still an emerging phenomenon in Nigerian.
Finally, is the financial constraints which limited the extent of the researcher’s travel for literature and constant visits to the case study companies for on-the spot observation required for this type of study.
1.7 OBJECTIVES OF THE STUDY
The aims of the study are:
i) To determine the contributions of materials management to organizational effectiveness
ii) To determine all the areas that are covered in the materials management functions.
iii) To ascertain the level of attention given to the materials management in the telecommunication industry. iv) To ascertain how appropriate materials management strategies can lead to cost savings and profitability.
1.8 RESEARCH QUESTIONS
To realize the stated objectives of this study, the researcher seeks to answer the following:
i) What are the areas covered in the materials management functions in the telecommunication industry?
ii) What effect does materials management have on organizational effectiveness in the companies under study?
iii) How can effective and efficient materials management activities contribute to cost savings?
iv) Is materials management given its rightful place as a management activity in the telecommunication industry?
v) Whether the use of non-professional will have any effect in the operation of materials management functions?
vi) Is there any relationship between the rank/position occupied by the head of materials management and its general effectiveness?
1) Null (Ho): There is no significant relationship between materials management and organizational effectiveness (profitability)
Alternative (HI): There is a significant relationship between Materials Management and organizational effectiveness recognize.
2) Null (Ho): Telecommunication industry does not neglect the services of qualified professional materials manager.
Alternative (HI): Telecommunication Industry does recognize the services of qualified professional materials managers.
3) Null (Ho): Telecommunication industry has not given materials management its rightful place as a management activity. Alternative (HI): Telecommunication industry has given materials management its rightful place as a management activity.
1.10 DEFINITION OF TERMS
The following are the definition of terms which are unavoidable in this research work. It is very important that these terms are defined in order to clarify issues.
1. Non-Professionals:- persons that are not qualified in terms of education and experience to undertake materials management functions.
2. Inventory Control: The operation of continuously arranging, receiving and issuing so that stock level is adequate to support the current rate of production/consumption.
3. Ltd: This is the short form of writing limited which means limited by guarantee.
4. Management Activity: Those activities that are carried out at a high level such as planning, directing, organizing, staffing and coordinating.
5. Sourcing: Identification or development of suitable sources of supply of materials.
6. Profitability: Ability to contribute to the profit objectives of the organization.
7. Competitive Tendering: Inviting prospective suppliers through advertisement to bid or make an offer to undertake a piece of work or supply goods at a stated price.
Outsourcing: Sub-letting certain jobs to firms that has the core competencies to handle such jobs on behalf of the owner of the jobs