EFFECT OF MATERIAL MANAGEMENT PRACTICES ON THE PERFORMANCE OF INNSON TECHNICAL AND INDUSTRIAL COMPANY LIMITED
CHAPTER ONE
INTRODUCTION
1.1 Background of the Study
The efficiency of any activity for production of goods and services depends to a great extent on the supply of materials, equipment and manpower made available in their right proportions (Oniwon, 2015). Therefore, in order to meet the needs of the customer while meeting the set objectives, there is a great need for a production schedule. This is only made possible by holding the inputs (materials, equipment and manpower) in form of stock.
Wanjogu (2016), opines that every organization invests a considerable amount of capital on materials. In many cases, the cost of materials exceeds fifty percent of the total cost of goods produced. Such a large investment, requires considerable planning and controls so as to minimize wastage, which invariably affects the performance and profitability of organizations. Ezeokonkwo (2015), posits that materials are the lifeblood and heart of many manufacturing system. They must be made available at the right price, at the right quantity, in the right place and at the right time in order to co-ordinate and schedule the production activity in an integrative way for an industrial undertaking.
A manufacturing firm will remain shaky if materials are under stocked, overstocked or in any way poorly managed (Banjoko, 2014). Materials management includes all the activities relating to acquisition, handling and control, and movement of materials and supplies used in the production of a firm’s final product. Okolie (2014), is of the view that materials management is a tool to optimize performance in meeting customer service requirements at the same time, adding to profitability by minimizing costs and making the best use of available resources.
Materials management encompasses all operations management functions from purchasing of raw materials through the production process to the final delivery of the end products. It brings together under one management responsibility for determining the manufacturing requirements, scheduling the manufacturing processes and procuring, storing and dispensing materials (Ondiek, 2013). Effective management of materials can lead to a reduction in cost, resulting in a significant saving. The various types of materials to be managed in any organization include purchased materials, Work in Progress (WIP), materials and finished goods. Ogbadu (2015), identified basic price, purchasing cost, marketing cost, obsolescence and wastages as the various costs involved in these materials. This clearly shows that priority should be given to management of materials in organizations to avoid unnecessary costs.
However, most organizations especially in the manufacturing sector do not have materials management department (Ayodele, 2012). Management in those organizations are of the view that any department within could assume such role. They also assume that it is a matter of making sure materials come into organization and are issued to production department as and when it is needed. Doramola (2015), states that since many organizations have neglected materials management when it comes to involvement in forward planning discussions and meetings, such organizations have found, to their cost, the error of leaving out a major part of the organization so directly involved with operations. It is against those backdrop that the researcher sees the subject matter, effect of material management practices on organizational performance as an issue worthy of being investigated, putting a search light on Innoson Technical and Industrial Company Limited.
1.2 Statement of the Problem
Efficient materials management reduces the total cost of production of an organization and also increases the units of output, profitability and sales turnover of an organization. Efficient materials management is important because it helps to reduce expenditure. This is because majority of expenditure of any industry is either on men or materials. The benefits of materials management include better handling of materials, improvement in labour productivity, quality control and better relations with suppliers.
Unfortunately, the manufacturing companies in Nigeria have not taken effective materials management as a priority. The extent of adoption of effective materials management is suspected to be low and this may have an adverse effect on performance of the organization.
Inability to adopt effective material management practices could have a devastating effect on a manufacturing firm. It could lead to increase in the total costs of production. This is because material management is a tool to optimize performance in meeting customer service requirements at the same time, adding to profitability by minimizing costs and making the best use of available resources. Material management also involves holding the appropriate raw materials in stock. Inability to observe this function could lead to decline in units of production. Production managers are saddled with the responsibility of keeping the appropriate raw materials in stock but when this function is not given adequate attention, the units of production is likely to be affected. Inability to have an effective means of reducing the carrying cost, could lead to increase in cost for the organization leading to decline in net profit.  It became necessary to investigate the effect of material management practices on organizational performance.
1.3 Objectives of the Study
The broad objective of the study was to examine effect of material management practices on performance of Innoson Technical and Industrial Company Limited. However, the specific objectives included to:
i.     Ascertain the extent of effect of purchase price of raw materials on total cost of production in Innoson Technical and Industrial Company Limited.
ii.    Determine the effect of order quantity of raw materials on units of production in Innoson Technical and Industrial Company Limited.
iii.    Evaluate the extent of effect of work scheduling on sales turnover of Innoson Technical and Industrial Company Limited.
iv.    Identify the extent of effect of carrying cost on profitability of Innoson Technical and Industrial Company Limited.
1.4. Research Questions
Based on the objectives of the study, the following research questions were raised.
i.    To what extent has purchase price of raw materials affected total cost of production in Innoson Technical and Industrial Company Limited?
ii.    What is the effect of order quantity of raw materials on units of production in Innoson Technical and Industrial Company Limited?
iii.    What is the extent of effect of work scheduling on sales turnover of Innoson Technical and Industrial Company Limited?
iv.    What is the extent of effect of carrying cost on profitability of Innoson Technical and Industrial Company Limited?
1.5 Statement of Hypotheses
Based on the research questions, the following hypotheses were formulated.
i.    Purchase price of raw materials has to a large extent a positive effect on total cost of production in Innoson Technical and Industrial Company Limited.
ii.    Order quantity of raw materials has a positive relationship with units of production in Innoson Technical and Industrial Company Limited
iii.    Work scheduling to a large extent has a positive effect on sales turnover of Innoson Technical and Industrial Company Limited.
iv.    Carrying cost to a large extent has a positive effect on profitability of Innoson Technical and Industrial Company Limited.
1.6 Significance of the Study
The research study was very important because it examined effect of material management practices on the performance of an organization. The management of manufacturing organizations will benefit from this study because the knowledge obtained will help in cost reduction as a result of effective material management. The researcher will benefit as the research study is a partial requirement for the award of a Bachelor of Science (B.Sc) in Business Administration. The university will benefit as the research study increases its data bank. Finally, this research study serves as a reference material for further research on this topic.
1.7 Scope of the Study
This research work covered the effect of acquisition of raw materials at the right price on total cost of production, the relationship between holding the appropriate raw materials in stock and units of production, the effect of work scheduling on sales turnover and the effect of carrying cost on profitability. The organization covered is Innoson Technical and Industrial Company Limited Enugu. The time scope is between 2010-2018.  
1.8 Limitations of the Study
The researcher encountered an impediment in the course of carrying out this research study. This includes the uncooperative attitude of the respondents.
Uncooperative Attitude of the Respondents: The respondents of Innoson Technical and Industrial Company Limited were initially economical with information.
1.9 Operational Definitions of Terms
Materials Management: Material management is simply the process by which an organization is supplied with the goods and services that it needs to achieve its objectives of buying, storage and movement of materials.  
1.10 Profile of Innoson Technical and Industrial Company Limited
Innoson Technical and Industrial Company Limited produces the best plastic products in the country. Products include chairs, jerry cans, drums, motorcycle parts etc. Innoson Technical and Industrial Company Limited is a subsidiary of Innoson Group of Companies and was incorporated in 2002 with its Head Office/Factory situated at plot W/L Industrial Layout, Emene, Enugu State, Nigeria. Full scale operations and production commenced in October 2002. It is an indigenous blue chip company engaged in the manufacturing of plastic chairs, tables, trays, plates, spoons, cups Jerry cans of different sizes and many other allied products.
Since inception, this company ranks the biggest plastic industry in Nigeria. It produces the highest quality range of plastic products of international standard and has production over 10,000 pieces of chairs and tables per day. Due to the rapid demand of these products, the company’s twelve production lines of injection moulds have since been increased with tremendous and near perfect production lines of international standard.
It was also established to further consolidate a leading position in the motorcycle industry by producing the motorcycle plastic requirement of Innoson Technical and Industrial Company Limited which is a sister company. This effort was in direct response to the Federal Government policy direction towards encouraging private sector as the engine of growth for the economy.
The company has an annual turnover of about 3.6 billion naira according to the company’s 2017 statement of account. The company also has a foreign partner in China named CRETEC Industries Company Limited, whose wealth of experience is unquantifiable. Innoson technical and industrial company Limited has over six hundred (600) indigenous staff and few expatriate workers. The directors of the company include Chief Dr. Innocent Ifediaso Chukwuma- CEO, Chief Gabriel Chukwuma – Director, Mrs. Ebere Chukwuma –Director, Christopher Ubah – General  Manager, Nnamdi Onusogu – General  Manager, S.O George – Business Development manager, Andrew Audu Dibal – General Manager, Engr. Kankan Kelvin Zhao-Head of Operations. Stephenie Mary Gbulie- Head Human resources. Chisom Ndefo- Manager finance. Ulonnam Naths Nwoko- Head Internal Audit, John Alobele- Sales Manager, Nze Charles Aniekwilo- Company Secretary.   
Mission: To satisfy the industrial and household plastic requirement of our client using the highest standard of automation and technology and with well motivated and trained indigenous workforce to ensure adequate return for the stakeholders.
Vision: To be a dominant player in the plastic industry, producing products of first choice in Nigeria.