ISSN: 1520-5509 Clarion University of Pennsylvania, Clarion, Pennsylvania
ISSN: 1520-5509 Clarion University of Pennsylvania, Clarion, Pennsylvania
ISSN: 1520-5509 Clarion University of Pennsylvania, Clarion, Pennsylvania
1, 2019)
ISSN: 1520-5509
Clarion University of Pennsylvania, Clarion, Pennsylvania
ABDUL, Falilat Ajoke, Aun Isaac Iortimbir, OLADIPO, Ganiyu Taiwo and OLOTA, Oluwayomi Omotayo
Department of Business Administration, University of Ilorin., Kwara State Nigeria.
ABSTRACT
Organizations perform various logistical operations so as to meet their customers’ needs and sustain development. The study
sought to address the following objectives: to analyze the influence of transport management on organization effectiveness;
evaluate the influence of inventory management on organizational productivity and to examine the influence of information
flow on employee’s efficiency. Descriptive survey research design was used to sample 115 employees of Dangote Flour
Mills Ilorin . Findings of the study shows that transportation management affects organizational effectiveness with a R 2 value
of 0.769; that there is strong relationship between information flow management and employees’ efficiency with a R 2 value
of 0.923 and that there is strong relationship between inventory management and organizational productivity with a Pearson
correlation value of 0.859. This study therefore recommended that factors associated with logistics management needs to be
considered by the organization in their strategic plans as it will contribute significantly to a sustainable development of the
Nigeria economy
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INTRODUCTION
The globalization process enables the sale of products for the same purpose from different manufacturers and with different
prices. The increased offer on the market has led to intensive competition and some of the companies are faced with the
problem of survival. The development of information technology has led to increased flow of information around the world,
which resulted in enhanced education of producers and consumers (Delfmann & Gehring, 2003). The only way for
companies to survive on the market is constant lowering the price of products and regular improvement of product
characteristics. Hence, the continuous intensive development of the company is crucial to its survival on domestic and global
markets. Globalization had a critical impact on manufacturing, both locally and internationally. Through broadening the
marketplace and increasing competition, globalization led customers to place greater demands on manufacturers to increase
quality, serviceability and flexibility, while maintaining competitive costs (Laosirihongthong & Dangayach, 2005). One of
the ways of improving efficiency on manufacturing firms was to improve logistics performance. That is why if
manufacturing firms needed to become efficient and flexible in their manufacturing methods, they needed different strategies
to manage the flow of goods from the point of production to the end user, (Awino, 2011).
One important management practice that can be applied in organizations today is Logistics management. Logistics
management provides business organizations with the total operations costs and increases the efficiency of the company’s
business activities. Collaboration among all the supply chain players coupled with a responsive approach can enhance
organizational competitiveness through reduced lead-time facilitated by smooth flow of material from upstream towards the
downstream end of supply chain. This approach will ensure end customers get value for their money and also reduce the level
of uncertainty in the industry (Waiganjo & Gatobu, 2014).
Many factors such as deregulation, competitive pressures, information technology, globalization, profits leverage, contributed
to the increase of Logistics management in the form we know it today (Ittmenn & King, 2010). The goal of Logistics
management was to optimize the number, size, and geographical arrangement of plants and warehouse facilities, select
transportation methods, and control distribution costs (Mentzer, Soonhong, & Bobbitt, Toward a unified theory of logistics,
2004). Consequently, Logistics management has done an excellent job of managing and moving inventory and the
operational aspect of Logistics (Mentzer, Flint, & Kent, 1999)
RESEARCH OBJECTIVES
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LITERATURE REVIEW
With the increasing awareness of strategic implications of logistics and the growing awareness of the benefits of leveraging
logistics to increase customer value measuring the performance of logistics had become a high priority (Cheng & Grimm,
2006; Griffis, Goldsby, Cooper, & Closs, 2007). In this study the dependent variable was organizational performance and it
was called dependent because any successful firm’s performance depended on many different factors which were termed as
independent variables. The independent variables in this case were the core factors that led to success of logistics
management and they included: transport management, inventory management, and information flow. A logistics information
system was the intervening variable.
Logistics is the process of planning, implementing and controlling procedures for the efficient and effective transportation
and storage of goods including services and related information from the point of origin to the point of consumption for the
purpose of conforming to customer requirements and includes inbound, outbound, internal and external movements.
(Lambert & Stock, 2008). Logistics management is a supply chain management component that is used to meet customer
demands through the planning, control and implementation of the effective movement and storage of related information,
goods and services from origin to destination. Logistics management helps companies reduce expenses and enhance customer
service. (Fugate, et al, 2010).Logistics management is the part of supply chain management that plans, implements,
and controls the efficient, effective forward, and reverses flow and storage of goods, services, and
related information between the point of origin and the point of consumption in order to meet customer's requirements. The
complexity of logistics can be modeled, analyzed, visualized, and optimized by dedicated simulation software. The
minimization of the use of resources is a common motivation in all logistics fields. A professional working in the field of
logistics management is called a logistician. (Christopher, 2011). According to the Council of Logistics Management
(CLM) “Logistics is the process of planning, implementing and controlling the efficient and effective flow of goods, services
and related information from point of origin to point of consumption in order to meet customer requirements”. Logistics
management is the process of strategically managing the procurement, movement and storage of materials, parts and finished
inventory (and the related information flows) through the organization and its marketing channels in such a way that current
and future profitability are maximized through the cost-effective fulfilment of orders (Christopher, Logistics & Supply Chain
Management, 2011).Logistics encompasses all of the information and material flows throughout an organization. It includes
everything from the movement of a product or from a service that needs to be rendered, through to the management of
incoming raw materials, production, the storing of finished goods, its delivery to the customer and after-sales service‖
(Ittmenn & King, 2010). The commonality of the recent definitions in logistics is that, it is a process of moving and handling
goods and materials, from the beginning to the end of the production, sale process and waste disposal, to satisfy customers
and add business competitiveness (Tseng, Yue, & Taylor, 2005). It is ‗the process of anticipating customer needs and wants;
acquiring the capital, materials, people, technologies, and information necessary to meet those needs and wants; optimizing
the goods or service-providing network to fulfill customer requests; and utilizing the network to fulfill customer requests in a
timely way (Tseng, Yue, & Taylor, 2005).
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Logistics Management
There has been a change in the way business is conducted today. Due to the development in technology, the logistics
management has evolved and gained greater significance in doing business. Logistics management is treated as a part of the
supply chain management that deals with management of goods in an efficient way. It is the management process that
integrates the movement of goods, services, information and capital, right from the sourcing of raw material, to the consumer
(Springinklee & Wallenburg, 2012). The goal of the logistics management is to provide the right product with the right
quality at the right time in the right place at the right price to the ultimate customer (Mentzer et al., 2004). Logistics
management has been defined as a high priority for contemporary organizations. The success of logistics management is
determined through the combination of efficiency, effectiveness and differentiation (Fugate et al., 2010). Eventually, supply
chain management measures through procrastination affect price/cost, product’s quality, innovation (Mamad & Chahdi,
2013).
In today’s competitive environment, effective and timely responses to ever-changing customer tastes and preferences have
become essential components for successful business performance (Han & Trienekens, 2009). In achieving performance,
information flow comes in handy. According to Harisson and van Hoell (2002) information flow was defined as the flow of
data in different directions with variable contents between various data base (department) within a company. Before, the
information flow within the logistics had become vital since it enabled chains to respond on real time and accurate data
(Harisson& van Hoell, 2002). Firms then, looked at information flow as an asset, since it was not possible to have efficient
and reliable materials flow without it ( (Mattsson & Lemmink, 2002) (Stevenson & Spring, 2009) concurred that, the flow of
accurate and real time information in logistics was considered very important to the flow of materials.
This information explosion had enabled logistics to become an important weapon in the firm's arsenal to add value to the
bottom line (Closs, et al., 2005). Information sharing was a key to success of logistics performance (Whipple, Lambert,
Vermeersch., 2002). In their study, Wardaya and Baskara (2013) confirmed that information flow had become an important
element that reflected collaboration within the logistics management and firm performance. Sharing of information on
transfer; exchange of information indicating the level and position of inventory; sales data and information on the
forecasting; information about the status of orders, production schedules and delivery capacity, and firm performance
measures had become essential to all firms (Wardaya, et al., 2013).
As a result, Bowersox et al., (2010) named four reasons why timely and accurate information flow had become more critical
for effective logistics systems' design and operations: Customers perceived information about order status, product
availability, delivery schedule, shipment tracking, and invoices as necessary elements of total customer service. With the
goal of reducing total supply chain assets, managers realized that information could be used to reduce inventory and human
resource requirements; Information flow increased flexibility with regard to how, when, and where resources may be utilized
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to gain strategic advantage; Enhanced information transfer and exchange capability utilizing the internet was changing
between buyers and sellers and redefining the channel relationships (Somuyiwa & Adewoye, 2010).
However, this information flow can only be successful when firms impress on information technology use. Information
technology provides the capacity to see data that is private in a system of cooperation and monitor the development of
products, where information is passing in every process in the supply chain (Simatupang & Sridharan, 2002).
Manufacturing companies are constantly faced with the challenges of keeping track of inventory and ensuring that their
products are successfully delivered to the customers. This workflow generally involves various forms of logistics, each of
which functions a little differently. The various forms of Logistics Management according to (Ristovska, Kozuharov, &
Petkovski, 2017) are:
Warehousing Management
Warehousing is an important part of a firm’s logistics system that stores products (raw materials, parts, goods-in-process and
finished goods) at and between points of origin and points of consumption. Warehousing can be provided by either
warehouses or distribution centres (Murphy & Wood, 2008). An important decision for many firms is the criteria for locating
the warehouse facilities. Cost factors are prevalent in the decision making models. Resources such as skilled labour are also
emphasized in some of the models. Another dominant factor is what might be named as accessibility, meaning infrastructure
and availability of transportation modes (Melachrinoudis, et al, 2000). Alberto (2000) also emphasizes time and reliability
related considerations. This includes the proximity of customers manufacturing facilities and suppliers.
Inventory Management
Besides the various activities associated with a lean supply chain, many firms across the world are always finding different
methods and techniques to reduce their investments in inventory, because it is indirectly taxing on the profitability of the
firm. Inventory management is a strategic area in logistics operation and has an impact of efficiency and effectiveness of the
overall supply chain system. Whilst inventories provide some security against fluctuations in the level of customer demand,
there is concern that they may reduce the ability of supply chains to respond to changes in the nature of demand. Inventories
in the international supply chains may therefore act as a buffer against one risk whilst increasing another type of risk.
Etienne (2005) lists factors such as speed to the market for new products, responsiveness to market niches, and feedback time
for quality issues. Harrison and Van (2008) have put forward inventory reduction strategies such as: reduction of production
lead times, product postponement, total cycle time, compression, centralization of inventory and the virtual warehousing
concept. Managing all kinds of assets in an organization can be viewed as an inventory problem.
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Transport Management
Transport management is the planning, controlling and decision making on operational area of logistics that geographically
moved and positioned inventory (Bowersox, Closs, & Cooper, 2010). Because of its fundamental importance and visible
cost, transportation had traditionally received considerable managerial attention and almost all enterprises, big and small, had
managers responsible for transportation (Bowersox, et al., 2010). Transportation occupied one-third to two thirds of the
amount in the logistics costs hence transport management influenced the performance of logistics system immensely
(Bowersox, et al., 2010). Transporting is required in the whole production procedures, from manufacturing to delivery to the
final consumers and returns. Only a good management and coordination between each component would bring the benefits of
logistics to a maximum. A good transport management in logistics activities could provide better logistics efficiency, reduce
operation cost, and promote service quality on firms (Bowersox, et al., 2010).
From the logistical system point of view, three factors were fundamental to transportation performance: cost, speed, and
consistency (Bowersox, et al., 2010). The cost of transport is the payment for shipment between two geographical locations
and the expenses related to maintaining on-transit inventory. Logistical systems utilized transportation that minimized total
system cost (Bowersox, et al., 2010). According to Bowersox, (2010) speed of transportation was the time required to
complete a specific movement. Speed and cost of transportation were related in two ways. First, transport firms capable of
offering faster delivery typically charged higher rates for their services. Second, the faster the transportation service was, the
shorter the time interval during which inventory were on transit and the higher the charges (Bowersox, et al., 2010). Thus, a
critical aspect of selecting the most desirable method of transportation to a firm is to balance speed and cost of service.
Sustainable Development
Sustainable development has been defined by many authors ,According to Wikipedia encyclopedia Sustainable development
can be defined as the principle for meeting human developmental goals while at the same time sustaining the natural
resource and ecosystem services upon which the economy and society depend. it can be deduced from this definition that it
is a development that meets the present need without compromising the ability of the future generation to meet their own
needs. It is a blue print to achieve better and guarantee more sustainable futre for all.
The growth and development of any nation depends largely on the manufacturing sector which contributes significantly to
economic development of all nations. The development of information technology has led to increased flow of information
around the world, which resulted in enhanced education of producers and consumers (Delfmann & Gehring, 2003). The only
way for companies to survive on the market is constant lowering the price of products and regular improvement of product
characteristics. Hence, the continuous intensive development of the company is crucial to its survival on domestic and global
markets with adequate logistics so as to maintain sustainable development in a developing economy such as Nigeria.
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THEORETICAL FRAMEWORK
The Resource Based View (RBV)
RBV identifies the (valuable, rare, imitable and non-substitutable) resources owned by the firm as the source of the firm’s
sustainable competitive advantage. Extensions of the theory have produced several theoretical refinements including the
knowledge-based view of the firm (Grant, 1996), core competency (Prahalad & Hamel, 1990) capabilities theory (Helfat &
Peteraf, 2003) and the dynamic capabilities view (Teece, Pisano, & Sheun, 1997).
The principal contribution of the resource based view of the firm to date has been as a theory of competitive advantage. Its
basic logic is a relatively simple one. It starts with the assumption that the desired outcome of managerial effort within the
firm is a sustainable competitive advantage (SCA). Achieving an SCA allows the firm to earn economic rents or above-
average returns. In turn, this focuses attention on how firms achieve and sustain advantages. The resource-based view
contends that the answer to this question lies in the possession of certain key resources, that is, resources having the
characteristics of value, barriers to duplication and appropriability. An SCA can be obtained if the firm effectively deploys
these resources in its product-markets. Therefore, the RBV emphasizes strategic choice, charging the firm's management with
the important tasks of identifying, developing and deploying key resources to maximize returns. In summary, the essential
elements of the resource-based view are: sustainable competitive advantage and superior performance; the characteristics and
types of advantage-generating resources; and strategic choices by management (Barney, 1991).
Empirical Framework
Fugate, Mentzer and Stank (2010) conducted a study on logistics performance and its influence on firm performance in USA
on 150 firms. The study revealed that increase in logistics efficiency, effectiveness, and differentiation decreased expenses,
inventory, cash requirements and increased inventory availability, timely delivery, on-time and damage-free deliveries, line-
item fill rates and sales which improved net margin and asset turnover, which improved return on assets and overall firm
performance.
Liu and Luo, (2008) examined the effect of logistics capabilities on performance in manufacturing firm‘s in China. The
study based on a survey of 1000 manufacturing firms in central south, south and central china regions. By exploratory and
confirmatory factor analyses, the scale of manufacturing firm’s logistics capabilities is obtained. The results show that
logistics capabilities can be conceptualized as a three dimensional construct: process capability, flexibility capability and
information integration capability
METHODOLOGY
The study adopted a survey research design. The studied company is Dangote Flour Mills Plc in Ilorin, Kwara State. A
simple random sample technique was adopted. A sample of one hundred and sixty two (162) employees was drawn from the
population using Yamane (1973) formula for estimating sample size. Primary source of data collection was used with the aid
of a structured questionnaire as it instrument. The questionnaire was divided into two sections; section A on demographic
questions while section B bothers on questions relating to the subject matter of the research. Using a Likert scale of 5 points,
42
the degree of agreement by the respondents to each of the items in the questionnaire is measured by calibrating the scale into
Strongly agreed (SA), Agreed (A), Undecided (U), Disagreed (D) and Strongly disagreed (SD) with the value of 5, 4, 3, 2,
and 1 respectively. The data obtained by means of questionnaire were analysed and interpreted, simple frequency tables were
used in presenting the results. The hypotheses were tested using Regression analysis and Pearson Product Moment
Correlation with the aid of Statistical Packages for Social Scientists (SPSS).
Test of Hypotheses
HO1: Transport Management has no significant effect on Organizational Effectiveness
Table 1.0 Model Summary
Model R R Square Adjusted R Std. Error of the
Square Estimate
1 .877a .769 .766 1.44449
The table shows the model summary. It shows how much of the variance in the dependent variable (Organizational
effectiveness) is explained by the independent variable (Transport Management). In this model, the value of R square is
0.769. When expressed as a percentage, it shows that Transport Management accounts for 76.9% of variances in
Organizational productivity. The remaining 23.1% is due to other variables that will affect organizational effectiveness but
are not present in the model.
Table 2.0 ANOVAa
Model Sum of Squares Df Mean Square F Sig.
Regression 679.359 1 679.359 325.591 .001b
1 Residual 204.481 113 2.087
Total 883.840 114
a. Dependent Variable: Organizational Effectiveness
b. Predictors: (Constant), Transport Management
Source: Author’s Computation, 2018
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The results of the findings above revealed that the level of significance was 0.001 which is less than 0.05. This implies that
the null hypothesis is rejected and the regression model is significant in predicting the effect of Transport Management on
Organizational Effectiveness.
The table above shows how transport management contributes to the prediction of organizational effectiveness. The beta is
0.877 and p-value of 0.001 lesser than 0.05% which is the critical value. This implies that Transport Management is
accumulated to 87.7 % of organizational effectiveness and since the p-value which is 0.001 is lesser than 0.05, this reveals
that the null hypothesis is rejected and we can therefore conclude that Transport Management has a positive impact on
Organizational effectiveness. The Coefficients value for Transport management which is 0.818 also reveals that Transport
management has a positive impact on organizational effectiveness because a unit increase in the Transport management will
bring about a 0.818 increase in organizational effectiveness.
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is also 0.002 which is less than 0.05, hence we would reject the null hypothesis stated above which means that there is a
positive relationship between Inventory management and Organizational productivity.
The table depicts a R2 Value of 0.923. This implies that 92.3% variation in Employee Efficiency is explained by Information
flow management. The Other 7.7% consists of Variables that will affect firm performance but are not present in the model.
The R-value of 0.961 also shows a strong relationship between Information flow management and employees efficiency. This
implies that the regression model is useful for making predictions since the value of R 2 is close to 1.
The ANOVA table is analyzed to see if any of the variables are significant. If the P-value is greater than 0.05 then we accept
the null hypothesis. From the ANOVA table, the P-Value = 0.000 which is less than 0.05 that is the level of significance.
This means that we will reject the null hypothesis and accept the alternative hypothesis which states that Information flow
management has a significant effect on employees’ efficiency.
DISCUSSIONS OF FINDINGS
The first hypothesis was built on the statement that transport management does not have any significant impact on
Organizational effectiveness of the manufacturing organization. The study findings rejected the null hypothesis and
established that organizational effectiveness was significantly influenced by transport management positively. Performance
was measured based on market share, response time and customer satisfaction. This study therefore established that transport
45
management provides better logistics efficiency, timely delivery, reduces operation costs and promotes services quality,
hence will affect performance of the organization positively. This finding is in line with the study of Musau, Namusonge,
Makhokha and Ngeno (2017) who concluded that Transport Management has a significant effect on organizational
performance which is measured by effectiveness.
The second hypothesis was based on the statement that there is no significant relationship between Inventory management
and Organizational productivity. The finding therefore rejected the null hypothesis, and established that there is a strong
relationship between inventory management and Organizational productivity. In manufacturing, inventory management is
even more important to keep production running. Every minute that is spent down because of the supply of raw materials is
interrupted costs on company’s unplanned expenses. In this way, inventory management is more than a means to control
costs; it becomes a way to promote the business. Due to this, every organization must focus and take into serious the
inventory control and management towards their business. This result agrees with the finding of Anichebe and Agu (2013)
who concluded that there is a significant relationship between good inventory management and organizational productivity.
The third hypothesis was able to measure the impact of Information flow management on Employees efficiency. The study
findings rejected the null hypothesis and established that the impact of information flow management on employee’s
efficiency was statistically significant. This finding submits that an improvement in information flow would lead to an
increase in mean index of information flow management increases the performance of the company by a positive unit. This
finding is in line with the findings of Asamu (2014) who opined that effective flow of information within an organization
helps to improve workers performance according to a study carried out in Lagos.
This study considers the impact of logistics management on organizational performance. Based on the responses of 192
respondents of the Dangote Flour Mills, Ilorin, Kwara State. We found that; transport management has a significant effect on
Organizational effectiveness. The need for materials movement along a supply chain puts transport management at the core
of logistics which is why Organizations must pay proper attention to Transport management if they want to record success in
Logistics management.
Secondly, this study has proven that Inventory management contributes largely to productivity within an organization.
Inventories are vital to the successful functioning of manufacturing and retailing organizations. They may consist of raw
materials, work-in-progress, spare parts/consumables, and finished goods. It is not necessary that an organization has all
these inventory classes. But, whatever may be the inventory items, they need efficient management as, generally, a
substantial share of its funds is invested in them. This therefore reiterates the conclusion that there is a significant
relationship between Inventory management and Organizational productivity.
Thirdly, employees in organizations will perform more efficiently if there is proper flow of information within the
organization. Information flow management ensures seamless flow of Information from the Top level to the lower cadre of
46
management. Therefore, organizations must realize that communication is an important component of organization activity
as it will help employees to understand what is expected of them during the logistics management process.
However, we recommend that organizations should incorporate transport management in their operations processes such as
proper fleet management, vehicle scheduling, route planning, proper maintenance of vehicles in other to ensure procurement
of raw materials and distribution of products in order to increase overall cost efficiency, enhanced market share, and reduced
lead time thereby impacting positively on their performance.
Secondly, inventory management should be enhanced as it will help to improve productivity within the organization. High
level of inventory management will tie down capital of the organization, so one of the major focuses in formulating strategic
plans of a manufacturing organization should be inventory management. Also, various Inventory management strategies such
as just-in-time(JIT) should be used to manage the stocks that is kept in storage, increase efficiency, decrease waste by
receiving goods only as they need them for the production process which reduces inventory costs and economic order
quantity (EOQ) should be used to minimize the total holding Costs and ordering costs.
Lastly, there should be accurate flow of logistics Information from Managers to employees. This will help to prevent
confusions that may lead to error in meeting customers demand. There should be investment on information technology
gadgets, and information systems to process, transmit and disseminate data useful to managers in manufacturing operations to
bring about quality products, reduce the cost of transformation of goods and efficiency amongst workers and contribute
significantly to sustainable development for the presnt and future generation.
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ABOUT THE AUTHORS
Falilat Ajoke Abdul, Ph.D is a lecturer I in the Department of Business Administration, Faculty of Management Sciences,
University of Ilorin.
Isaac Iortimbir Aun, Ph.D is a lecturer I in the Department of Business Administration, Faculty of Management Sciences,
University of Ilorin.
Ganiyu Taiwo Oladipo, Ph.D is a lecturer I in the Department of Business Administration, Faculty of Management
Sciences, University of Ilorin.
Oluwayomi Omotayo Olota, is a lecturer II in the Department of Business Administration, Faculty of Management
Sciences, University of Ilorin
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