CHAPTER ONE

Introduction

1.1             Background to the Study

Transportation usually represents the most important element in logistics cost for most firms. Freight movement has been observed to absorb between one-third and two third of total logistics cost. (Ballou 2004). Thus the logistician needs a good understanding of transport matters.

Again transport is the very life and blood of business management and commerce. The purchase man’s job is not complete until and unless he ensures that the materials are shipped to the vendors premised located on a different area of his location.

As the organization grows in size transportation became very crucial, and effectiveness depends  upon the knowledge of alternatives, their rates, schedules, merits and demerits for all types of materials coming from diverse sources such as, local, regional, national or international. In the light of this, organization must seek constant improvement in transportation with a view to cutting down cost associated to it. Achieving a greater speed, better quality of services due to technological changes in transportation, and handling purchasing and logistics management.

The importance of this function in business logistics and to the society at large is better understood and appreciated if we imagine life without it. That is, the problem that will emanates from the inability to move from one place to

Another, the most important role of transportation in business is that it makes goods and services available to customers wherever they are and at the time they need it. It is the knowledge of these factors, problem and importance of transportation that will form the background of this study.

1.2       Statement of the Problem  

Transportation is the life of integrated logistics and control of which is paramount to the long term survival of the organization. Just like every other concept in business and management, transportation is also faced with some problem as regards making goods and materials available to the customers as at when needed.

Lack of skilled and qualified individuals to handle transportation matter for the organization is also a major problem observed. The wrong persons are often selected to handle matters relating to transportation. However the need for professionals is treated with reckless abandon because the function is viewed as casual activity that should be performed by any one. Only one way we can go is to start to correct the situation We have to remember that perception can be stronger than reality Logistics in many companies is not really understood It can be viewed in wrong or narrow terms To change the perspective, we must define what logistics is and does Then define it in terms consistent with how the company talks It is not an easy task But it can be beneficial, especially when outsourcing is an option to the company. Transport of products is often the way that logistics is viewed in many companies But there is more. Moves of products should complement the company strategy If the emphasis is on cost reduction, lower inventories, customer service or whatever, then products must move in a way that is consistent with the emphasis. Product must also flow not just move if it does not flow then there is not a supply pipeline. Transfer of Information It is not enough to move product and materials we must know where they are we must know what orders are coming in and when they must be delivered. Information (timely and accurate) is vital for sound decision-

making he views of Time. Ability to respond to the dynamics of the global marketplace must be quick. Raw materials and components must be ordered and arrive completely, accurately and quickly. Orders must be filled completely, accurately and quickly. Cost is the key measure by which logistics effectiveness is often measured The highest price does not mean the best service, and it may not be the service we need. Nor does the lowest price necessarily meet our needs. There is no doubt about how important costs are. But the company must be careful. Minimising the cost of the various logistics elements, such as freight and warehousing can sub optimize the effectiveness of the logistics group and of the company in satisfying its customers.

Lastly, the problem of poor record keeping as most at times records of transportation schedules are not taken and will subsequently affect annual fleet checks.

1.3       Objectives of the Study

The main objective of the study is to assess the impact of transportation and logistics on the profitability of listed beverages manufacturing firms, other specific objectives includes to:

i.                    Identify the objectives of transportation set by the organization.

ii.                 Investigate the various methods of transportation and logistics used by organization.

iii.                examine how logistics can enhance materials availability

iv.               Assess the problems facing transportation in organizations.

1.4       Research Questions

In order to achieve the objective, the following research questions are formulated and assessed:

i.           What are the objectives of transportation set by the organisations?

ii.        What are the various methods of transportation adopted by the organization?

iii.      How does transportation enhance materials availability?

iv.      What are the problems of transportation in the organization?

1.5       Significance of the Study

            The study is significant to the following individuals.

The research work will be useful to Nigeria Bottling Company Plc and other beverage industry stakeholders, as it will provide them with information on how to plan and implement transportations issues with regards to making materials available. The study will also reveal contemporary knowledge in transport management, which can be applied for optimal performance and competitiveness.

The research work will also benefit prospective researchers who may find findings of this research work as a point of reference especially for those intending to carry out further research on the related subject matter under study. The research work will also benefit the researcher as it serves as a pre-requisite for the partial fulfilment for the award of postgraduate Diploma in procurement and supply chain management in Kaduna State University

1.6       Scope of the Study

This study is restricted to Nigerian Bottling Company plc. it also focuses on the transportation and logistics and it covers a period of (2009-2014) The study will also be limited to the subject matter i.e. the impact of transportation on cost reduction in Nigerian Bottling company plc. Kaduna other areas of interest include: Concept of transportation, Benefits of transportation, Modes of transportation, Factors to consider in selecting mode or carrier, Containerization, Computer technology, Duties and responsibilitiesof transport manager, Duties of a driver, cost structure and cost reduction techniques.

1.7       Definition of the key Terms

Air transport: It involves the movement of people and goods by air.

Common carriers: is aservices been offered by shipper to transport products at published rates between designated points.

Computer: is a general-purpose device that can be programmed to carry out a set of arithmetic or logical operations automatically.

Contract Carriers: is a for-hire carrier that does not hold its self out to serve the general public; instead, it serves a limited number of shippers under specific contracted agreements.

Containerization:is large steel framed boxes used to store goods for movement from one place to another.

Costs: An amount that has to be paid or given up in order to get something.

 

Disposal logistics: has as its main function to reduce logistics cost(s) and enhance service(s) related to the disposal of waste produced during the operation of a business.

Distribution logistics: has as main tasks, the delivery of the finished products to the customer.

Emergency logistics: is a term used by the logistics, supply chain, and manufacturing industries to denote specific time-critical modes of transport used to move goods

Exempt Carriers: the virtue of their ownership and the goods they deal in or services it means that they are exempted from some restrictions, and they enjoy certain privileges that the common and contract carriers don’t enjoy.

Fishy Back: is the combination of ship and trucks and/or contain to move goods. 

Green Logistic: describes all attempts to measure and minimize the ecological impact of logistics activities.

Logistics:“the work that is required to move and position inventory throughout a supply chain

            NBC: Nigerian bottling company plc.

            Own Account Carriers: is generally not for hire and is not subject to government economic regulations it means that a firm is providing transportation load the transport equipment and operating its own facilities.

Piggy Back: is a specialized system of transportation using containers in which rail and road transport coordinate to facilitate the movement of good.

Procurement logistics: consists of activities such as market research, requirements planning, make-or-buy decisions, supplier management

Production logistics: aims to ensure that each machine and workstation receives the right product in the right quantity and quality at the right time.

Pipe-Line Transport: offers a product to move by pipelines

through inland water way / rivers and canals.

Rail Transportation:  involves the use of trains for moving materials and people from one place to another.

Reverse logistics:denotes all those operations related to the reuse of products and material.

Road: Transport by land movement of people and good by the road

Transportation: the movement of people, materials, finished goods and other items across the supply chain.

Technology:is the application of knowledge to the practical aims of human life or to changing and manipulating the human environment

 

Water transportation: Moving from one part of the country to another

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