ABSTRACT
The rice industry in Abia state is growing exponentially, it is yet to fully maximize it potentials in terms of logistics management practices (warehousing, storage facilities, transportation, physical distribution) to consumers and low cost of distribution. Only in a simplest marketing system will a producer sell directly to the final consumer. Therefore, it is in view of this that the study considers it imperative to look at the logistic management practices and marketing performance of rice distributors in Abia State. The broad objective of the study is to examine the effect of logistics management practices and marketing performance of rice distributors in Abia state. The specific objectives are to: ascertain the effect of transportation on sales volume, determine the effect of warehousing on distribution of rice, examine the relationship between physical distribution and customer loyalty as it affects rice distributors, effect of other logistic management related practices (business experience, cost of personnel management, market share) on warehouse volume capacities of the rice distributors in Abia state and effect of pooled costs of operation of logistic management practices on the profit performance of rice distributors. The study was carried out is Abia State of Nigeria. Survey research design was adopted for these study, 30 respondents selected from each of the two major cities in the State namely; Aba and Umuahia metropolis making a total of 60 respondents. Primary data was collected via the administration of well-structured questionnaires and data was analysed using simple regression, correlation models, probit, profitability ratio and multiple regression. The regression result showed that transportation is negatively significant at 1%. Warehousing is positively significant at 1%. The correlation result showed a strong positive relationship between physical distribution and customer loyalty of rice distributors in Abia state. There is a significant effect of other logistic management related practices (business experience, cost of personnel management, market share) on warehouse volume capacities of the rice distributors in Abia state. There is a significant effect of pooled costs of operation of logistic management practices on the profit performance of rice distributors.In line with the findings of this work the researcher concluded that logistics management practices have significant influence on marketing performance of rice distributors in the study area. More so, in the area of cost, its cost implication is equally high, however, it can be managed to certain minimal level that can bring about cost effectiveness. Efforts should be consolidated in maximizing logistics management practices and distribution system (transportation, warehouses, and physical distribution). This is a bold step in achieving improve efficiency of operations and save cost. Rice distributors in Abia state should at all-time determine the best practice in managing logistics and distribution system. This is because optimum application of logistics management and distribution resources will guarantee customer satisfaction which in turn will yield loyalty and retention.
TABLE OF CONTENTS
Title page i
Declaration ii
Certification iii
Dedication iv
Acknowledgement v
Abstract xii
CHAPTER 1
INTRODUCTION
1.1 Background of the Study 1
1.2 Statement of the Problem 3
1.3 Objectives of the Study 4
1.4 Research Question 5
1.5 Research Hypotheses 6
1.6 Significance of the Study 6
1.7 Scope of the Study 7
1.8 Limitation of Study 7
1.9 Definition of Operational Terms 7
CHAPTER 2
REVIEW OF RELATED LITERATURE
2.1. Conceptual Framework 9
2.1.1. Cost of operation 10
2.1.2. Profitability 10
2.1.3. Transportation 11
2.1.4. Sales volume 12
2.1.5. Warehousing 12
2.1.6. Distribution 13
2.1.7. Physical distribution 13
2.1.8. Customer loyalty 14
2.1.9. Relationship between cost of operation and marketing performance 15
2.1.10. Relationship between transportation and marketing performance 15
2.1.11. Relationship between warehousing and marketing performance 15
2.1.12. Relationship between physical distribution and marketing performance 16
2.2. Theoretical Framework 17
2.2.1. Expectancy theory of motivation: Fred C. Lunenburg (2011) 17
2.2.2. Theory of constraints: Dr Elyahu Goldratt (1980) 18
2.2.3 Maslow’s hierarchy of needs: Maslow, A. H. (1954) 19
2.2.4. Inventory theory: Jaime Zappone (2006) 21
2.3. Empirical Framework 22
2.3.1. Analysis of income gap between wholesalers and retailers of rice marketing 22
in Abia State, Nigeria.
2.3.2. Profitability analysis of rice processing and marketing in Kano State, Nigeria. 23
2.3.3. Socio-economic analysis of wholesale rice marketers in Abia State, Nigeria. 24
2.3.4. Performance of rice market in Ebonyi State, Nigeria. 24
2.3.5. Analysis of the performance of paddy rice marketing in Benue State, Nigeria. 25
2.3.6. Economic analysis of rice marketing margin in Adani Uzo-Uwani local 25
Government area of Enugu State, Nigeria.
2.3.7. Managing logistics and distribution system in the Nigerian cement industry. 26
2.3.8. Economics of milled rice marketing in Gombe metropolis, Gombe state, Nigeria. 26
2.3.9. Economics of rice production and marketing in Nigeria 27
2.3.10. Profitability in rice marketing along the marketing channel in Benue 27
State of Nigeria.
2.4. Summary of Literature 28
CHAPTER 3
METHODOLOGY 29
3.1. Research Design 29
3.2. Area for the Study 29
3.3. Population for the Study 29
3.4. Sample and Sampling Techniques 30
3.5. Sample Size Determination 30
3.6. Validation of the Instrument 30
3.7. Reliability of the Instrument 30
3.9. Method of data Collection 30
3.10. Methods of Data Analysis 31
CHAPTER 4
RESULTS AND DISCUSSION 36
4.1. Data Presentation and Analysis 36
4.2. Socio- Economic Characteristics of Rice Distributors 37
4.2.1. Distribution of Respondents According to Age 37
4.2.2. Distribution of Respondents According to Gender 38
4.2.3. Distribution of Respondents According to Education 38
4.2.4. Distribution of Respondents According to Business Experience 39
4.2.5. Distribution of Respondents According to Scale of Operation 40
4.2.6. Distribution of Respondents According to Credit Access 40
4.2.7. Distribution of Respondents According to Employees 41
4.3. Effect of Cost of Operation on Profitability of Rice Distributors. 42
4.4. Effect of Transportation on Sales Volume of Rice Distributors in Abia State 43
4.5. Effect of Warehousing on Distribution of Rice in Abia State 44
4.6. Relationship between Physical Distribution and Customer Loyalty in Abia State. 45
4.7. Factors Influencing Logistics Management Practices of the Rice Distributors 46
4.8. Factors Influencing Profitability and Sales Volume among the Rice Distributors in 47
Abia State.
4.9 Test of the Hypotheses 49
CHAPTER 5
SUMMARY OF FINDINGS, CONCLUSION AND RECOMMENDATIONS 53
5.1. Introduction 53
5.2. Summary of Findings 53
5.3. Conclusion 55
5.4. Recommendations 56
LIST OF TABLES
4.1. Distribution of questionnaires 36-42
4.3. Cost and returns analysis on profitability of rice distributors 42
CHAPTER 1
` INTRODUCTION
1.1 BACKGROUND OF THE STUDY
In recent times, rice globally has established a place in food security and it has quality cultural identity as an essential staple food (Nwachukwu, Oteh, Udenwoke, & Ebere, 2015). It is the fastest growing commodity in Nigeria’s food basket (Akande, 2003) with an annual consumption growth rate of 4.4% (IFDC, 2008). In West Africa sub-region,Nigeria is the largest producer of rice in the continent of Africa (Oyinbo, Omolehin & Abdulsalam, 2013); but its demand has outstripped supply which is due to government policies on rice production and importation in Nigeria.
Marketing of rice involves all the activities of the movement of rice from the point of production to the point where it is needed by the final consumer in the desired form and at the appropriate time (Bassey, Okon & Ibok, 2013). Availability of food is one of the element of food reliability and warranty a healthy and fruitful nation, (FAO, 2008). According to FAO (2008) and Inuwa, Kyiogwom, Ala, Maikasuwa & Ibrahim (2011), many people depend on rice for about 80 percent of their calorie requirement; as a result, there is hardly any nation in the world where it is not utilized in one form or the other.
In Nigeria, rice is among the few food items whose consumption has no cultural, religious, ethnic or geographical boundary (Ibitoye, Idoko, & Shaibu, 2014). Consequently, its demand and consumption have continued to record significant changes with increase in population beyond all socio-economic classes (Ogunsumi, Ajayi, Amire & Williams, 2013). But unfortunately, rice production in Nigeria has not kept pace with the increasing population. The growing rate of food sub-sector is 2.0 percent annually while the rate of annual population growth is 3.3 percent (NBS, 2002).This will have great implication on logistics. But supply is limited to match demand with multiplier impact on production, price, availability, distribution, information and feedback; this means that a wide gap exists between demand, supply and marketing performance of rice distributors in Abia state, Nigeria.
Performance can be defined as the completion of a task with application of knowledge, skills and abilities. The marketing performance can be reflected from the acquisition of market share, growth in market share, sales growth, profit growth and the end customer (Egan, 2010). But such may not be fully achieved without creating a proper logistics management plan, good marketing channels and good customer service system by the rice distributors.
Customer service is the process of ensuring customer satisfaction with a product or service. And it involves all contact with the customer, be it face-to-face, or indirect contact with high quality service and assistance before, during, and after the customer's requirements are met (i.e. dealing with complaint letters).
According to Jamier (2002), “Customer service is a group of activities creates to increase the level of customer satisfaction; that is, the idea that customer expectation over a product or service has been met. Therefore, it is now left for the rice distributors in Abia state to design a good logistic system that will enhance customer satisfaction.
A good logistics system consist of logistics services, information systems, resources, and infrastructure; and has to be managed very well in order to deliver final products in the exact quantities at the required time and quality at the right place and at a suitable price to the end users. Council of Logistics Management in (2013) defined logistics as the process of efficient planning, controlling implementing, and cost effective flow of raw materials, inventory, finished product and related information from the point of production to the point of consumption for the purpose of satisfying customer requirements. Logistics describes all process involve in the movement of goods and materials moving into, through and out of organization. While inbound logistics covers the movement of material received from suppliers. Materials management explains the movement of materials and elements within a firm. The outward movement of goods from the assembly line to the customer is described as physical distribution. And it also has two main objective strategies; cost reduction and service improvement.
Rice distributors ensures the flow of rice from producers to the wholesalers/retailers and then to the final users in the form, time and place of need. Although the fact that, marketing provide the means of meeting the necessities involves the movement of goods and services; and therefore has an important multiplier effect in the development of any economy. It is a continuous worry which as a results of unorganized and inefficiency in marketing system of rice distributors in Abia state, Nigeria which arising for logistics management problems such as transportation, storage, inventory, warehousing, processing, seasonal variations, quality and communication.
Thus, rice distributors in Abia state have to initiate a good logistics management practices which will strengthen the reliability of the product, speed of delivery, need for improvement of service quality, redefining of idea in order to enhance cost effectiveness in distribution and efficiency in marketing performance on rice distribution system of Abia state Nigeria, i.e. good transportation system, warehousing, inventory management etc.
1.2 STATEMENT OF THE PROBLEM
One of the major functions of logistic management on marketing performance is to effectively plan for distribution of goods and service delivery to the consumption point (customers) and at the right time. However, the state of infrastructure and bad logistic management practices of rice distributors in Abia State have caused serious challenge to the enterprise. Due to the poor condition of our major roads, the cost of moving goods from one location to another especially in rural region becomes very high. Another problem it is the difficulty of measuring logistics success and it is quite difficult to show contribution of logistics to the company and the value-added created by means of logistics. We have to take into a consideration many different data, sources and measures. But logistics effectiveness is more than costs and cost reduction. According to Bhagwat and Sharma (2009), logistics performance is among the main challenges faced by today's companies. Other challenges include, for example, customer service, strategic partnerships, inventory management and logistics flow management, reducing cycle times and geographical coverage along with flexibility Li, Ragu-Nathan, Ragu-Nathan & Rao (2006). These challenges arise mostly from the decentralization of production systems, leading companies to move towards the development of basic skills and the need to implement efficient and effective management of logistic activities.
Although, the rice industry in Abia state is growing exponentially, it is yet to fully maximize it potentials in terms of logistics management practices (warehousing, storage facilities, transportation, timely product delivery) to consumers and low cost of distribution.
Therefore, it is in view of this that the study considers it imperative to look at the logistic management practices and marketing performance of rice distributors in Abia State.
1.3 OBJECTIVES OF THE STUDY
The broad objective of the study is to ascertain the effect of logistics management practices and marketing performance of rice distributors in Abia state, Nigeria. The specific objectives of this study are to:
i. ascertain the effect of transportation cost on sales volume of rice distributors in Abia state, Nigeria.
ii. determine the effect of warehousing on sales volume of rice distributors in Abia state.
iii. examine the relationship between timely product delivery and customer loyalty as it affects rice distributors.
iv. examine the relationship between logistics management practices and the firms performance of rice distributors.
v. examine effect of pooled costs of operation of logistic management practices on the marketing performance of rice distributors.
1.4 RESEARCH QUESTIONS
To give the study a sharp focus and effectively guide its prosecution, the following questions were formulated;
i. What is the effect of transportation cost on sales volume of rice distributors in Abia state, Nigeria?
ii. What is the effect of warehousing on sales volume of rice distributors in Abia state?
iii. What is the relationship between timely product delivery and customer loyalty as it affects rice distributors?
iv. What is the relationship between logistics management practices and the firm’s performance?
v. What is the effect of pooled costs of operation of logistic management practices on the marketing performance of rice distributors?
1.5 HYPOTHESES
In consonance with the statement of the problem, the research objectives and the research questions, it is hypothesized in this study that:
H01: there is no significant effect of transportation cost on sales volume of rice distributors in Abia state, Nigeria.
H02: there is no significant effect of warehousing on sales volume of rice distributors in Abia state.
H03: there is no significant relationship between timely product delivery and customer loyalty as it affects rice distributors in Abia state.
H04: there is no significant relationship between logistics management practices and the firm’s performance.
H05: there is no significant effect of pooled costs of operation of logistic management practices on the marketing performance of rice distributors.
1.6 SIGNIFICANCE OF THE STUDY
The study was to examine the logistics management practices and marketing performance of rice distributors in Abia state. However, many group or people stand to benefit from the study such as marketers, customers, dealers, academic institution, government etc.
i. Marketers: Marketers will use this research work as a core competent in the marketing of rice, so as to gain competitive advantage over other marketers.
ii. Customers: The information provided in this study will help to guide customers of this product during purchase.
iii. Dealers: The dealers of rice distribution will use the information provided in the research as a guide during and after distribution, and these will help them to develop new strategy for efficient and effective distribution.
iv. Academic institutions: They will use as a further research, especially those who have interest in this study.
v. Government: Government will use this research for policy making in the state.
1.7 SCOPE OF THE STUDY
The study was delimited to rice distributors in Abia state, with specific distribution strategy of rice. The marketing performance of rice emphasized on cost reduction, service improvement, returns on investment, performance, the price efficiency of rice, logistics management, transportation, inventory management, as well as warehousing.
Geographically the study will cover 2 major cities in Abia state, namely Aba and Umuahia.
1.8 LIMITATIONS OF THE STUDY
The researcher in the course of this study, which was based on Logistics Management Practices and Marketing Performance of Rice Distributors in Abia state, encountered some challenges which affected the efficiency and effectiveness in the realization of data for the achievement of the research objectives which can eventually affect the generalization of results obtained from the findings. Some of them are poor attitude from some of the respondents in given out information, the scope of the study, statistical models used for the analysis of data.
1.9 DEFINITION OF OPERATIONAL TERMS
Logistics: Logistics is the management of the flow of things between the point of origin and the point of consumption in order to meet requirements of customers or corporations.
Management: Management is the process of dealing with or controlling things or people.
Marketing: Marketing ismanagement process through which goods and services move from concept to the customer. Also, it is a form of communication between you and your customers with the goal of selling your product or service to them.
Distribution: Distribution is the process of moving a product or service from its manufacturing source to its customers.
Performance: Performance is the accomplishment of a given task measured against preset known standards of accuracy, completeness, cost, and speed.
Practices: The actual application or use of an idea, belief, or method, as opposed to theories relating to it.
Logistics management: Logistics management is the part of supply chain management that plans, implements, and controls the efficient, effective forward, and reverse flow and storage of goods, services, and related information between the point of origin and the point of consumption in order to meet customer's requirements.
Marketing performance: Marketing Performance is a measure of the results achieved by the company or business from marketing activities or the operation of the company (Clark, et al., 2006, Zinkhan, 2002).
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