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

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 subassemblies 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. 1. 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. 1. 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. 1. 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. 1. 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. 1. 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. 1. 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 equipments, materials and services.