THE ROLE OF RAW MATERIAL SELECTION IN SMALL SCALE INDUSTRIES (A CASE STUDY OF DANMODI FOODS PROCESSING LTD, KAFIN HAUSA)

CHAPTER ONE

1.0 INTRODUCTION

The ascertainment of raw materials selection is of basic importance to small scale industries in particular, because it is a very important element of selection. Raw Material selection of a particular job depends on the price at which material is purchased.

Manufacturing industries especially small scale industries incur different types of selection to produce a unit of output. Such selection includes material selection, labour selection and other selections. Among them materials selection, are most important because in many enterprise such selections are greater than all other selection combined together. Material is one of the most important elements of production apart from the selection of labour to produce the product.

The ingredient and amount of money invested in the production of a product, the ingredient of the product would be the thing that incurs material selection. The combination of material selection together with the selection of labour helps to determine the total selection of a product, and the eventual and actual sales price of a company product. Material selection in production industries are used to help and understand the value of inputs and output in a production process by tracking and categorizing the information according to rigorous (accuracy) of accounting system. Corporate management can determine with a high degree of accuracy, the selection per unit of production and other key performance indicators.

Management of the organization needs this information in order to make and form decision about production level, pricing, competitive strategy, future investment and a host of other concern. Such information is primarily necessary for internal use, or management accounting for decision making because material selection is very important in the life of any production enterprise being it the-large industry or small scale business which is our concern in this research. Thus whole aspect and exercise of material selection in an enterprises are classified under; valuation of purchase and pricing of material issues etc.

1.1            BACKGOUND OF THE CASE STUDY AREA

Danmodi Food processing limited was established in 2007 at Gambawa quarters, along hospital road in Kafin Hausa Local Government, Jigawa state, Nigeria.

The company started with a small scale grinding-machine operated for commercial use with only three staff, year later, the company became expanded to rice processing firm and employed more than thirty-staff. The  Company and Allied Matters Act (CAMA) 1990, with Alh. Umar Namadi and Dr. Abdullahi Namadi as directors respectively.

However, the company as a small scale firm has five functional departments that run its production activities. These include the; Administration, production, marketing/sales, account and lastly maintenance departments, each carrying out different functions for the company.

1.2       STATEMENT OF THE RESEARCH PROBLEM

All other the world, inadequate access to finance in one of the major problem in habiting the establishment and growth of small business firms. The finance problem of the small business firms is more serious in the developing countries then develop countries, developing countries like Nigeria.

There is need for improve ways of financing the small business firm, but at the same time this need are difficult to safety.

For long time new, the medium and large scale firms have been receiving more financing alternature at the expenses of the small firms while the Nigerian industrial Development Bank (NIDB) and the Nigeria Bank for Commerce and Industries (NBCI) reserve their financial assistance for the medium and large scale enterprises, the small business firms cannot be said to have such special development institution set society to enter for their financial need.

The small scale business/industries in Nigeria have other problem apart from that of financial managerial inefficiency is one of such problem other include lack of infrastructure, facilities, mobility to attack skilled manpower, poor making and in accurate accounting record keeping.

Increase emphasis a self-reliant approach to development and great attention paid to aspect of development other then investment and output growth.

Therefore, this research work is intended to find out the role of raw-material selection in small scale industries.

1.3       AIM AND OBJECTIVES OF THE STUDY

The main aim of this research is to point out the role of raw materials selection in a small scale industry, and also use the following specific objective;

i.                   To determine whether raw material selection plays any role in small scale industries.

ii.                 To examine the effect of poor selection of material and control procedure in determining effective profit.

iii.              To identify why most of the small scale business are not selection their product properly and effectively.

iv.              To highlight the problems that is facing small scale industries as a result of improper selection of raw-materials.

v.                 To suggest ways and proper solution in which the knowledge of material selection in selection the product can assist in solving the problem being faced by small scale industries and hence improved their growth and development.

1.4  RESEARCH HYPOTHESIS

A hypothesis is a set of preposition to explain the subject under study in short and brief statement or words. It is also a set of general aspect of the problem understudy.

The null hypothesis: is usually denoted by the symbol H₀, and alternative hypothesis is usually denoted by the symbol H₁, the formulation of hypothesis lead to tentative assumption, of the problem to be investigated.

i.                   Null Hypothesis

H₀:- Material selection does not play an important role "in economic development of small scale industries in Nigeria.

ii.                 Alternative Hypothesis

H₁: Material selection plays an important role m the economic development of small scale industries in Nigeria.

1.5       SIGNIFICANCE OF THE STUDY

The significance of research or study is to enable the researcher to highlight the role of material selection in the industrialization development in Nigeria and also this research would be significant to Danmodi Food Limited management as it enable them to understand the environment with which they operate and it would also offer practical solutions to the problem encountered by small scale industries. This research work would however be beneficial to some or all of the following:

i.                   Shareholders

ii.                 Management

iii.              Staff

iv.               Students

v.                 Potential investors

vi.               Academic institutions

vii.            Government

1.6  SCOPE AND LIMITATION OF THE STUDY

This research work is intended and aimed to cover up the role of raw material selection in small scale industries. It is however restricted to some selected small scale industries in Jigawa State. The research work would pay its attention to “Danmodi Food processing Limited Kafin Hausa as the area of the study.

The content of this project is limited to the role of material selecting in small scale industries, in Nigeria other limitations are explained vividly as

i.                   Academic Activities

The fact that exams are taking place during the conduct of this research work constrained my research work, as it is not easy to cover wide areas.

ii.                 Time

Time is one of the major factors that constrained the research work, because the research is to be conducted in specified period of time and so covering large area is not possible which lead to narrowing the scope of my work to Kafin Hausa Local Government where the company is located.

iii.              Finance

One other problem faced in time of conducting this research work is finance, lack of funds as a student during the process of conducting this research as well as high transport fare from one place to another prompted me to limit my research work.

1.7  DEFINATION OF THE TERMS

i.                   Role: This can be defined and seen as the type of functions or duties that a particular something or somebody plays in a particular field.

ii.                 Raw: This refer to a product or material that is not yet processed or cooked

iii.              Material: The term materials include physical commodities used to make the final end product in a manufacturing industry. It is however define as any commodities item used by a particular company or industry to produce another product or to change it and transform into finished goods.

iv.              Selection: The process of choosing from a group things, usually according to a system.

v.                 Small Scale Industry: In Nigeria, small scale industries is defined as a small business whose total asset in capital equipment and work capital are less than ₦50,000 and employing fewer than 50 full time workers.

According to Bangkok,(1959) defined it as that firm operated mainly with hired labour usually not exceeding 50 workers without the use of motive power or 20 workers where motive power is used.