AN ASSESSEMENT OF MATERIAL MANAGEMENT ON THE

PROFITABILITY OF MANUFACTURING COMPANIES IN LIBERIA:

(A CASE STUDY ON THE LIPFOCO MATTRESS FACTORY)

Amelia W. Wellington
18-01-05-3552

A RESEARCH PROPOSAL SUBMITTED TO THE FACULTY OF THE DAVE

WEIGLEY COLLEGE OF BUSINESS AND PUBLIC

ADMINISTRATION IN PARTIAL FULFILLMENT OF
REQUIREMENTS FOR THE AWARD OF BACHELORS’
DEGREE IN PROCUREMENT MANAGEMENT
ADVENTISTS UNIVERSITY OF WEST AFRICA.
Lower Margibi County

BEING A RESEARCH PROJECT SUBMITTED TO MR Adama Gross

November 2021

CHAPTER ONE

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1.1 Background of the Study

Sindhu (2014) offers that Material Management is simply the process by which an

organization is supplied with the goods and services that it needs to achieve its objectives of

buying, storage and movement of material, Materials management is that aspect of business

activity that deals with planning for purchasing, receiving, handling, storing, and releasing of

materials for use in production with effective control measures. Materials are industrial goods

that will become part of another physical product. Rumelt (1981) has classified materials for

use in manufacture under three headings: Raw materials primarily from agriculture and the

various extractive industries e.g. mineral resources, fruits, and vegetables sold to processor. –

semi finished goods and processed materials to which some work has been applied or value

e.g. rods, wires, paper, chemicals, etc. – component parts and assemblies that are completely

finished products of one manufacture, which can be used as part of more complex product by

another manufactures.

Sindhu (2014) Materials management is a tool that can be used effectively in promoting

profit maximization in a company. The objective of materials management is to maximize the

use of the firms’ resources by ensuring adequate supply of materials for production process

and also minimizing cost of holding excessive inventories. This objective when achieved,

leads to cost reduction and improve profitability. The researcher, therefore, intend to examine

materials management on the profitability of manufacturing companies in Liberia, with

Lipfoco Mattress Factory as a case source.

Bull (2016) The Lipfoco is purely Liberian owned business seeking to improve the quality in

services provided to the Liberian Business Community by the means of offering clients

service with quality, precision efficiency and the overall reward in giving our clients their

money worth. Our services are general manufacturing, home improvement and renovation.

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Remodeling. We provide good service to any person or group of persons without regards to

personality, financial standing or value or service. We accept and treat all with equality.

1.2 Statement of the Problem

The mismanagement of material has been a challenge to every manufacturing company of

which Lipfoco mattress factory is of no exception. The mismanagement of material has

created these problems and not limited to the manufacturing of substandard goods

These problem have the ability to undermine the growth for development and advancement

of the company when not handle professionally and urgently

Materials management decreases waste for the organization. With a good materials

management practice and organization can improve

There can be some common pitfalls and challenges that could result in material delays if this

is not done correctly. Some challenges include inaccurate or partial bill of materials listing

from the engineering firm, engineering requisition issue and purchase order revisions and

inaccuracies.

The researcher observed that material is not manage properly as a result of such

manufacturing companies in Liberia are not yielding much profit, despite all the strives that

have been made in delivery and management of material in the manufacturing companies in

Liberia, it is still observed that the managing of materials is not functioning as effectively as

expected. This seemed to be a problem, therefore the problem of the study expressed in a

question form is: how does material management affect the profit margin of manufacturing

companies in Liberia? It is predicated on these that the researcher seeks to embark on this

study.

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1.3 Objective of the Study

The main objective of the study is to examine material management on the profitability of

manufacturing companies in Liberia. The specific objectives are:

1. To analyze the material management control adopted by the Lipfoco Mattress

Factory.

2. Examine material management through inventory control techniques.

3. Evaluate the improvement level on the manufacturing factories in Liberia.

1.4 Significance of the Study

The study is important because there is an urgent need for more systematic and empirical

efforts to investigate the role of Material Management on the profit margin of manufacturing

factories in Liberia.

The study is important to manufacturing practitioners since the findings will assist them have

an Insight on how to manage material leading to greater achievement and improved the

performance of manufacturing factories as a vital plan to increase in growth of economy in

Liberia. This research further provided them with vital information of which they can build

on in effort to regulate and align material management process appropriately.

The result and recommendations of the study will help manufacturing practitioners in

decision making and enable them to regulate material management in the manufacturing

factories.

The study will also generate the new knowledge and facts to help manufacturing practitioners

regarding the strengthening of the delivery schedule within the manufacturing factories.

The findings of this study are as well of great value to researchers and academicians as this

research added to other scholars’ literature and knowledge gap in material management and

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filled the existing gaps as far as profitability is concerned and therefore, avail them with

option for further research in relation to performance based on Material Management.

Finally, the study wil1help academicians and practitioners endeavoring to embark on similar

research.

1.5 Research Question

The research question is the question form of the specify objectives:

1. What are the weaknesses and strengths of the Leadership of the Company in scope

of the study?

2. What are the causes and effects of the factory losing customer during the period

under review?

3. How can these problems be well handled to move the factory forward?

1.6 Definition of Key Terms

Manufacture: is the process of producing goods

Inventory control: The sum of the value of raw materials, fuel and lubricants, spare parts,

maintenance consumables at any given point of time building.

Inventory planning: refers to the process that an organization adopts to determine the

optimal quantity as well as timing. With the sole aim of aligning such plans with the

organization capacity to produced and make sales.

Lead Time: The time the purchase order is place until the time the goods arrived.

Material: They are the physical items needed for producing goods and services.

Profitability: the degree to which a business or activity yields profit or financial gain.

Purchasing: is a business o organization attempting to acquire goods or services to

accomplish its goals.

Procuring: obtain (something). Especially PR with care or effort.

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Purchase requisition: a document used as part P the accounting process to initiate

merchandise or supply purchase.

Requisition: an official order laying claim to the use of property or materials.

Stock: the goods or merchandise kept on the premises of a business or warehouse and

available for sale or distribution.

Sourcing: is the stage that comes before any purchases are made and can be considered a

subsection of the procurement department.

Warehousing: the practice or process of storing goods in a warehouse

1.7 Scope (Delimitation) and Limitation of the Study

The study will focus on the examination of material management on the profitability of

manufacturing factories in Liberia. The researcher will use the Lipfoco Mattress Factory as

an area of focus.

The research study will cover the entire Lipfoco Mattress Factory located in Bushrod Island,

Bong Mines Bridge. All departments of the company will be involved and both management

and staff of the company will be sampled in the collection of data for the study. 2018- 2020 is

being captured as the timeframe of the study.

1.8 Organization of the Study

The study is organized into three (3) chapters. The first Chapter consists of background to the

study which provides an overview of the effect of material management and follows by the

statement of the problem. Provide the objectives of the study, significant of the study, states

the research questions. Definition of key terms, scope or delimitation of the study and

organization the study. Chapter two of the study will give the review of related literature on

topic under discussion. In this section, concepts and ideas are drawn from various text books,

journals, annual reports, and from efforts undertaken by international development

institutions. In this chapter, the researcher reviewed the literatures from various contexts and

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experiences. Chapter three presented the research methodology. This chapter will include the

research design that will be used, gives the population of the study, and states the sample size

and sampling techniques to be used.

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 CHAPTER TWO

REVIEW OF RELATED LITERATURE

2.0 Introduction

This chapter presents the existing literature review on material management and profitability

on manufacturing companies in Liberia. Specifically, this chapter covers the theoretical

review Material management and the challenges that affect these materials on the profit

margin of manufacturing companies. The conceptual framework will also be covered in this

section.

Applicable theoretical frameworks will be adopted for the study in this chapter.

The study will also supply the Annotated Bibliographies

2.1 Conceptual Review

The materials management system attempts to ensure that the right quality and quantity of

materials are appropriately selected, purchased, delivered and handled on site in a timely

manner and at a reasonable cost. Materials management is the system for planning and

controlling all of the efforts necessary to ensure that the correct quality and quantity of

materials are properly specified in a timely manner, are obtained at a reasonable cost and

most importantly are available at the point of use when required. Thus Materials management

is an important element in project management. Materials represent a major expense in

manufacturing, so minimizing procurement costs improves opportunities for reducing the

overall project costs.

Concept of Material Management

(Mathew 2015)Material management can be defined as a process that coordinates planning,

assessing the requirement, sourcing, purchasing, transporting, storing and controlling of

materials, minimizing the wastage and optimizing the profitability by reducing cost of

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material. Building materials account for 60 to 70 percent of direct cost of a project or a

facility, the remaining 30 to 40 percent being the labor cost. Materials management is a

process for planning executive and controlling field and office activities in manufacturing.

The goal of materials management is to ensure that manufacturing materials are available at

their point of use when needed.

(Kanimozhi and Latha 2014) Warehousing and storage records need to be utilized for

accepting issuing merchandise on client offices. The vast majority about these documents

need to be responsible and ought to be secured against unapproved right of use. Warehousing

and storage records ought to further to be figured out how inside the acquisition cycle and

their overseeing of economy to a chance to be coordinated for those records that relate to

economic project of a procuring processes. The records / acquisition management officers

need supervisory to facilitate any obligations for the administration of storage records. It may

be crucial that store records need to be appropriately kept in a systematic manner.

2.2 Function of Materials Management

Robert ( 2012) The functions of materials management are discussed below: In order to fulfill

the objectives of materials management as stated above to meet the basic objectives and

goals, the functions of the materials management are also categorized as primary and

secondary functions. (I) Primary Functions to meet the primary objectives, the primary

functions of the materials management are given as follows: Materials Requirements

Planning (MRP), Purchasing Inventory Planning and Control, Ascertaining and Maintaining

the Flow and Supply of Material, Departmental Efficiency, (II) Secondary Functions,

Standardization and Simplification Make and Buy Decisions, Coding and Classification of

Materials, Forecasting and Planning

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(Madhavi, Mathew et al. 2013) It will be especially paramount to have end to end

coordination of efforts within the officers that are answerable for the overseeing the economy

for procurement accounts and records.

The records administration branches clinched alongside procurement must give acceptable

course and authority in the management about storage records close by different records in

different entities (PPOA, 2008).

Components of material management are: Material estimation, budgeting, planning and

programming, Scheduling, purchasing and procurement

 Receiving and inspection.

 Inventory control, storage and warehousing

 Material handling and transport

 Waste management

2.3. Overview of Effect of Material Management

Madhavi,(2013) emphasized on the problems related to improper material procurement

process. Construction project cost may vary depending on material, manpower,

subcontractor, overhead cost and other general issues.

Kanimozhi(2014) Poor Materials management can result in increased costs during

construction. Efficient management of materials can result in substantial savings in project

costs. If materials are purchased too early, capital may be held up and interest charges

incurred on the excess inventory of materials. Materials may deteriorate during storage or get

stolen unless special care is taken. Delays and extras expenses may be incurred if materials

required for particular activities are unavailable. Ensuring a timely flow of materials is an

important concern of material management. For effectively managing and controlling

materials, the performance of materials management should be measured. A performance

measure calculates the effective working of a function. These performance measures may

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differ from system to system. The measures divide the materials management system in parts

and make the working of the system more efficient. When joined, the measures make the

complete materials management system

2.4 Objective of Materials Management

Efficient materials planning, Buying or Purchasing, Procuring and receiving, Storing and

inventory control, Supply and distribution of materials, Quality assurance, Goods supplier

and customer relationship

It is necessary to establish harmony and good co-ordination between all the employees of

material management department and this department should have good co-ordination with

the other departments of the organization to serve all production centers.

2.5 Empirical Literature Review

Etale and Bingilar (2016) examined effect of inventory cost management on profitability of

listed manufacturing companies in Liberia will be use. Secondary data from the annual

reports and accounts of selected manufacturing companies from the Liberia Stock Exchange

from 2018 to 2020 will be used in the study. Using the multiple regression technique, the

study found that efficient inventory cost management has a positive effect on profitability of

manufacturing companies in Liberia. The study recommended that manufacturing companies

should adopt effective and efficient inventory cost management practices; deploy appropriate

modern technology for effective inventory cost management; and employ capable and

qualified staff who should be trained regularly on proper and efficient material cost

management.

Naliaka and Namusonge (2015) investigated the role of material management on competitive

advantage for Liberian manufacturing firms. A descriptive research design will be use in the

study. Self-administered questionnaires will he use in data collection. The findings of the

study will be revealing that inventory control systems, information technology, inventory

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lead-time and inventory control practices are vital factors in achievement of a competitive

advantage for Liberian’s construction companies.

Sitienei and Kioko (2015) examined the effect of working capital management on the

profitability of cement manufacturing firm in Liberia. The study wills us secondary data for a

15 years period from 2004 to 2018. The study establishes that material conversion period

positively and significantly influences profitability while average receivables period had a

positive insignificant relationship with profitability. The study also

Nwosu (2014) examined the impact of materials management on profitability of Liberia

Manufacturing companies. The study will use questionnaire and oral interviews to collect

data. The study establishes that materials procurement and storage has significant effect on

profitability on manufacturing companies

2.6 Project Management

(NICMAR. Pune 2015) Special training sessions should be arranged on site to update the

workers regarding the latest techniques. Plant and machinery should be updated regularly in

order to avoid any break down. Workers and contractors should be guided for correct

methodology to execute a particular task. Regular check should be kept on planning so as to

overcome any error. Proper supervision should be done on site to improve the level of

workmanship. Taylor (2014) pointed out that the economic losses caused by material waste

are smaller than those related to the inefficiency of human work. Ford (2016) also suggested

that human work should be the focus of waste convention since the value of materials

depends, to a great extent, on the work that has been spent on them. Berliner B. says project

control in many companies is based mostly on financial performance measures, which tend to

be backward focused and do not make it easy to trace operational costs.

2.7 Bench Marking Processes

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According to Agarwal Anil (NICMAR. Pune 2015) benchmarking processes and techniques

can be applied to develop benchmarks for wastage control of building materials. After

selection of project, the following steps are adopted. Work out estimates of quantities of

materials required either from the first or final drawings. From site records/ accounts records,

actual quantities of material consumed is obtained. Interviews are held with project managers

and owners concerned to collect other related information.

2.7.1 Planning

The most commonly used basis for planning things out for the project is the BOQ prepared

by the client. Companies may have two major levels in planning- micro and macro level.

Time, cost, material and labour are the four major types of planning undertaken on sites. The

planning should be revised as frequently as possible in order to monitor whether work is

progressing as planned.

2.7.2 Purchasing

According to Ninad Shah and Manish Dave (2016) Purchasing procedure can be described as

below:

Step 1 – Material Indent Step

2 – Enquiry to Vendors Step

3 – Vender Comparison Step

4 - Vendor Selection and Negotiations Step

5 - Purchase Order Step

6 - Vendor Evaluation

2.7.3 Receiving

According to Sundersan, M. (2014) the receipt system can be divided into:

1. Receipt from outside suppliers

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2. Receipts from internal divisions. System of receipt starts even before the material

reaches the site. The three documents that should he dispatched are copy of purchase

order, supplier’s advice document and the consignment note. This enables the Stores

manager to organize and plan for clearances of materials. For receipt from internal

divisions, usually transfer notes and return to stores documents are used.

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2.9 Summary of Literature Review and Knowledge Gaps Scholars

Study Major Findings Knowledge Gap

(Mathew 201 5) overview of material management and Nature of material management was

found to have significant variations in construction companies. The study focused Inventory

control, storage and warehousing, Material handling, transport, purchasing, Material

estimation, budgeting, planning and programming.

Madhavi, Mathew et al. (2013) Effect of Material Management on the profitability of

construction companies in Liberia

There were significant relationship between material planning and service delivery and that

the positive profitability of construction companies in Liberia attributed by proper private

material planning.

This study did not outline how construction practitioner should monitor, control, and train

their employees but investigated practices such as material planning, service delivery, and

performance measure.

2.10 Conceptual Framework

Conceptual framework is used to show the relationship between the independent variables

and dependent variable. Figure

Profitability is the dependent variable which can he measured through productivity; cost

saved, quality of goods/services d1ivered, and leads time.

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 CHAPTER THREE

RESEARCH METHODOLOGY

3.0 Introduction

This chapter focuses on the research method, research design, population of the study, data

collection, sampling size and techniques, instrument of the study validity of the study, ethical

consideration and method of data analysis.

3.1 Research method

A quantitative and qualitative research method will be used in the study.

3.2 Research Design

The adopt survey research design. This will include the use of questionnaires and personal

interviews to generate relevant and reliable information from the identified entity on the

examination of material management and lead time performance

3.3 Population of the study

Population in the context of research methodology is the total representation of a target group

of the study about whom data must be collected, presented and analyzed for the making of

intelligent and realistic conclusions.

The population of this study will include the administrators and staff of the Lipfoco mattress

factory of 200 persons; of which 75 of them are occupying administrative positions while the

remaining 125 are staff members.

3.4 sample size sampling techniques

Sample size is defined as a total representation of the population in every way. The sample as

representative of the population is expected to provide or produce relevant data, facts,

knowledge, information or statistics about the population in terms of education, age, income,

family size, and etc to be used in the computation of the data of the population. The

Representativeness of the sample is predicated upon the sampling method and the adequacy

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of the sample size (Agbonifoh and Yomere, 1999). Hence in keeping with research

methodology practice in view of the population size; 30 % of population will be considered

as the sample size for this study totaling to 60 persons; that include 25 administrators and 35

staffs to fully represent the population of the Integrated group of Contractor

3.5Instrument of the Study

Questionnaire is the main data-gathering instrument of this study. Structure close end

questions will be administered to respondents.

Interview will be also used as an instrument of the study

3.6 Validity of the instrument

To validate the instrument, the researcher is to consult his supervisor, lecturers of the Dave

Weigley Business College of the Adventist University Of West Africa and practitioners in the

field.

Very important to the research process are the data collection instruments such as expert

opinions, observations, interviews and survey questionnaires (Agbonifoh and Yomere,

1999).In keeping with the research methodology of this study, the researcher will distribute

survey questionnaires to the 60 respondents or participants that are Administrators and staffs

of the Lipfoco mattress factory for the purpose Of data collection for the study.

3.7 Method of Data Analysis

To analyze the data the computer software known as statistical package for the social

sciences (SPSS) version 21 will be used.

3.8 Ethical Consideration

The ethical guideline of the Dave Weigley Business School, Adventist University of West

Africa will be approved by Mr. Adama A. Gross The research will uphold respondent

confidentiality and protects their identities and character

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REFERENCES

Ahmad Zeb, Daud Khan, Muhammad Sajid and Sikandar Bilal Khattak(20] 7), Inventory

Analysis Of Construction Project, Proceedings of The First International Conference on

Industrial Engineering and Management Applications

Acharya, Jitendra. , Thesis Materials management for the construction sector, CEPT

Agarwal, Anil. (2001), “Benchmarking wastage control of construction materials”, NICMAR

journal of Construction Management, Vol 16, No.1, January 2001

A. K. Datta, “Materials Management: Procedures, text and cases, Rev. Ed. “, New Delhi:

B. Applications in — Journal of Optimization Theory Application, vol. 124, no. 1, pp.

137-155,32 .2015] C. T Formoso, L. S. M. ASCE, C. De Cesare, and E. L. Isatto,

“Materials waste in building industry: Main causes and prevention”, Journal of

Construction Engineering and Management, vol. 128(4), pp. 316-325, 2015.

Baldva, Surbhi. (1997) Thesis, Material management in construction industry, CEP

Buffa, F/wood., Production inventory systems: planning and control 5. Bhatt, Navjot

Singh., Thesis, Material planning

S. Sindhu, K.Nirmalkumar, V.Krishnamoorthy (2014), Performance Analysis of Inventory

Management System in Construction Industries in India, International Journal of Innovative

Research in Science. Engineering and Technology,

Sabri, E. (2015). Optimization of Supply Chain Management in Contemporary Organizations.

Dallas: IGI

Global. International Academic Journal of Procurement and Supply Chain Management

Prentice-Hall,2014.] Q. Feng, G. Gallego,et al., “Periodic-Review Inventory Model with

three consecutive delivery modes and forecast updates”: Journal of Optimization Theory and

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