VARIETY REDUCTION AS A TOOL FOR EFFECTIVE MATERIAL CONTROL (A CASE STUDY OF NIGERIA BOTTLING COMPANY PLC)

Abstract

This research study is based on variety reduction as a tool for effective material control, a case study of Nigeria Bottling Company Plc. To understand the research work better, efforts was made at the introductory stage to explain the general importance of variety reduction with special consideration being placed on company especially Nigeria Bottling Company Plc, Kaduna. Also the general problem was also emphasized on such non recognition of the role of variety reduction on storage of different articles that can serve the same purpose. Effort was also made to identify the purpose of the study such as the degree of importance attached to variety reduction, areas covered by variety reduction and its operational activities. It also focused on its significance to the organization, the academics, the populace and the researcher. Research question were also generated to determine the importance the organization placed on variety reduction and how variety reduction facilitate the organization operational efficiency. The survey research design is employed; also simple random sampling procedure was employed. The researcher used questionnaire and documentary sources. The likert four rating scale technique is used to analyze the data, findings made among which are, that the organization considered variety reduction to facilitate the organizational efficiency and that the variety reduction minimizes cost and avoid storing the same item that can serve the same purpose in making material available in the store. However, the researcher summarized and concluded the research study and made recommendations to the company, amongst which are formulation of variety reduction policy to align with the vision and mission of the organization, always employed a competent hand to handle variety reduction activities, to strive as much as possible to create a variety reduction unit to be controlled by a qualified store manager, purchasing and supply officer and engineer.

Table of Contents

Title                                                                                                                            i

Approval                                                                                                                   ii

Declaration                                                                                                               iii

Dedication                                                                                                                 iv

Acknowledgement                                                                                                   v

Abstract                                                                                                                     vii

Chapter One: Introduction

1.1             Background of the Study                                                                            1

1.2             Statement of the Problem                                                                            2

1.3             Objectives of the Study                                                                               3

1.4             Significance of the Study                                                                            4

1.5             Scope of the Study                                                                                       5

1.6             Research Question                                                                                       6

1.7             Definition of Terms                                                                                     7

Chapter Two: Literature Review

2.1             Conceptual Framework of Variety Reduction                                         9

2.2             Stages of Variety Reduction                                                                       18

2.3             Areas covered in Variety Reduction                                                         19

2.4             Reasons for Variety Reduction                                                                  21

2.5             Benefits/Advantages and Disadvantages of Variety Reduction        21

2.6             Why should the variety be controlled                                                      24 

2.7             How does Variety Reduction tend to Increase                                        24

2.8             How to Control Variety Reduction                                                           25

2.9             Materials Control                                                                                         26

Chapter Three: Research Methodology

3.1             Area of Study                                                                                                27

3.2             Research Design                                                                                           28

3.3             Population of the Study                                                                              29

3.4             Sample for Data Collection                                       29

3.5             Instruments for Data Collection                                                                30

3.6             Administration of the Instrument                                                              30

3.7             Techniques for Analyzing Data                                                                 31

Chapter Four: Presentation and Analysis of Data

4.1             Presentation of Results                                                                               33

Chapter Five: Summary, Discussion, Conclusion and Recommendation

5.1             Summary of Procedure                                                                                43

5.2             Discussion of Finding                                                                                 44

5.3             Implication of Finding                                                                                 46

5.4             Conclusions                                                                                                  47

5.5             Recommendations                                                                                       48

5.6             Suggestion for Further Study                                                                     49

Bibliography                                                 50

Appendix                  

CHAPTER I: Introduction

1.1             Background of the Study

Variety reduction can be applied to any production process. The technique certainly has more effect if applied in the right place and at the right time.

Apparently in many organization, it is clearly to see organization be it manufacturing holding different number of types, size or grade of a product that can perform the same function, this means duplication of items, the cost of materials is the last remaining cost that is truly variable, a reduction in the cost of material clearly offers on usual opportunity for profit improvement, therefore the need for purchasing to minimize  waste and enhance maximum services within the organization has resulted in the use of variety reduction. Variety reduction can make a substantial savings in inventory by standardizing and rationalizing the range of materials, parts and component kept in store. Variety reduction can be achieved by using, so far as possible, standardized components and sub assemblies to make end products that are dissimilar in appearance and performance so that variety of final products uses only a few basic components, variety reduction can also be applied when considering capital purchases, by ensuring compatibility with existing machinery, the range of spares carried to ensure against breakdowns can be substantially reduced also variety reduction can be undertaken periodically to examine arrange of stock items to determine

the intended use for each item of stock, how many stock item serve the same purpose, the extent to which items having the same purpose can be gives a standard description, what range of sizes is essential and lastly what items can be eliminated all these are done to ensure effective material control. Therefore, variety reduction can be defined as “the process of reducing the number of types, size or grades of a product that are purchase made or stocked (Hassan 2008 p. 445).

1.2             Statement of Problems

Among the objectives of all private sector is to maximize profit and reduce costs. These objectives can be achieved in material control aspect of the organization by imploring a strategy that will help or ensure that the number of types, sizes or grades of a product held in the organization are not duplicated when purchased, this will help in investing minimum cost on materials. But is quite unfortunate that these objectives are rarely achieved as a result of non recognition of the role of variety reduction in an organization as a tool for effective material control.

Variety reduction is the process used to describe standardization and simplification where different items that are capable of performing the same function are carried in large quantities, variety reduction is required but hardly did any organization take cognizance of this vital function as a tool for effective material control, as a result many organizations continue to hold materials, parts, items that are similar and capable of performing the same function this affect the material control unit of the organization efficiency be holding excess stock.

Variety reduction helps to reduce the number of varieties in the store, it also help to stipulate suitability of purpose, reduce the stock held and its associated cost another importance of variety reduction is to establish datum as a basis for development, but despite all these importance of variety reduction to an organization the researcher observed that most organization lost foresight of this important function that required a proactive approach for better control of materials held in an organization.

Also variety reduction assist the organization in avoiding buying different types of item that can serve the purpose, quicker and effective stock taking, reduce obsolete, overhead cost, it also facilitate easier inspection due to product uniformity and easier stock control and less storage space required, in view of all these benefits of variety reduction to an organization, the researcher observed that hardly can any organization show a unit or professionals bestowed with the responsibility of performing this vital function as a result many of these benefits are not derived by organizations.

1.3             Objectives of the Study

The purpose of embarking on this research work by the researcher is to determine the effect of variety reduction on materials control.

Specifically, the research work is set out;

-                     To determine the areas covered by variety reduction in an organization is, Nigeria Bottling Company Plc Kaduna.

-                     To determine stages of variety reduction that can facilitate the organization’s operational efficiency.

-                     To determine if the benefit of variety reduction can minimize cost in the organization.

-                     To determine if the reasons for variety reduction can improve quality production in the organization.

-                     To determine why variety reduction should be control through the importance attached to variety reduction.

1.4             Significance of the Study

This study will bring to light the effect of variety reduction on materials control in Nigeria Bottling Company Plc Kaduna plant.

The study will also be of great benefit to potential investors, those in academics, other researcher in business management fields and the entire populace.

The significance of the research work to the organization is to provide them with relevant information on how important variety reduction is in facilitating organizational efficiency, productivity and materials control and also to change their orientation in terms of how best to manage, maintain and handle their material or inventory level and this will also be applicable to other industries that is into production activities.

The study will also be of immense benefit to the potential investors, in the sense that it will provide them with freehand information on how important variety reduction is in promoting material flow. In the academics, the research work can stand as a study material and reference book they can consult to broaden their knowledge on what it meant by variety reduction.

The research work will also serve as a reference book to the other researcher on this type of project topic. To the entire populace, come across this research work, the research work will provide them with the knowledge on how important variety reduction is to an organization and it will also add value to their knowledge.

The research work is embarked on by the researcher to broaden and ad value to his knowledge on variety reduction on materials control.

Lastly, the research work is also a requirement in fulfillment for the award of Higher National Diploma in Purchasing and Supply Department of Kaduna Polytechnic.

1.5             Scope of the Study

This research work is based on variety reduction as a tool for effective material control. A case study of Nigeria Bottling Company Plc Kaduna plant which is situated at Kaduna South industrial layout Kaduna, Kaduna State.

The researcher intends to examine the extent to which variety reduction techniques if applicable may lead to effective material controls in the organization.

The findings of this research work will primarily base on the data collected from the staff of the plant draw from the stores, design, production, suppliers and purchasing and supply personnel of Nigeria Bottling Company Plc Kaduna Plant.

1.6             Research Questions

This study will attempt to provide answers to the following research questions:

-         What are the areas covered by variety reduction?

-         To what extent the stages of  variety reduction facilitate the organization operational efficiency?

-         How the benefit of variety reduction does minimizes cost in the organization?

-         How do reasons for variety reduction improve quality production in the organization?

-         What importance does the organization attach to variety reduction?

1.7             Definition of Terms

Material Control: Is a key activity which covers a wide range of different tasks from the moment the product is designed up to and including its final delivery.

Standardization: Is a process of reducing the number of varieties stocked to a controlled workable minimum.

Simplification: Is the elimination of all labour and materials that are absolutely essentials so that more effective production can be carried out.

Redundancy: Is the excess over the normal holding of stock.

Surplus Materials: Having more than what is required or necessary.

Variety Reduction: Is the process of reducing the number of types, size or grades of a product that are purchased, made or stocked.

Store: Is a place where goods are kept upon onward delivery.

Suppliers: Those that supply or makes material available to an organization when needed and when required.

Value: Is the cost from which the function of a product or service may be obtained or accomplished at a form or place with the require quality.

Value Engineering: This is simply the application of value technique to a ‘new’ product, process, components and system, commencing with the conceptual design or prototype stage of the product.

Value Analysis: Is a tool or technique for identifying unnecessary cost factors with a view to eliminating or reducing them.

Cost: What it takes to make or buy a certain material or product.

Organization: Is the process of dividing work into convenient tasks or duties, by creating and maintaining like-groups to achieve specific objectives.

Personnel: The human resources and labour relations function.

Purchasing: The buying of required equipment, materials and services.