The Effect of Material Management Practice On Organizational Performance

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The Effect of Material Management Practice on Organizational Performance:

In Case of Werabe Town Flour Factories.
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International Journal of Management (IJM)
Volume 14, Issue 6, Sep-Oct 2023, pp. 70-80, Article ID: IJM_14_06_006
Available online at https://iaeme.com/Home/issue/IJM?Volume=14&Issue=6
ISSN Print: 0976-6502 and ISSN Online: 0976-6510
© IAEME Publication
THE EFFECT OF MATERIAL MANAGEMENT

PRACTICE ON ORGANIZATIONAL
PERFORMANCE: IN CASE OF WERABE TOWN
FLOUR FACTORIES
Muhdin Zeyne Shifa
Lecturer, MBA, Management Department, College of Business and Economics,
Werabe University, Ethiopia
Temam Siraj Mohammed

Endalw Adamu
Assistant Professor, Management Department, College of Business and Economics,
Sayfedin Sultan Yesuf

Redela Seman Habib

Management Department, College of Business and
Economics, Werabe University, Ethiopia
ABSTRACT
Recently, in the dramatically growing digital world, the management of materials
plays a criticalrole on the performance of manufacturing companies. This study
focuses on the effect of materials management practices on organizational
performance of flour factories of Werabe. In this research descriptive and explanatory
research designs were applied. In order to collect accurate data the researcher used
mixed research design (descriptive and explanatory) in integration with a commonly
used quantitative research approach. The researcher used both Primary and
secondary data source for the study. The researcher employed mixed sampling design
or technique (stratified random, purposive and convenience sampling) to take sample
respondents under the study.
https://iaeme.com/Home/journal/ 7 editor@iaeme.co
Muhdin Zeyne Shifa, Temam Siraj Mohammed, Endalw Adamu, Sayfedin Sultan Yesuf and
Seman Habib
The researcher used closed ended questionnaire as instrument of collecting data.

The collected data through close ended questionnaire were analysed by using software
of statistical package for social science (SPSS) version 25, in which multiple linear
regression and correlation were used to see the effect of materials management
practices on organizational performance and the relationship between material
management practices and organizational performance respectively. The finding of
this research revealed that organizational performance was significantly influenced by
maintenance, expediting, storage management and inventory management factors.
Key words: Materials Management Practices, Maintenance, Expediting, Storage
Management, Inventory Management, and Organizational Performance.
Cite this Article: Muhdin Zeyne Shifa, Temam Siraj Mohammed, Endalw Adamu,
Sayfedin Sultan Yesuf and Redela Seman Habib, The Effect of Material Management
Practice on Organizational Performance: In Case of Werabe Town Flour Factories,
International Journal of Management (IJM), 14(6), 2023, pp. 70-80.
https://iaeme.com/Home/issue/IJM?Volume=14&Issue=6
1. INTRODUCTION
Every organization makes significant financial investments in materials. The cost of materials
often exceeds 50% of the overall cost of items produced. Such a huge investmentnecessitates
extensive planning and monitoring in order to minimize waste, which invariably has an impact
on any organization's performance and profitability as a worldwide (JerutoKeitany & Richu,
2014). The performance an organization can be measured through various factors and the
most common performance indicators for every type of business organizations are
productivity, profitability, quality of product (service) and growth and customer satisfaction
(Abdela et al., 2023).
Materials management has been widely recognized as a vital tool for boosting the
performance of organizations since it curtails costs and makes the best use of existing
resources. Companies engaging in efficient material management are most probable to
perform better than those that do not and realize significant savings in total costs of
production , hence, effective materials management can result to cost reduction, savings and
overall productivity (Davis, 1993).
The researchers and scholars have identified materials management as an alternative
paradigm to the performance of manufacturing organization (Oyebamiji, 2018). Material
management practices are critical to an organizational performance in today’s competitive and
dynamic market (Dimitrios, 2008).
Flour factories play a great role in food manufacturing (Arendt & Zannini, 2013; Ahmed
et al., 2022). Products that have produced in flour factories like: breads, cakes and others are
commonly used by mostof the people of Ethiopia. Especially bread has consumed regularly
by almost all of urban area residuals and sometimes by rural area residuals (Newman &
Newman, 2006).
As per the researcher’s knowledge, there is no research which has conducted on the effect
of materials management practice (maintenance, store management, inventory management
and Expediting) on the performance of Werabe town flour factories. On the other hand, as the
researcher’s preliminary survey (Jan, 25, 2023), Werabe town flour factory’s owners and
managers are said as they are experiencing a kind of challenges related to effective
management of their materials. In addition to this the researcher observes broken, damaged or
defective equipment’s that are not maintained properly which have thrown in unfavourable
place.
The Effect of Material Management Practice on Organizational Performance: In Case of
Town Flour Factories
As a result of this some of the materials are looks like they can’t be
returned into functionality. Therefore, in order to fill the listed research gaps and to add
empirical evidence that can draw answers and recommendation to problems related to
material management and the flour factories performance, conducting a research on this topic
is important. To achieve these, the study has tried to determine the effect of material
management practices on organizational performance of Werabe flour factories.
2. REVIEW OF RELATED LITRATURE

2.1. Introduction
Materials management is seen as a system for assuring the availability ofthe products desired
by customers at the best obtainable cost of manufacture is not anybody’s total responsibility.
Truly enough quality and cost of manufacture are production management’s responsibilities,
but materials management must see timely delivery of materials of proper quality andquantity
at the work site.
Materials management is an integrated process that consists of the people, organizations,
technology, and procedures used to effectively identify, quantify, acquire, expedite, inspect,
transport, receive, store, and preserve the materials, equipment, and associated information
across the life cycle of a capital project (Caldas et al., 2015; Ahmed et al., 2023).
The definitions of material management provides the scope of materials management
which includes materials requirements planning, decision on purchasing, procurement of
materials, inventory management, staffing, storing and warehouse management, production
and distribution of finished goods at minimum cost at due date with the required quantity and
quality (Asaolu et al., 2012; Ahmed et al., 2023)
The functions of materials management can be classified as purchasing, inventory control
or management, stores management, material planning and control,
standardization,simplification, specifications, value analysis, ergonomics, Just-in-Time (JIT)
(Fabio et al., 2013; Argaw and Ahmed, 2017).
2.2. Organizational Performance

Organizational performance is the organization’s ability to attain itsgoals by using resources
in an efficient and effective method. Performance relates to the ability to attaingoals or a
specific mission (Jacobs et al., 2009; Eshetu and Ahmed 2022).
2.3. Description of Study Variables

2.3.1. Maintenance
Maintenance refers to all action taken to retain material in a serviceable condition or to restore
it to serviceability. It includes inspections, testing, servicing and classification as to
serviceability, repair, rebuilding, and reclamation (Ren, Chen, & Chen, 2017).
The routine recurring work required to keep a facility (plant, building, structure, ground
facility, utility system, or other real property) in such condition that it may be continuously
used, at its original or designedcapacity and efficiency for its intended purpose (Cobbinah,
2010).
Maintenance is strictly connected to the utilization stage of the product or technical
system, in which theconcept of maintainability must be included. In this scenario,
maintainability is considered as the ability ofan item, under stated conditions of use, to be
retained in or restored to a state in which it can perform its required functions, using
prescribed procedures and resources (Amran, 2018).
Seman Habib
2.3.2. Storage management

Materials storage includes a careful management of the stock and maintaining a perfect
control over them. Management of materials is one of the events performed by materials
managers and can be an efficient tool for saving cost and holding up profit. Storage of
materials depends on the nature and how they are used in the manufacturing procedures.
Profits can be achieved if managers effectively and successfully handle issues relating to
stores location, layout and equipment examination, safety of stores, production issues, stock
records and disposal of obsolete materials Cross (2019).
Store keeping is the activity of receiving, storing or distributing supplies. The duty of the
stores is to receive, store and issue materials. The store is separated into receiving section,
tools stores, general stores, raw materials stores, and finished parts stores and so on. The
receiving section receives all incoming materials, checked the correctness of the quantity and
quality received, arranges for inspection and subsequently sends the materials to the
respective stores along with a report called Goods Inwards Note or Materials Receipt Note
(Fessha, 2004).
2.3.3. Inventory management

Inventory management refers to all the activities involved in developing and managing the
inventorylevels of raw materials, semi-finished materials and finished good so that adequate
supplies are available and the costs of over or under stocks are low. Inventories are essential
for keeping the production controls moving, keep the market going and the distribution
system unharmed serving as key drivers for production and distribution systems of
organizations (Dwivedi & Kothiyal, 2012).
Inventory control enhances organizationalprofitability and performance by reducing costs
related with storage and handling of materials. Inventory control is a means by which
materials of the right quality and quantity are made available when needed with due regards to the
economy of shortages, ordering cost, purchase price and working capital (Jhansi et al., 2022;
Muzeyin et al., 2022).
2.3.4. Expediting
Expediting is a common and possibly necessary part of the day-to-day activities of
manufacturing firms (Miller & Fink, 1990; Seman et al., 2022).
Expediting is an extremely important materials management function that does not always
receive its proper emphasis. The purpose of expediting is to provide timely information
regarding anticipated materials deliveries to all concerned project personnel. Experienced
expeditors residing in vendor or subcontractor shops can give accurate projections of vendor
delivery dates, workloads, and labor climates. Expeditors also work closely with
representatives individuals who may perform material inspections in the vendor shops. To
maximize expediting efficiency, the expeditors should receive information pertaining to
projected or actual material shortages in some order of priority. This priority can be conveyed
from scheduling reports, from an open purchase order report, or from a trial allocationreport.
(A trial allocation report arranges drawings in some priority order and then allocates the
materialson hand to the drawings with the highest priority. Materials not yet received are then
assigned a priority in the order in which they was needed.) The expeditor’s estimate of
materials delivery dates must then be communicated back to materials management
personnel. This communication is accomplished by issuing an expediting report or inserting
projected delivery dates and comments into thepurchase order file (Bell & Stukhart, 1986;
Seman et al., 2023).
2.6. Conceptual
Framework
A conceptual framework is a structure of concepts or theories which are built as a map for the
study andit shows the relationship of research variables. The conceptual framework is used to
provide an explanation for the relationship between the equitable variables and the organized
variable. It shows thediagrammatical relationship between the different variables in the study.
The independent variable wasdetected as materials management and the dependent variable
was organizational performance. The maintenance, inventory and storage management and
the expediting are aspects of the independent variable which are functions of materials
management while organizational performance is the dependent variable which concerns
growth and customer satisfaction, quality products/services, increased profit and
organizational productivity.
Figure 2.1: Conceptual Framework
Independent variable Dependent Variable
Source: self-conceptualized based on the finding of previous researches
Seman Habib
3. METHODOLOGY OF THE STUDY

The main purpose of the study was to investigate the effect of material management practice
on organizational performance. Hence, both descriptive and explanatory types of research
designs were employed, quantitative approach was adopted in order to test the hypothesis
developed using empirical data. According to the town administration investment office
report on (Jan, 25, 2023), there are 12 flour factories that engaged in producing wheat flour
and related products. There are a total population of 471 which includes 12 managers and 205
employees. From the mentioned population, 205 employees are taken as a sample by using of
simple random sampling and proportional stratification sampling technique, and 12 managers
are taken as a sample purposively.
To the end, the collected data was analysed by descriptive and inferential statistics through
the help of a Statistical package for social science (SPSS) version 25.
DATA PRESENTATION, ANALYSIS AND INTERPRETATION

4.1. Descriptive statistical analysis of the variables.
Under this part the descriptive statistics analysis of independent and dependent variables were
presented. Maintenance, storage management, inventory management and expediting
practices were the independent variables whereas the performance of flour factories was the
dependent variables of the study. Accordingly, each statement under the variables was
subjected to the five likert scale of measurement where 1 represent the respondents perception
of a statement as strongly disagree, 2 stands for disagree, 3 for neutral, 4 for agree and 5 for
strongly agree on the particular statements. The Average mean value of the respondents rating
for each variable was taken as the respondents’ perception on the variable. The perception of
respondents for the nature of the study variables was interpreted accordingly.
Table 4.1 Result of Descriptive Analysis
Variables Mean Standard deviation
Maintenance 2.18 .5305
Storage management 2.25 .5845
Inventory management 2.31 .5613
Expediting 2.21 .5524
Flour factories performance 2.21 .5573
Source: researcher’s Survey Result 2023
The above Table (4.1) demonstrates that the mean score of each study variables is less than
3.00. This indicates that the perception of respondents on the material management practice of
flour factories is low and the performance of the enterprises also relatively low. The combined
standard deviation of each variables are less than 1, this shows that there is consistency and
harmony on the response of the respondents.
4.2 Correlation analysis

Table 4.2 Correlation table
Correlations
Maintenance Expediting Storage Inventory Performance
Maintenance Pearson 1 .723** .420** .474** .761**
Correlation
Sig. (2-tailed) .000 .000 .000 .000
N 217 217 217 217 217
Expediting Pearson .723** 1 .597** .633** .789**
Correlation
Sig. (2-tailed) .000 .000 .000 .000
N 217 217 217 217 217
Storage Pearson .420** .597** 1 .777** .658**
Correlation
Sig. (2-tailed) .000 .000 .000 .000
N 217 217 217 217 217
Inventory Pearson .474** .633** .777** 1 .690**
Correlation
Sig. (2-tailed) .000 .000 .000 .000
N 217 217 217 217 217
Performance Pearson .761** .789** .658** .690** 1
Correlation
Sig. (2-tailed) .000 .000 .000 .000
N 217 217 217 217 217

As demonstrated the table 4.2 above the correlation matrix between materials management
practices (maintenance management, inventory management, storage management and
expediting) and organizational performance of Werabe flour factories. Among these materials
management practices that have an effect on performance of the Werabe flour factories,
maintenance and expediting have a strong and positive relationship with organizational
performance with a correlation coefficient of 0.761 and 0.789 respectively. And storage
management and inventory management have a positive and moderate correlation with the
performance of the flour factories with a correlation coefficient of 0.658 and 0.690
respectively.
4.3. Regression analysis

Multiple linear regression model is used to evaluate the effects of two or more than one
independent variables toward the dependent variable as follows:-
Seman Habib
Table 4.3; Regression Model summary
Model Summaryb
Adjusted R Std. Error of Durbin-
Model R R Square Square the Estimate Watson
1 .876a .768 .764 .100 1.992
a. Predictors: (Constant), Inventory, Maintenance, Storage, Expediting
b. Dependent Variable: Performance

As presented in the table 4.3 above, the R square value of the study is 0.768 indicating how
much of the total variation in the dependent variables can be explained by these independent
variables. That means, flour factories performance is explained by the independent variables
(maintenance, expediting, storage management and inventory management) by 76.8% and the
remaining 23.2% would be explained by other factors. And the Durbin-Watson statistic value
is 1.992 which is found in an acceptable range of 1.50 – 2.50. Based on the indicated result
the assumption of independence of residuals was satisfied. Therefore, there is no existence of
autocorrelationproblem in the survey study model.
4.4. Regression Coefficient

The significance of each of the independent variables should be tested to see the influence of
each predictor variable on the dependent variable through regression coefficient. The
regression coefficient of the study is calculated as follows:
Table 4.4 Regression Coefficient
Coefficientsa
Unstandardized Standardized
Coefficients Coefficients
Model B Std. Error Beta t Sig.
1 (Constant) .097 .089 1.096 .274
Maintenance .351 .042 .398 8.301 .000
Expediting .224 .045 .274 4.930 .000
Storage .173 .051 .183 3.406 .001
Inventory .253 .076 .185 3.309 .001
a. Dependent Variable: Performance
The result in the table 4.4 above presents the effect that materials management practices
have on the performance of Werabe flour factories in association with the level of regression
coefficients of the explanatory variables. According to the result, Maintenance management
has high effect on the Werabe flour factories performance, with beta value of 0.351,
expediting has an effect on the Werabe flour factories performance with beta value of 0.224,
storage management has an effect on the performance of Werabe flour factories with beta
value of
0.173 and inventory management has an effect on the performance of Werabe flour factories
with beta value of 0.253.
The computed result in the table in Unstandardized Coefficients demonstrated that, all the
four independent variables maintenance management, inventory management, storage
management and expediting have a positive and significant effect on the organizational
performance of Werabe flour factories. And as it is indicated through standardized beta
Coefficients all are positive numbers and shows that the effect of each independent variable
toward the dependent variable is positive.
Therefore:
Flour factories performance = .097+.351 (Maintenance) + .224 (Expediting) + .173 (storage) +
.253 (inventory) + Ԑ0
5. CONCLUSION AND RECOMMENDATION

According to the findings of the research/study, it is decisive that the materials management
practices have effect on the performance of flour factories of Werabe positively and
significantly. Moreover, the study model demonstrates that there is a positive and statistically
significant relationship between the materials management practices: inventory management,
storage management, maintenance management and expediting and the dependent variable
(the performance of Werabe flour factory). Based on the findings and conclusions of the
study, the researcher would like to give the following recommendations to the concerned
organs accordingly. As we have seen in the descriptive analysis part, there is poor
implementation of maintenance, expediting, storage and inventory management activities in
flour factories. Hence, the researcher indicates to flour factory’s managers to give enough
emphasis for maintenance to stay the materials safety, expediting to speed up the time which
is spent for distributing the requisition up to receiving of materials, storage to arrange and
settle the stored items appropriately and inventory management to hold the right amount or
balance, the right quality and good trend of right planning and recording of items, in order to
achieve improved organizational performance.
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Citation: Muhdin Zeyne Shifa, Temam Siraj Mohammed, Endalw Adamu, Sayfedin Sultan Yesuf
and Redela Seman Habib, The Effect of Material Management Practice on Organizational
Performance: In Case of Werabe Town Flour Factories, International Journal of Management
(IJM), 14(6), 2023, pp. 70-80
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THE EFFECT OF MATERIAL MANAGEMENT

Temam Siraj Mohammed

Sayfedin Sultan Yesuf

Redela Seman Habib

The researcher used closed ended questionnaire as instrument of collecting data.

2. REVIEW OF RELATED LITRATURE

2.2. Organizational Performance

2.3. Description of Study Variables

2.3.2. Storage management

2.3.3. Inventory management

Independent variable Dependent Variable

Source: self-conceptualized based on the finding of previous researches

3. METHODOLOGY OF THE STUDY

DATA PRESENTATION, ANALYSIS AND INTERPRETATION

4.2 Correlation analysis

Source: researcher’s Survey Result 2023

4.3. Regression analysis

Table 4.3; Regression Model summary

Source: researcher’s Survey Result 2023

4.4. Regression Coefficient

5. CONCLUSION AND RECOMMENDATION

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