Logistics Of Distribution System In Breweries
Logistics Of Distribution System In Breweries – The distribution sector, up till today in the Nigerian commercial activities is left unused more or less by design than by ignorance the reason for this ugly trend of events cannot be dismissed from the fact that Nigerians still experience the seller market.
DR N.C. Nwaogwugwu observed as follows. The reason for the absence of marketing planning stems from the fact that products for distribution is channeled through established channel of distribution. The marketing manager simply allocates products to appointed distributor or co-operative societies an approved formula since demand is above the supply in most cases. There is no marketing problem encountered in the future. This is an example of the situation experienced in the developed economies.
Background Of The Study
Since 1970, Nigerian as a developing nation has been marketing an encouraging progress in the area of industrialization especially in the beer industry. Several brands of beer has been launched into the Nigerian market especially during the second republic under the administration of Alhaji Alieu Shehu Shagari
The means procedure and method of distributing of goods to reach the final consumer have posed some problems for the management of every firm in particular and the economy in general. By distribution, we mean an efficient movement of raw materials from supplier and financial goods from the end of the production to the customers. The beer industry being part and parcel of our economy, more so as there are rapid growth of beer firms in the country. There is no way it can fully separate itself from nations economic depression. Therefore the following problems are identifiable: fair and dubious distribution of finished product to different parts of the country. For instance, how to supply the consumer resident in Northern part of the country with appropriate quantity of golden guinea beer which is brewed and bottled in the south in part.
The channel through which these finished products actually gets to the final users. The problem of producing the raw materials required for production purposed. The problems also concern the method or means through which such raw material is move from the suppliers to the manufacturers.
The inadequacy of raw materials and finished products has to a great extent motivated the researcher to make a serious study in that direction to find out ways by which raw materials can be distributed effectively to their raw materials can be distributed effectively increase in the price of goods and services which we have experiencing since the 1970’s distributive techniques. The ugly state of affair placed many firms in the state of commercial stagnation, as they cannot improve on their market shares. The co 1.3 in increase of price due to the ineffective logistical approach as they consumer are forced through against their will to limit their consumption to the available goods and services. By this study it is the intention of the researchers to suggest ways by which materials and finished products can be effectively distributed.
This is based on the belief that the study could help firms and industries in designing and implementing successful programmes in their logistics and distribution system.
Statement Of The Problem
There have concerned over the logistic of distribution system distribution is in the service industry. Many firm in a developing nation the basic infrastructure needed to support modern marketing activities are inadequate in golden guinea breweries limited.
There have been problem in distribution system and there is loss, in an attempt to handle the distribution activity areas of inadequacies are
- Transport problem
- Poor inventory management
- Ware house
- Federal government policy on importation of raw material
Objective Of The Study
The researchers intend by this study to high light some of such logistical approaches in the best industry
- The most effective and efficient method of getting to the consumers of a particular brand of beer is very essential especially now that Nigerians are in need to widen their export base and all are now on beer industry. This may not be possible without adequate logistical planning.
- By this study data collected and recorded which in turn are highly essential in the planning and developing of marketing education and practice
- To offer suggestion on decision regarding the way in which transportation should be used for each type of shipment of raw materials or finished products.
- Decision on ware housing as to how many of them are required and location and quantity of goods to be stocked in each will also be discussed and useful suggestions will be offered in that direction. Finally the study on how best to select the distributors of the products, sales personnel and how to institute an adequate and effective sales organization with effective communication network. We therefore hope that firms or individuals that operate within the recommended suggestion will be operating within the range of acceptable logistical system.
The following hypothesis will be tested.
4.0 The brewer programme of the federal government cannot be an answer to the breweries problem in Nigeria
4.1 The brewer programme of the federal government can be an answer to the brewer problem in Nigeria.
4.2 There is no channel for the distribution of golden guinea products.
4.3 There is a channel for the distribution of golden guinea product
4.4 Are their any serious problems facing golden guinea brewers
4.5 There is no serious problem facing golden guinea brewers
Significance Of The Study
The economic crunch recently being experienced is found all over the world and cut across all aspects of human endeavor. Nigerian being part and parcel of the world economy can in way exempt herself from what ever effects that are now being experienced by the global economic down turn. The serious effect of some governmental policies designed to cope with the economic glut not with standing.
Therefore we believe that both individuals and organization should benefit even distributors, wholesalers when they operate a sound logistical system.
Scope Limitation and Delimitations
Scope Of The Study
Golden guinea brewery was founded, as government owned Brewery Company. I shall use this company as a case study being a company founded by the federal government of Nigeria.
There are some factors that make the researchers limit their studies to using only Golden Guinea brewers.
Some of them are finance, time constraint again the sad experience we get during the collection of data, it is indeed in the face of the above problems that the researcher think it is wise to limit our study to a near by area.
This research work has been delimited to using only the golden guinea brewers as the case study due to the limitating factors of finance time and carrying out the project work while lecturers were still in progress. All these factors contribute to the delimitation of the work.
Definition Of Terms
- Logistics: In this contest, logistics is the organization of the movement of goods and services to reach the final consumers
- Distribution: This is the efficient movement of raw materials from supplier and finished goods from the end of the production to the customers.
- Wholesaler: Is a trader who purchases goods in large quantities from the manufacturer and sells in small quantities to the retailers.
- Brewers: In this contest brewers are persons who make beer
- System: This is ways of working in a company. The ways by which golden guinea brewery work in their company.
Genesis And Scope Of Logistics Of Distribution System
The word logistic is from the Greek word “LOGISIKOS” that is the science of computation or calculation logista was the title of administrative official in the Roman and Byzantine armies while the word loger” a related French word meaning billeting soldiers.
Baron Joni and early 19th century authority in his book “précis de l’aet de la Guerre (1836) defined logistics as the practical art of moving armies in which be included reconnaissance engineering and staff work”. A united state captain Alfred Thayer Maham who tried to review Jonis definition in 1882, defined logistics as the support of armed force by the economic and industrial mobilization of a nation.
By the above account it is easily discovered that the word logistics had very strong connotation with the ministry. This one can say with little fear of contradiction that the organizational concepts of logistics were developed in the armed forces.
In industries today, logistics management includes all of the functions of both materials management and physical distribution management. In the wide sense, logistics management sees a firm as a single operating system and seeks to minimize total cost operating system and handling of the final delivery of finished products to the end users.
Brewers and related firms often start their logistic planning with sales forecasting. This allows the company to formulate plans in respect to production entory level. The production planners think about the volume of raw material like malt, hop, sugar etc. to be ordered by the purchasing department and these arrive through transportation and are stored in the raw materials inventory. Raw material are converted into finished goods by making various brands of beer which we drink today. The finished beer flows off the assembly line and pass through packaging implant warehousing shipping room processing out bound transportation field warehousing to the depots customer delivery servicing.
In marketing physical distribution planning should start from marketing consideration back – ward to raw material is needed and sources.
Therefore physical distribution under the marketing though, when placed side by side with logistics, speaks the same language and a large number of practitioners prefer to describe physical distribution as market logistics
Channel Of Distribution
Distribution channels are considered to sets of institutions, which form all of the activities or functions utilized in moving a product and its brand form production to consumption point.
This is normally characterized in the beer industry according to the number of channel levels, which are institutions that perform some work to bring the product and its title to the point consumption including the producer and the ultimate consumers. Generally there are different types of such levels with varying number of intermediaries.
Direct Marketing Channel: This consists of a raw manufacturer selling directly to the consumers in the beer market. It is normally practiced under a special management between the firm and the individual. In the united state of America, beer is normally carried to such places by the firm in special tankers. In Nigeria block-moulding industry is a good example.
One Level Channel: This contains one selling intermediaries. This channel system is rarely experienced in the beer industry but abounds in other consumer markets for example; products distributed through this channel include bread, garri, ice cream, cars.
Two Level Channel: This consists of two selling units standings between the manufacturer and the consumer. It is this system that beer manufacturers use the consumer it is this system that beer manufacturer use most. Other goods distributed by this system include durable goods such as cars, ice fish, cements etc.
Three Level Channel: This is made up of three marketing intermediaries standing between the manufacturer and the final consumer. The three marketing intermediaries are the agent, wholesaler and the retailer in the beer industry, there are such things as distributors under this sensitive outlets etc.
However goods distributed under this channel include photographic material; electronic materials such as musical sets, refrigerators, generators etc.
Designing A Channel Of Distribution
The term marketing connotes two different but relates subjects that is, the search for and stimulation of buyers and the physical distribution of goods.
In developed markets logistics problems have drawn management attention and have led to examining the possibilities of increasing customer services, out performance competition and effect cost savings.
This is what is required in breweries in the country today because of the increasing cost. From freighting warehousing bills, inventory, physical movement of raw material such as malt, wheat hop etc.
FACTORS TO BEAR IN MIND WHEN SELCTION APPROACH RATE COST EFFECTIVE CHANNELS
Major Feasible Channel Alternative Must Be Distinguished:
This means taking a close examination of the type of business intermediaries who will be required at each stage in the channel flow and price policies of those intermediaries.
Channel Objectives And Constraints Must Be Determined With Accuracy.
Here consideration are centered on customer characteristics, product properties and features, ability and weaknesses of middlemen, channel utilized by competitions and environmental characteristic such as general economic condition.
Functions Of Middlemen
There are four basic reasons for the existence of the middlemen
- Economic of operational specialization
- Economic of minimum transaction
- Economic of spatial and temporal convenience
- Economic of balanced inventories
From the days of Plato to this day the basic principle of social efficiency has been recognized and outlined by Plato and other renowned thinkers.
For instance, Plato explained the functions of the middlemen in the following passage.
“Suppose an artisan brings some product to the market and he come at a time when there is no one to exchange with him, is he to leave his calling and sit idol. In the market place? Not at all. He will look for people who will undertake the office of salesmen. In well ordered state they are commonly those who are the weakest in bodily strength their duty is to be in the market and to other purpose their duty is to be in the market and to give money in exchanging for goods to those who desire to buy”
As a result of certain passages from the bible, the teaching of the early fathers of the Christian church was frequently. It was a popular word that he who is trading sells a thing for move than he pays for it, and must have paid for it less than it is worth.
Richard Canutillo also gives a food statement of the case for the middlemen. He says that what encourages and maintains entrepreneur is the fact that the consumers who are their customers prefer to my little move in order to find at hand what they need in small quantities rather than to pay in stock of.
Turget in his own view points out them that the only distinguishing factor common to them is that all buy and sell to resell. He upholds the view of Canutillo and holds that what people call profit is but the revenue they would have obtained from their capital, wages and prices of their labour of the risk and of industry.
Adam Smith in his own view sees the gain made by dealers especially during scarcity as normal and natural. He believed that the knowing the crop and market is able by raising price in times of scarcity to prevent consumption and hence grant benefit to the community at large. All these views given above held by the early thinkers with respect to the functions of middlemen are equally applicable to the case in point that is the distribution of beer.
Thus these intermediaries ensure that various brands are distributed to cover all the target markets.
They also make available the beer to the consumers in the quantities that are suitable to their individual needs.
In summary, all the above benefits derivable from the functions of middlemen are applicable in the beer industry.
Transportation And Warehousing
“Transportation and warehousing are the most important things for a successful implementation of any logistics planning” said Francis Ezeonwumelu E.S of the institute of management and technology (IMT) Enugu.
He classified transportation into five part i.e. rail Road, water, air and pipe. All these five ways in use in Nigeria but majority are not in beer industries other 80% of the logistical operations of Nigeria breweries are done by road. The rail and the sea freight are the second in the mode of transportation used in breweries the freight is the fastest of them all but is only suitable for light materials.
Things to consider before selecting a mode of transportation as part of logistic planning are:
- Cost: This will vary within a specific mode depending on a particular product being transported.
- Speed: Which is indicated by the time required to move goods from the point of origin to the destination.
- Frequency of service: The number of vehicle moving between origins and destinations per time period.
- Dependability: The ability to perform according to schedule.
- Availability: The number of geographic points to and from which the particular mode provides service.
- Operation capability: The ability to handle goods of all kinds from very large to fragile or perishable products.
The American marketing association (AMA) identified three kinds of warehouse
- Private and owned warehouse
- Private and leased warehouse
- Public warehouse
The first, which is the privately owned warehouse, is the one owned and operated by the firm that owns the merchandise handled through the facility.
A privately and leased warehousing is the case when a firm owns the goods and operates the warehouses, but does own it, which is leased from one party to another party.
Lastly, a public warehouse is owned and operated by some one other than the firm that owns the merchandise handled.
The decision to use any of the above warehouses in beer industries are predicted on two factors.
- The availability of capital and
- The degree of control required
If public warehousing is used costs are largely variable and there are fewer commitments in either assets of manpower the bad side, of this is that the user has very small control over operations.
Location of the warehouse or beer depots has a very close relationship with the requirements of production volume and market. There are three locational patterns.
- If the production site, which is very essential and common to all brewers
- Near the market as we see with most of the brewers establishing depot in most of our major cities and areas with dense population and high propensity to beer consumption.
- Between production sites and markets. This last method is not common with the brewers as it mostly suitable for large firms that serve very wide markets and use it as a supply point for other smaller depots. However, the Nigerian brewers practice this system.
The above three patterns are, not alternatives as such therefore a producer can use the three depending upon circumstance. If distance plant and warehouses are considerable a special type of warehouse called distribution centre, may be located the plans and the market and this leads to some cost benefit.
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This article was extracted from a Project Research Work Topic “LOGISTICS OF DISTRIBUTION SYSTEM IN BREWERIES (A CASE STUDY OF GLODEN GUINEA BREWERIER COMPANY) ”