THE IMPACT OF MATERIAL MANAGEMENT PRACTICE ON

ORGANIZATIONAL PRODUCTIVITY IN CASE OF HOSSANA FLOUR

FACTORY, HOSSANA, ETHIOPIA.

A Research Paper Submitted to Department of Management Department in

Partial Fulfilment of the Requirements for the Award of Bachelor of Arts
(BA) Degree In Management

BY: KIDIST DESTA

ADVISOR: NIGATU (MA)

WACHEMO UNIVERSITY

COLLEGE OF BUSINESS AND ECONOMICS

DEPARTMENT OF MANAGEMENT

JUNE ,2023

HOSSANA , ETHIOPIA
Declaration
I, the under signed declare that this research is my original work that has not been presented by
any governmental institutions as well as private, so that all of its source are available by my
effort acknowledged
Kidist Desta
Signature------------------------
Date----------------------------------
ACKNOWLEDGEMENT
Before any other things, the one I want to thanks in all my life is the “Almighty God” since all
things has been done by him. Next I would like to express my deepest gratitude pleasure and
appreciation to my advisor Mr. Nigatu. for his great contribution in giving an advice deeply
about the concept of research project. My special heartfelt gratitude goes to Hossana Flour
Factory manager who have provided all necessary information for my paper. Finally my special
gratitude goes to respondents of this research for provided necessary information for my paper.
Abstract
The study was conducted on topic, the impact of material management practice on
organizational productivity in Hossana Flour Factory. Material management has great
importance for company, in reduction of unnecessary cost and enhancing organizational
productivity. Even if the practice of material management has importance on organizational
productivity. It faced by problems that affect productivity. Like law availability of material
management practice, inadequate storage house for material and products. The main objective
of this study is to assess the impact of managerial management practice on organizational
productivity in Hossana Flour Factory. In order to conduct the study, the researcher used
descriptive approach, survey method is used to collect data and the researcher uses both
primary and secondary sources data. Primary source are obtained by questionnaire for
employers and interview with managers of the company. And secondary source obtained from
review of company document and the researcher use simple random sampling techniques to
conduct the study. After questionnaires were collected and interview taken from manager the
data would be put in table by frequency and percentage and then finally analyze and
interpretation of data are occurred.
 Table of Content

ACKNOWLEDGEMENT-----------------------------------------------------------------------------------ii
Abstract--------------------------------------------------------------------------------------------------------iii
CHAPTER ONE----------------------------------------------------------------------------------------------1
1INTRODUCTION-------------------------------------------------------------------------------------------1
1.1Background of the Study------------------------------------------------------------------------------1
1.2 Statement Of The Problem---------------------------------------------------------------------------2
1.3 Research Question-------------------------------------------------------------------------------------2
1.4 Objective Of The Study-------------------------------------------------------------------------------3
1.4.1General Objective------------------------------------------------------------------------------------3
1.4.2 Specific Objective-----------------------------------------------------------------------------------3
1.5 Significant Of The Study-----------------------------------------------------------------------------3
1.6 Scope of the study-------------------------------------------------------------------------------------3
1.7 Limitation of the study--------------------------------------------------------------------------------3
1.8Organization of the paper------------------------------------------------------------------------------4
Chapter Two---------------------------------------------------------------------------------------------------5
2Review Of Related Literature------------------------------------------------------------------------------5
2.1 Theoretical Background-------------------------------------------------------------------------------5
2.1.1 Concept Of Material Management----------------------------------------------------------------6
2.2 Objectives Of Material Management----------------------------------------------------------------6
2.3 Organizational Structure Of Material Department------------------------------------------------7
2.3.1 The Structure Of Material Management department-------------------------------------------7
2.3.2 Importance Of Material Management------------------------------------------------------------8
2.4 Function Of Material Management-----------------------------------------------------------------8
2.4.1 Inventory Arrangement and Control--------------------------------------------------------------8
2.4.2 Material coding and classification-----------------------------------------------------------------8
2.4.3 Purchasing--------------------------------------------------------------------------------------------8
2.4.4 Receiving, inspection and storing----------------------------------------------------------------11
2.5 Material Management Department Activity That Lead To Law Productivity---------------12
2.6 Productivity Measurement--------------------------------------------------------------------------12
2.7 The Impact Material Management On Productivity---------------------------------------------12
 2.8 Concept Of Just In Time Delivery-----------------------------------------------------------------13
CHAPTER THREE-----------------------------------------------------------------------------------------15
3 RESEARCH METHODOLOGY-----------------------------------------------------------------------15
3.1Research Design---------------------------------------------------------------------------------------16
3.2 Types Of Data And Source-------------------------------------------------------------------------16
3.3 Method Of Data Collection-------------------------------------------------------------------------16
3.4 Sampling Techniques And Sample Size Determination----------------------------------------16
3.5 Data Analysis Method-------------------------------------------------------------------------------17
CHAPTER FOUR-------------------------------------------------------------------------------------------18
4 DATA ANALYSIS AND INTERPRETATION------------------------------------------------------18
4.1 Demographic Information---------------------------------------------------------------------------18
4.2 Material Managerial Practice and Inspection Mechanism--------------------------------------19
4.3 Purchase Condition And Item Classification-----------------------------------------------------21
4.4 Inventory Control Section Information And Inventory Control System----------------------22
4.5 The Impact of Material Management And The Experience Of Management----------------23
4.6 Appropriateness Of Material Management And Presence Of Storage House/Warehouse- 25
4.7 Data Analysis Through Interview------------------------------------------------------------------26
CHAPTER FIVE--------------------------------------------------------------------------------------------28
5. CONCLUSION AND RECOMMENDATION------------------------------------------------------28
5.1 Conclusion--------------------------------------------------------------------------------------------28
5.2 Recommendation-------------------------------------------------------------------------------------28
Reference-----------------------------------------------------------------------------------------------------30
 CHAPTER ONE

1INTRODUCTION
1.1Background of the Study
According to Singh (2008) material management is connected with maintaining adequate supply
of material. These materials classified as raw material, work in process, finished goods.

Material management is concerned with the planning and programming of material and
equipment, market research for purchase, predesigned value analyst, procurement of all material,
store control and inventory control. The material management form of the organization can be
utilized with purchasing and supply management concept or unique combination of them
(Gospel Krishna and dunaresan, 1997: 12).

The most significant factor in the success of any business is the management of the company as
the whole. This involves putting a deficit maximum control on major function of the business for
the success of the company. material management is one of the major function which play very
vital role production and productivity (Doublers and Burt, 1996:21).

Productivity is the quality of being or having the productivity power to produce the product,
productivity is the measure of efficiency of the production, it is the ratio of what is produced to
what is required (Ibid).

In majority of the company the cost of material exceeds 50% of total cost of goods produced,
such large investment required considerable planning and control so as to minimize the wastage
which invariably affect the performance of the organization (Rama Krishna, 2005).

The various type of material to be managed in organization include purchased material, work in
progress (WIP), raw material and finished good (Banjoko, 2009). Ogbadu (2009), identified
basic, price, purchasing cost, marketing cost, obsolesce and wastage are the various cost
involved in these material. Thus the management of these materials so as to reduce the cost
associated with these is referred to as material management.
1.2 Statement Of The Problem
According to wild (1995) material management is the concept which brings together the
responsibility for determining the manufacturing requirement that is scheduling the
manufacturing process and procuring, storing and dispensing material.

Material management is an integrated management approach to the planning, purchasing,

warehousing, stock keeping, allocation and movement of needed material from point of source to
user department (Baker, 1989).

The concept of material management is comparatively, new concepts in our country Ethiopia
which is not always clear and distinctive activity and not all organization have formally
designated (Ibid).

According to the claim of the company the ultimate objective of the organization is to realize a
profit to exit in the market for long period through producing quality product. Effective control
of material throughout manufacturing cycle, help to achieve this ultimate objective. Hossana
Flour Factory is the new plant wich start operation in 1995. It is a leading company in production
of pasta, flours, and macaroni and biscuit products by covering 70% of country demand of these
products. Then in order to continue with this performance and to increase in productivity,
management of material is needed.

The importance of material management for company is reduction of unnecessary cost and result
a significant saving, enhancing of organizational productivity. Even if the practice material
management have importance on organizational productivity, It face problem that affect
productivity like, law availability material management practice, inadequate storage house for
products, poor inspection of raw material, no just in time delivery of raw material from supplier
and finished good to customer, lack of continuity of supply of product to the market,
incorrectness of inventory control system are some factor. Taking these problems into account
the study tries to investigate the impact of material management on organizational productivity
and to point out some solution to problem that hampers the organizational effectiveness.

1.3 Research Question

- Does material management have impact on organizational productivity?
- Is there appropriate storage space (warehouse) in the company?
 - What inspection mechanism Hossana Flour Factory Use?
- Is there any inventory control system in the company?

1.4 Objective of the Study

1.4.1General objective
The general objectivity of the study is to assess the impact of material management practice on
organizational productivity in Hossana Flour Factory.

1.4.2 Specific Objective

- To indicate the impact of material management on organizational productivity.
- To identify the existence of appropriate storage/warehouse for material
- To indicate the inspection mechanism Hossana Flour Factory uses.
- To identify the inventory control system in the company.

1.5 Significant of the Study

- To give additional insight for other researcher to make future study on the issue and
provide better view of material management and inventory control section
- To evaluate the company material management strength and weakness, and take
corrective measure on weakness to keep up it by improving more.
- The research also helps the researcher to change theoretical knowledge to practical one.

1.6 Scope of the study

The boundaries of the study would be limited to Hossana Flour Factory and cannot go further to
other similar organization from January one up to June thirty on investigation of material
management practice on organization productivity.

1.7 Limitation of the study

Every study has made of every aspect is not fully completed due to some reason. One of the
reasons would be setting of boundaries for the study and cannot study outside of the boundaries,
the study also focus on specific area, lack of available source on study, since the concept material
management is new in our country that is not formally designated, and unwillingness of some
respondents to give detail information about the issue under consideration.
1.8 Organization of the paper
The whole aspect of the study is better to put under five chapter, the first chapter deal the
introduction part, the second would be review related literature, the third chapter is about
methodology part, the fourth is about data analysis and interpretation and the final chapter is
about conclusion and recommendation are organization of the study.
 CHAPTER TWO

2 REVIEW OF RELATED LITERATURE

2.1 Theoretical Background
Baker (1989) identified five key functional areas that material management cuts across which
include purchasing, production and inventory control, storage and warehouse and physical
distribution. Other literature (Donald, 1975, why Bark And William, 1986, Linton etal, 2007)
expanded the areas to include forecasting demand and quantity material requirement, good
supplier and customer relationship. Inadequate source of supply for foreign material, developing
skill of worker in material management, improved departmental efficiency and material
management department, research and development material management. These activities are
managed by the material management department. selection of personal for marketing,
purchasing, inventory control, store management and material handling and their training and
placement is also to be seen by the material management department.

Material are the life blood and heart of any manufacturing system and no organization can
operate without them. They must be made available at the right price, at right quantity, at the
right quality, in the right place, at the right time in order to coordinate and schedule the
production activity in an integrative way for an industrial undertaking. A manufacturing firm will
remain shaky if material are under stocked, overstocked or in dry way poorly managed (Bonioko,
2000).

According to Naval and Berkovich (2006) the main logistic responsibility in any organization is
to formulate master program for the timely provision of material, component and work n
progress. Stevenson (2001) explain that logistics including material and goods flowing in and out
of production facilities as well as its internal handling has become very important to an
organization to acquire competitive advantage as the complains struggle to deliver the right
products at correct time and place.

The main aim is to actually promote, with low cost, a flow whose velocity allows the execution
of manufacturing process with expected satisfaction level. Boer’s ox and Closs (2002) articulated
that improvement in continuity of supply with reduced lead time will lead to improvement in
cooperation and will also enhance corporation and communication with reduced duplication of
efforts, reduction in material cost and improvement in quality control, which are the main benefit
of material management.

2.1.1 Concept Of Material Management

Material management is a tool to optimize performance in meeting service requirement at the
same time adding to profitability by minimizing cost and making the best use of available
resources. The basic objective of material management as explained by Bonjoko (2000) and
Jacobs etal… (2009) is to ensure that the right item is bought and made available to the
manufacturing operation at the right time, at right place and at the lowest possible cost.

According to wild (1995) material management is a concept which bring together the
responsibility for determine the manufacturing requirement that is scheduling the manufacturing
process and procuring. Storing and dispensing material (Wild, 1995 Indie, 2009). An integrated
approach to material management defines it as the function responsible for the coordination of
planning, sourcing, purchasing, moving, starting and controlling material in an optimum manner
so as to provide predetermined service to the customer at a minimum cost (Rama Krishna, 2005,
Gopal Krishna and Sanderson, 2006). These definition provide the scope of material
management which include material requirement planning (MRP) decision on purchasing,
procumbent of material, inventory management staffing store and warehouse management,
production and distribution of finished goods at minimum cost due to time (Osotimehin, 2006,
Monday, 2008, Ogbadu, 2009).

2.2 Objectives Of Material Management

There are many objectives of material management

 To maintain steady flow of material to ensure uninterrupted production and any

disruption affect cost of the product
 To achieve economy in cost of material by adopting cost reduction techniques like value
analysis, Just in time, MRP. Etc.
 To ensure consistency of quality by providing right material of right quality, at right
quantity, at right time.
 To improve inventory control through scientific inventory control techniques
 To improve corporate image by maintain good buyers and seller relation
  To improve competitive strength
 To reduce operating cost by minimizing wastage and improving productivity of material
(Ibid)

2.3 Organizational Structure Of Material Department

Structuring material management in organization depend on several factors, including type of
organization and size of the organization. Deferent organization required deferent structure for
material management. Business organization do not structure material management department
as non business one do.

2.3.1 The Structure of Material Management department

The material management department should be placed at top management function. Typical
organization structures are exhibit below.

Managing Director

Production Marketing Material Finance Personnel

Director Director Director Director Director

Purchasing Traffic Central Store Inventory

receiving control
Depending up on the company operation and its environment many variation of organization
span are feasible (Gospel) Krishnan and Sundoresan (1997).

2.3.2 Importance of Material Management

Effective material management system can have brought numerous advantages for organization
in competitive business. Such as reducing overall cost of material, better handling of material,
reduction is duplicated order, material will be on site when needed and in the quantity required,
improvement labor productivity quality control, better relation with supplier, reduce of material
surplus, labor saving and better cash flow management and stock reduction purchase saving
(Ibid).

2.4 Function of Material Management

2.4.1 Inventory Arrangement and Control
The inventory arrangement would mean the purchase of material to store before entering the
production stage or sold out. Such that the stock cost is zero, there are three kinds of inventories:
a, raw material b, purchased good c, finished component. This inventory cantor is the
responsibility of the material management department, production department, and sales
department. It is always important to insure that inventory at different level is maintained. The
raw material are available to each level and that there is proper flow of material from one
production feasibility to another at all level in the manufacturing firm.

2.4.2 Material coding and classification

One of the important functions of material management is The material coding and classification
provide support to the production and purchasing department of an organization. The materials
are classified through a simple yet standard method such as arc analysis to manufacture the
product or sell various goods. This method is used may many organization for the purpose of
classifying and storing material which are identified by the codes. The coding method should be
used by every firm to keep a check on the range of material their quantities and costs (Ibid).

2.4.3 Purchasing
Purchasing is a function of buying machinery tool, raw material etc, required by an organization
(Nair, 1985) purchasing is the business activity directed at securing the material supplies and
equipment required in the operation of an organization. Purchasing is the acquisition by
manufacturing of any necessary primal material supplies equipment. Purchasing mean a policy
well planned, properly coordinate and converting a wide range of control in the section of
material, source of supply the follow up to ensure fast deliverers, a completion pectin for quality
and quantity, well planned producer and development of up economy (Ibid).

Objective of purchasing

 To create good will and enhance the company reputation, for fairness.
 To render assistance in standardization, variety reduction, value analysis cost reduction
etc…
 To maintain continuity of supply to production schedule
 To promote company reputation

According to (Doubler and Burt, 1996) in their book purchasing can be viewed from three levels.

A very general material level

- The general objectives have traditionally been expressed as the five right that
management expected the department to achieve in the acquisition of material
 Of right quality
 From right suppler
 In right quantity
 at right time
 at the right price

Specification or Operation Level

- To support company operation with uninterrupted flow material and service

- To buy competitively
- To buy wisely
- To keep inventory investment and inventory losses or practical minimum
- To develop effective under reliable resource of supply
Detailed Objective

Those are applied to fulfill needs associated with each type of purchase the prices set of objective
for each material typically varies because the usage requirement of the operation condition and
the market in which each material purchased usually are different.

Organization of Purchasing

The organization of purchasing is two, centralized and decentralized purchasing

Centralized Purchasing

In an organization where purchasing is recognized as separate function. A separate department

may be set up to perform all purchasing activity in the organization; this is known as centralized
purchasing.

 Advantage of centralized purchase

 Save time and money
 Ensure more efficiency
 Through accounting is possible
 Through checking is possible
 Less chance of surpluses, wastage and obsolescence.
 Better delivery service can be obtained on bulk order

Decentralized or Local Purchasing

- Under decentralized purchasing the authority of purchased operation is delegate to

various plants. Division or department, every department is responsible for purchasing its
own requirement and it does so independently
- Purchasing of material by all department
 Advantage of decentralization purchasing
 Material can be purchased by each department locally as and when required
  Material are purchased in right quantity of right quality for each department
easily
 No heavy investment is required initially
 Purchase order can placed quickly
 The replacement of defective mater can take little time.

2.4.4 Receiving, inspection and storing

Receiving of good

The supplier on receipt of the purchase order, fill up the buyers requirement and arrange delivery
of material with the instruction relating to the quantity, time, road, made of transported.
Mentioned in the purchase order The department that entrusted the responsibility of receiving
material and getting them inspected is known as receiving department activating involved in
receiving department are:

- Collection of material
- Record of receipt of material
- Preparation of good report
- Physical count of receipted material

Inspection of Goods

After receiving all supplies are subjected to inspection and testing for purpose of the corrective
do not require detail inspection. These are accepted and put to use after visual inspection of their
packing verification of labels or cases. All the remaining item (i.e. except those mentioned
above) is inspected on receipt by the inward inspection of the buyer works for one or more of the
following checks.

- Conformance of dimension
- Conformance to material specification
- Conformance to performance

Storage and Record Keeping

After inspection, the good are segregated into accepted/rejected or rework categories, and only
the fully accepted quantity is forwarded to the stores function of stores

- Receive all in coming material and see that quantity is correct according to invoice
- Arrange for inspection of material
- Carry out the verification in accordance with producers laid down by the management
- See that daily good receipt register are properly maintained (Stevenson, 2005)

2.5 Material Management Department Activity That Lead To Law Productivity

The material management department activity that can lead to law productivity

- Poor storage method

- Buying from wrong source
- Excessive purchasing of bill
- Poor record keeping .
- Long and inefficient purchasing procedures.
- Lack of standardization.
- Large proportion of non-moving (dead) in store.
- Excessive inventory (Law inventory turnover rating).
- Wastage of material (spoil of scalp) (Ibid).

2.6 Productivity Measurement

Productivity is an overall measure to ability to produce a good or service, it is also an index that
measure output (good and service) relative input (labor, material, energy) use produce the output.

Productivity is difficult to measure and can only be measure indirectly. That is by measuring
other variable and then calculating productivity from them so in equation from:

Unit produced
production= ( stenson , william ) productoion∧operational mangement
Input used

2.7 The Impact Material Management On Productivity

Material management has impact on organizational productivity because material are a life blood
and heart of any manufacturing system and no organization can operate without the material. A
manufacturing firm will remain shaky if it material are under stoked, overstocked or in any way
poorly managed, due to this the practice of material management have great impact on
productivity (Banioko, 2000).

The various type of material to be managed in organization include purchased material work in
process (WIP) material and finished good (Banoko,2009). If material are managed in
organization it can reduce cost like purchasing cost, marketing cost, obsolesce cost, due to this it
has very high impact on organizational productivity (Ogbadu, 2009).

2.8 Concept Of Just In Time Delivery

The concept of just in time is strategy for inventory management in which raw material and
component are delivery from the vendor or supplier immediately before they are needed in the
manufacturing process. It is a supply chain management system designed to reduce carrying cost
to a minimum. A firm any order what is expect for its immediate needs. Just in time system
require that the retailer at the end of the supply chain accurately predict demand for its products.
They also required that each stage of the chain known as exactly how much time it take to fill an
order when it is made. It is an inventory strategy companies employ to increase efficiency and
decrease waste by receiving goods only as they are needed in the production process, their by
reducing inventory cost. This method requires those producers are able to accurately forecast
demand (Ford, 1923).

Many companies use just in time inventory system, so they don’t lose money by holding excess
the inventory they create their product just in time for their consumer

Advantages of just in time delivery (JIT)

- Funds that were fixed up in inventories can be used else where

- Areas previously used to store inventories can be used for other more productive use
- Defect rates are reduced result in waste reduction and greater customer satisfaction

Disadvantage of just in time delivery (JIT)

- It may be difficult and expensive to introduce

- JIT manufacturing also open business to a number of risk. Notably those associated with
the supply chain no stock to fall back on, minor distribution in supplies to the business
from just, one supplier could force production to cease at very short notice (International
Herald Tribune, February 8, 1997)and (Ford,1923).
 CHAPTER THREE

3 RESEARCH METHODOLOGY
3.1 Description of the study area

Hossana town is located south west of Addis Ababa 232km away via Alemgena-Butajira
route,280 km from via Wolkite route ,and 303km via Zeway. Hossana is also located 168km
away from Hawassa via Halaba-Angeca and 203km via Halaba .The absolute geographic
location of Hossana is 7015’00’’ North lalitude and 37050’30’’ East longitude. The administrative
area of Hossana town is 10,414.3 hectares, from these area 4,585.48 hectares of the town has
been well master planned. The altitude of the town ranges from 2140 to 2380m above mean sea
level. This shows that the town is mainly characterized by highland (dega) climate
conditions .There is meteorology sub-station in Hossana at a specific location of
374900E,832800 UTM coordinates. The annual average temperature of the town is16.50 c.
(Atlas of the World,2009).Being an administrative capital of the Hadiya zone, Hossana provides
a base for many public and private institutions that operate in the zone. The total population of
Hossana will 13,467 and 31,301 in 1984 and 1994 respectively (CSA;1984,1994).within ten
years’ time, the town’s population census result, the current population of the town is projected
to reach 89,251 at the end of 2010 out of which 45,307(50.8%) and43,944(49.2%)are estimated
to be male and female respectively.

Fig. 3.1 Map of the Study Area Source:-Ethio-GIS and CSA

3.2Research Design
Since the purpose of the study is to describe the existing factor, the researcher used descriptive
approach; survey method is used to collected data, and put the collected data in to table by
frequency and percentage.

3.3 Types of Data And Source

In order to obtain relevant and enough data the researcher used both primary and secondary
source of data type. primary data were collected from managers and employers of the company.
The researcher also obtain secondary data from source like review of the company document

3.4 Method of Data Collection

The researcher collects data in different way, from primary and secondary data source. Primary
data was collected through questionnaire and interview would be conducted with manager of the
company. Secondary data was conducted by reviewing the company document.

3.5 Sampling Techniques and Sample Size Determination

The sampling technique that the researcher used for the study would be simple random sampling
technique. This is because of the technique is less time consuming than other technique and
homogeneity of population. The total population of company including managers is 450. Out of
450 total population the researcher take 60 sample (n) to identify necessary information about the
impact of material management practice on organization of productivity.

Sample (n) determination techniques is determined when the researcher take 88% level of
confidence and remain 12% of maximum errors. This is because of consideration of cost like
financial and time consuming.

N
sample ( n ) = 2
(Yamene ,1967)
1+ N ( e)

Where, N= total population

n= sample size

e= maximum error
 450
n= 2
=60
1+ 450(0.12)

3.6 Data Analysis Method

To analysis the data, the researcher use descriptive data analysis, to describe the actual event in
given sample. After data was collected from tools like questionnaire and interview, it would be
arranged based on common characteristics, then it would be put in table and converted to
percentage and finally lead to data interpretation.
 CHAPTER FOUR

4 DATA ANALYSIS AND INTERPRETATION

This chapter deals with analysis, presentation and interpretation of data. So, the researcher
prepares 20 questions to respondents and 4 interview questions to company manager. Then. 60
questionnaires were distributed to respondent and interview taken from manager of company.
From distributed questionnaire, five questionnaires were not answered by employees. This
represent 91% of distributed questionnaire were returned and 9% of questionnaire were not
returned. Then the collected data was tabulated, analyzed and presented below.

4.1 Demographic Information

Table 1: percentage distribution of respondents with respect to sex, Age and educational level
No Demographic Respondent Percentage
character
1 Sex
Male 42 76%
Female 13 24%
Total 55 100%
2 Age
18-25 13 23%
26-35 20 36%
36-41 17 30%
42 and above 5 11%
Total 55 100%
3 Educational level
Grade 10 complete - -
College 15 27%
First degree 38 69%
Master and above 2 4%
total 55 100%
Source: Own Survey, 2023
As seen from above table 1, item, one, 76% of respondents were males and the rest 24% of
respondent were female. So that majority of the respondents are male. So the numbers of female
employees the in companies were low and can limit female participation on in management
practice

The above table one, item 2, show 13(23%) f the respondent age group between 18-25 years, 20
(36% of respondent age group between 26-35 years, 17( 30%) of the respondent age group
between 36-41, and 5(11%) of respondent were age group above 42, this item 2 show that most
respondent are young worker in the organization. Young employ can increase productivity
capacity than old employ. In this item the numbers of old employ is very low due to this
productivity can be more increase.

According to above table 1, item 3 states out of sampled respondents, 15(27%) respondents are
college, 38(69%) respondents were first degree holder and 2 (4%) respondents were master and
above holder in educational level. This all indicates that even if more knowledgeable employee
were low, those who have degree holder very high and this can increase the productivity and
product quality, on the other hand colleague holder are also very law, due to this the company
cannot affected by educational level in productivity. The educational level affects the sort and
quality of product, employee with better education level more likely productive than less
educated (Meshane, 2000:314).

4.2 Material Managerial Practice and Inspection Mechanism

Table 2: the percentage distribution of the above study variable two
No Item Respondents Percentage
4 Does your organization have material
management practice?
Yes 50 90%
No 5 10%
Total 55 100%
5 Is there any inspection mechanism in the
company?
Yes 45 81%
No 10 19%
 Total 55 10%
6 What inspection mechanism used in
your company?
Inspection in buyer plant 44 80%
Inspection in vendor plant 11 20%
Total 55 100%
Source: Own Survey, 2023

As it can seen from above table 2, item four, 50(90%) of respondents are responded yes. This
indicates that majority of respondents were said yes, this means the company has material
managerial management practice, so the practice can help the company to produce the product
effectively by using material properly. Whereas, 5 (10%) of respondents are responded no.
according to the respondents the reason that they responded no are, the concept of material
management is new in the organization, the Practice is not formally designated, due to this the
practice is not as much as implanted in the organization.

As shown in the above table 2, item five, 45(81%) of respondents were responded yes. This
show that majority of respondent said, there is inspection mechanism in the company. The
mechanism is important to the company to know whether the quality of material are correct or
not, whether the condition of item are good or not, whereas, 10(19%) respondents responded no.
this indicate that few respondents responded there is no material inspection in the company, this
is may be information gap. if the company cannot implement the mechanism, the company may
affected by material quality.

As it seen in the table 2, item six, 44(80%) of respondents were responded the material
inspection mechanism in the company is inspection in buyer plant. These indicate that the
company inspects the material in their plant after buying from supplier and the mechanism can
help the company check material freely. On the other hand 11(20%) of respondents were
responded the company inspect material in the vender plant. According to the respondents this
indicate that the company inspect material when buying the material and at the same time
inspecting the material in the supplier plant and the mechanism can help the company, when the
material are incorrect, immediately the company buyer return the item to the supplier.
4.3 Purchase Condition And Item Classification
Table 3: percentage distribution of respondent in above study variable three
No Item Respondent Percentage
7 In what situation that unethical purchase condition
occurred?
Purchasing from single supplier 38 69%
Purchasing through agent 12 21%
Feeding of price for supplier 5 10%
If any other specify - -
Total 55 100%
8 What type of system used in the organization to
classify item easy location and identification?
Based on ABC classification 5 10%
Based on usage rate of classification 40 72%
Based on character and type of item 10 18%
If any other specify - -
Total 55 100%
Source: Own Survey, 2023

As indicated in the above table three, item seven, 38(69%) of respondents were responded,
unethical purchase condition is occurred when the company purchasing from single supplier.
This show if the company purchase its material from single supplier it can affect the company
productivity, because if the supplier is single for a company he/she play great role in delivering
the material and sometimes there is delay of material for production. On the other hand, 12(21%)
of respondents are responded, unethical purchase condition is occurred when purchasing through
agent. This indicate that the company purchase its material through third party and the situation
can reduce productivity because the material are sometimes not delivered on time and no direct
contact of company purchaser with the supplier and can result in under or over purchase of
material. Whereas 5(10%) of respondents are answered another unethical purchase condition is
occurred when the company feeding of price for supplier. Purchase condition in this situation can
affect the company by increasing cost, through over pricing of material for supplier.
As shown in the above table three, item eighth 5 (10%) of respondents were responded type of
system used to classify item easy location and identification is based on ABC classification. This
indicates that the company uses this system for some item. But the company not as much as use
this system because item to classify based on dollar value was difficult to the company. Whereas
40 (42%) of respondents responded classification based on usage rate of material. This type of
classification used the company, in reducing variety of material or increasing standardization of
material when item are classified in usage rate. On the other hand, 10(18%) of respondents
responded classification based on characteristic and type of item. The company uses this
classification for some items and the system can help the company, to accelerate the production
process because, if the material are classified under their character and type it is simple to use
them for production through directly taking the item from classification.

4.4 Inventory Control Section Information And Inventory Control System

Table 4: respondent answer in the study variable four

No Item Respondent Percentage

9 Does inventory control section provide accurate
information to material management department?
Yes 51 93%
No 4 7%
Total 55 100%
10 What type of inventory control system used in your
company?
Periodic 49 89%
Perpetual 6 11%
Total 55 100%
Source: Own Survey, 2023

As indicated in the above table four, item nine, 51(93%) of respondents responded yes. This
indicate that inventory control section provide accurate information for material management
department. This practice increases the relationship of one department with other department in
the company and can strength the company. According to respondent the information from
inventory control section to material management department are:- how much inventory are
received, how much inventory are on hand, how many material are used, balancing of supply and
demand report, and establishing a safety stock are reported from inventory control section to
material management department for the purpose of the increase the organization profitability.
On the other hand, 4(7%) of respondents responded No. this indicate that the inventory control
section cannot report accurate information to material management department. According to the
respondent there is information error when inventory section provides information to material
management department. However the company does not so much affected by report from
inventory control section to material management department.

As it can be seen from above table four, item ten, 49(89%) of respondents were responded
company use periodic inventory control system. This show that the company control their
inventory in interval that is monthly, annually or semi-annually recoding system and this system
can help company by saving finance spent on recording inventory continuously or day to day
recording of inventory system. Whereas 6(11%) of respondent responded, inventory control
system in the company is perpetual inventory control system. According to the respondents this
indicates that, the company use inventory control system continuously recording. This system of
inventory recording is not much used in the company because recording inventory day to day is
may be more difficult and time consuming.

4.5 The Impact of Material Management And The Experience Of Management

Table 5: respondent answer on study variable five
No Item Respondent Percentage
11 The practices of material management have impact
of organizational productivity?
Yes 47 85%
No 8 15%
Total 55 100%
12 Do you think that the experience of manager in the
organization is enough to perform the activity of
company?
Ye 19 35%
No 36 65%
Total 55 100%
Source: Own Survey, 2023
As indicated in the above table 5, item eleven, 47 (85%) of respondent were responded yes. This
show that the practice of material management has impact on organizational productivity, so
that, according to respondent the impact are both positive and negative for the organization. If
material are not managed properly shortage of raw material would be occurred, if the
organization use its material improperly the organization productivity decrease and the positive
impact are if the organization use its material properly the company productivity increase and
lead to profitability. On the other hand 8(15%) of respondents responded No. this show that even
if the respondent were few in number there is knowledge gap between the respondents because
no organization can achieve its goal without managing the company material, therefore, the
practice of management have impact on organizational productivity.

As seen in the above table five, item twelve 19(35%) of respondents were responded yes. This
shows that few respondent were says the experience of manager in the organization is enough to
perform the activity of the company. So that these respondents are more depend on the manager
of the company to perform the activities. Whereas, 36(65%) of respondents responded No.
according to the respondent large number of respondents says the experience of manager in the
organization is not enough to perform all the activity of the company. Because in order to
perform the activity in the organization, participation of different department is needed, every
employ in the organization must be involved in his/her sector and sub sector based on their
experience.
4.6 Appropriateness Of Material Management And Presence Of Storage
House/Warehouse
Table 6: respondent answer on study variable six
No Item Respondent Percentage
13 Do you think materials are managed appropriately in
your company?
Yes 51 93%
No 4 7%
Total 55 100%
14 Is there adequate storage space/warehouse in your
company?
Ye 48 88%
No 7 12%
Total 55 100%
Source: Own Survey, 2023

As indicated in the above table 6, item thirteen (93%) of respondents are responded yes. This
show that majority of the sample says material are managed appropriately in their company, if
material are managed appropriately in the company it can lead the company to profitability and
growth of the organization. On the other hand 4(7%) of respondents responded material are not
managed appropriately in their organization. According to respondent the reason that material
are not managed appropriately are; lack of management experience, lack of enough training on
the practice of material management for responsible department for material. However, the
company can not so much affected by the practice of material management.

As seen from above table 6, item fourteen, 48 (88%) of respondents responded yes, this indicate
large number of sample says these is adequate storage/warehouse for the company. According to
the respondent there is enough in both quality and quantity of storage in the company. Whereas
7(12%) of respondents are respond No. this indicate that, some respondents say there is no
adequate storage/warehouse in the company, because some time raw material from supplier are
deliver to the company, it may stay outside the storage for two up three days, storage are long
lived.
4.7 Data Analysis Through Interview
Question 1: what do you think to improve material management practice so as to increase
productivity?

- According to the above question, the manager said that in order to increase the
productivity, material are managed properly unless it can decrease the productivity,
because more than 50% of the total cost are spent on material. So to improve the material
management practice the company give on job training to the department manager for
more improvement in his/her management practice, recruiting other new employee those
who have work experience on the same filled and also recruiting other those who have no
work experience and give six month off job training for these new employee. Through
this mechanism the company can improve its material management practice for
increasing the productivity.

Question 2: what do you think that, so as to make quality ware house/storage house in your
company?

- From the above question manager responded, the company have enough in both quality
and quantity storage warehouse. There are large numbers of storage for the company, like
Hossana store for raw material supplied from Addis Ababa for storage of finished
product like pasta and macaroni, main storage in the company. This all storages are
builded in quality form, so as to increase the safety of material. Finally the company
assumes taking care around storage area to keep the warehouse from damage, to increase
the storage quality.

Question 3: is there any just in time delivery in your company?

- According to the above question the manager said that, just in time delivery is the best
practice for company whether the company is nongovernmental or governmental. But the
practice is not much used in our company. This is because of since the practice is new,
that is not developed widely in our company, because some suppliers are very far from
the organization like the vendor from Italia. Due to this there may be delay time of
material when to deliver it to the company. Even if the practice is not used widely in our
organization, companies in some situation deliver the product, on time to the customer.
Question 4: do you think that the practices of material management have impact organizational
productivity?

Manager answered the above question as follows. The practices of material management have
great impact an organizational productivity. Because all the organization operation is ruined by
material, without material no organization can operate the business. The practices of material
management have both negative and positive impact. This is when if materials are managed
properly: productivity can be increased. The increases in productivity result in high market share
and high customer for company. Whereas if material is not managed properly: it can result
decrease in productivity, reduce the market share, may have low customer and finally
profitability cab be decreased.
 CHAPTER FIVE

5. CONCLUSION AND RECOMMENDATION

5.1 Conclusion
This study describes the impact of material management practice on the organizational
productivity in Hossana Flour Factory, based on data analysis and interpretation, the following
conclusion are obtained.

- Most of the employee of Hossana Flour Factory are first degree holder and found
between 26-41 years age group most of them are male, youngsters and are found in
productive age group.
- The organization implemented material management practice and material are managed
appropriate in the company.
- As information from respondents there was inspection mechanism in the company and
the organization was inspecting material in buyer plant.
- Unethical purchase conditions in organization were occurred when the organization
purchasing from single supplier, and item classification and identification are based on
usage rate , in order to facilitate the routine activity and help the works to do more.
- The inventory control section provides accurate information to material management
department and the company used periodic inventory control system to record the items.
- As indicated in analysis and interpretation part, the experience of manager in the
organization is not enough to perform all the activity of the company, this is because of
participation from different department is needed.
- The company has adequate storage space/warehouse in both quality and quantity for
storing of both raw material and finished products.

5.2 Recommendation
From the finding of this particular study, the researcher forwarded the following
recommendation for the Hossana Flour Factory for efficient and effective practice of material
management.

- Hossana Flour Factory should develop more educated employee like master and above
- Top management should give consideration to working condition problem faced by
purchasing condition and must work to fill information gap between employees of some
department like purchasing, marketing.
- The available practice like modern management skill should be developed and practiced
- In order to perform all the company activity different department must be coordinated.
- The time gap to store material in the storage should be minimized in order to take timely
adjusted storing mechanism.
- Good inspection mechanism should be developed and practiced in order to keep the items
quality.
- The practice of just in time delivery practice should be implemented in the company
widely.
- The study also recommended that there is need to enormously employ inventory control
system, information and communication technology, especially in material requirement
planning so as to excel and guarantee in future, hence improving organizational
performance. Further, the study recommend that the Hossana Flour Factory company
should increase the resource commitment, to staff training, research and development in
material management so as develop the necessary skill, update their knowledge and
enhance new product development.
- Finally the researcher recommended that there is need for organization to adopt the use of
information technology that will help information sharing. Further the study recommends
that Material management department should to support the management of an
organization in production activities. It should help to control all type of material for
quantity, quality and cost.
Reference
- BanjokoS.A (2000) production and operation management
- Baker J. (1989) essential of material management
- Bower Sox D. and Clouse (2002). Logistic management
- Dobrelee B. (1984), purchasing 3rd ed. MacMillan London
- Gapalakrishan and Sunaresan (1997), material management
- Jacobs R. (2009) operation and supply management
- Monday J.U (2008) the effect efficient material management on performance of firm
- Ondiek G.O (2009) assessment of material management
- Operational management 8thed
- Wild R. (1995) production and operation 5th edition
- William J.G (1996). Material requirement planning under certainty
 APPENDIX

WACHEMO UNIVERSITY

COLLEGE OF BUSINESS AND ECONOMIC

DEPARTMENT OF MANAGEMENT

Dear employees,

This questionnaire is prepared by 3rd year management student. The main purpose of the
questionnaire is to get factual information about the material management and its impact on
organizational productivity in Hossana Flour Factory. Therefore, I would like to bring your
attention that success of the research depends on your genuine response for the questions. This
questionnaire is only need for academic purpose and free from any other issue.

Thank you in advance for cooperation!

Instruction

- No need of writing your name

- Please put tick mark (√) in the box your response.
Part I. Demographic Information

1. Sex: Male  Female 

2. Age: 18-25  26-35  36-41  42 and above 
3. Educational level:
Grade 10 complete  First Degree 
College  Master and above 
Part II. Specific Information on Study Variable

4. Do your organizations have material management practice?

Yes  No 
5. If your answer for question number ‘4’ is ‘no’ explain your reason:
 ________________________________________________________________________
6. Is there any inspection mechanism in your company?
Yes  No 
7. If your answer for above No. “6” is “yes”, what inspection mechanism is used in your
company.
Inspection in vendor plant  inspection in buyer plant 
If any other ___________________________________________________________
8. The practices of material management have impact on organization productivity?
Yes  No 
9. If your answer for the above question No. 8 is “yes” explain the impacts,
________________________________________________________________________
________________________________________________________________________
10. Do you think that the experience of manager in the organization is enough to perform the
activity of the company?
Yes  No 
11. If your answer for the above question No. 10 is “no” explain your reason,
________________________________________________________________________
_______________________________________________________________________
12. What type of inventory control system is used in your company?
Periodic  perceptual 
13. What type of system used to classify item easy location and identification?
Based on ABC classification  based on usage rate of classification 
Based on type and characteristic of item 
If any other specify ____________________________________________________

14. In what situation those unethical purchase conditions occurred?

Purchasing from single supplier  feeding of price for suppliers 
Purchasing through agent 
if any other____________________________________________________________
15. Does inventory control section provide accurate information for the material management
department?
Yes  No 

16. If your answer for the above question No 15 is “yes”, list information from inventory
control section to material management department.
________________________________________________________________________
________________________________________________________________________
17. Do you think materials are managed appropriately in your company?
Yes  No 
18. If your answer for above No. 17 is “No”, explain your reason
________________________________________________________________________
________________________________________________________________________
19. Are there adequate storage space/ warehouse in your company?
Yes  No 
20. If your answer for the above question No “19” is “No”, explain your reason,
________________________________________________________________________
________________________________________________________________________
Part III. Interview question for company manager

1. What do you think to improve the material management practice so as to increase

productivity quality?
2. What do you think that, so as to more qualified warehouse/storage house in your
company?
3. Is there any just in time delivery practice in your company?
4. Do you think that the practice of material management have impact on organizational
productivity?