MATERIALS MANAGEMENT AND ORGANIZATIONAL PERFORMANCE IN THE NIGERIAN ALUMINUM INDUSTRY
CHAPTER ONE
INTRODUCTION
1.1    Background to the Study
The importance of materials to efficient operation of a manufacturing organization cannot be over emphasized; in that the availability of the raw materials in the right quality and quantity will determine to a reasonable extent; the availability, quality and quantity of the resultant output.Materials management is critical to the overall performance of any manufacturing concern. Beside demand and other forces like competitor’s actions and general price index; raw material situation in terms of efficient management and effective planning determines the activity level, the turn-over and the ultimate profit in a given company. The determination of economic order quantity (EOQ), re-order level and minimum/maximum stock levels is important in raw material management in any manufacturing outfit (Olusakin.A2014).
Material management is a planned procedure that include, the purchasing, delivery, handling and minimization of waste with the aim of ensuring that requirement are met (Illingworth &Thain, 1998). Efficient material planning is a key to high productivity on site. Material planning embraces quantifying, ordering and scheduling-. Productivity will suffer if the material planning process is not executed properly (Kaming, Olomolaiye, Holt &Harris, 1997).
Organizational performance can be judged by many different constituencies, resulting in many different interpretations of “successful performance”. Each of these perspectives of organizational performance can be argued to be unique. Further, each organization has a unique set of circumstances, making performance measurement inherently situational (Cameron &Whetton, 1983).Effective and efficient functioning of the materials management has direct bearing on the total performance of the organization.
Competitiveness at the level of the firm can be defined as the ability of a firm to survive and grow, in the light of competition from other firms. Porter (1985, 1996) defines competitive advantage as the ability of a company to make products that provide more value to the consumer than rival products. This leads to higher sales and increased profits for that company.Measuring performance is a critical factor in optimizing performance. Project performance, on the surface, seems easy to measure; just track time, cost and scope and it’s done. But when we look more deeply we find that it is not that simple.
1.2 Statement of the Research Problem
Some promising investments with high rate of return had turned out to be failures and were frustrated out of business (Salandeen, 2001). This could be due to poor materials management. Many factories had been either temporarily or completely shut down Example, Nigeria paper mills ltd, jebbe, Nigeria sugar company Bacita, Kastina steel rolling mill Co.Ltd, among others. Many Nigerian workers had been thrown into unemployment market and frustratingly became dependent on relations and friends, example;Ajaokuta steel complex reduced its staff from 5000 to 1000 in 2007. Some Nigerian manufacturing firms that are still in business cannot pay dividends to shareholders in their companies, Example, Champion Breweries has not paid dividend since 1988, Golden Guinea Breweries has not paid since 1997 etc. (Salandeen, 2001). Some of these companies are still shaking in spite of their being quoted on the NSE. Some manufacturing firms were acquired by another because they could not stand alone, example Savannah. Sugar Company limited was acquired by Dangote industries limited in 2002. It is in the light of this crisis that the researcher had deemed it necessary to examine the impact of materials management on organizational performance in the Nigerian Aluminum industry. Material is the life wire of any business enterprise. It therefore requires that the way it is managed will to a large extent determine whether such enterprise can survive or not. Ineffective materials management for projects can result in significant cost blow-outs and delays in project completion. Such cost inefficiencies will negatively impact global competitiveness, and owner operators and engineering, procurement, and construction companies are trying to streamline work processes for their projects. Inaccurate materials information, such as incorrect bills of materials, inaccurate cycle counts, shipping errors, receiving errors and so on, will also affect the overall project life cycle and increase project costs. Having to deal with subcontractors outside of the materials management process impacts the overall project supply chain as there is an increased risk of data inconsistencies. Cash flow has become crucial for the survival of any business, if materials are purchased early, capital may be tied up and interest charges incurred on the excess inventory of material. Material may deteriorate during storage or be stolen; also delays and extra expense may be incurred if materials required for particular activities are not available.
Despite the importance of the materials, very little research has been directed towards understanding the management of materials from order to production; most research is focused upon the management of the design and procurement process and on labour site productivity. Materials management, which includes procurement, shop fabrication, logistics, supply chain management, production on site, and field servicing, requires special attention to achieve cost reduction.
    The management decides the best proportion of its investment in both fixed and current assets and finally her liability level to enable improvement and correction of imbalances in the liquidity position of the firm. Therefore, it seems important to look into the above problem to know how to encourage managers so that their companies can stand the test of time.
1.3    Research Questions
The following research questions have been formed and will be answered at the end of the work
1.    To what extent does production planning influence organization performance?
2.    To what extent does material control influence organizational performance?
3.    To what extent does purchasing influence organizational performance?
4.    To what extent does stock ordering influence organizational performance?
1.4    Objectives of the Study
The broad objective of the study is to investigate the relationship between materials management, project performance and competitive advantage. It is to examine how each of materials management indicator influences project performance and competitive advantage, and to determine whether the link between material management and competitive advantage is mediated by project performance. The specific objectives of the study are to
1.    Determine the extent to which production planning influence organization performance.
2.    Investigate the extent to which material controlinfluence organizational performance.
3.    Ascertain the extent to which purchasing influence organizational performance.
4.    Find the extent to which Stock Ordering influence organizational performance.
1.5    Research Hypotheses
H1: Materials management practices do not have a significant relationship with organizational performance.
H2: Materials management practices do not influence organizational performance.
1.6    Significance of the Study
The study will be of important to Aluminum industry and the general public because it would not only clarify but also create awareness of the extent to which inadequacies in materials management can affect project performance. The project will also help contractors, clients and all parties involved in building projects on the best method of materials management.
This research will also serve as a resource data base to other scholars and researchers interested in carrying out further research in this field subsequently, if applied will go to an extent to provide new explanation to the topic.
1.7    Scope of the Study
This research work on the impact of materials management on organizational performance in the Nigerian Aluminum Industry is limited to what is happening in the Nigerian Aluminum Company, precisely Benin City and would span from 2010 to 2015. In carrying out this research, the researcher would make use of a combination of sampling techniques such as cluster sampling and stratified random sampling to obtain information from the management and staff of the company that deals primarily with Aluminum materials.