CAPACITY PLANNING AND PERFORMANCE IN THE NIGERIAN BREWING INDUSTRY IN SOUTHEASTERN NIGERIA

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TABLE OF CONTENTS

          Pages

Declaration…………………………………………………………………………………  iii

Approval……………………………………………………..…….…………………          iv

Dedication…………………………………………………………………………………  v

Acknowledgements…………………………………………..………………………….     vi

Table of Contents………………………………………………..…………….…………    vii

List of Tables………………………………………………………….….……………..      x

List of Figures……………………………………………………………………………     xi

Abstract………………………………………………………………………………….     xii

CHAPTER ONE:

  1.  Background of the Study………………………………………………………… 1
  2.  Statement of the Problem……………………………………………………         5
  3.  Objectives of the Study………………………………………………………..      5
  4. Research Questions…………………………………………………………….      6
  5.  Research Hypotheses…………………………..………………………………..    6
  6.  Significance of the Study……………………………………………………….     7
  7. Scope of the Study……………………………………………………………..      7
  8. Limitations of the Study………………………………………………………        8
  9. Profiles of the Brewing Firms studied……………….……………….          8

1.10     Operational Definition of Terms………………………………………..   13

References………………………………………………………………………      15

CHAPTER TWO: LITERATURE REVIEW

  •  Literature………………………………………………………………………      16
  • Conceptual Framework………………………………………………………..       17
  • Theoretical Framework………………………………………………………..       37
  •  Empirical Review………………………………………………………………      67
  • Capacity Management and Planning………………………………..      69
  •  Brewing…………………………………………………………………………    74
  • Summary of the Review of the Related Literature……………….  90

 References………………………………………………………………………….            93

CHAPTER THREE: METHODOLOGY

  •  Research Methods………………………………………………            105
  • Research Design……………………………………………………………            105
  •  Sources of Data Collection…………………………………………………….       105
  •  Population of the Study……………………………………………………….        106
  • The Sample and Sampling Technique…………………………………    106
  •  Description of Research Instruments………………………………… 107
  • Data Analysis Technique(s) ……………………………………………  107
  • Validity of Instrument……………………………………………………    109
  • Reliability of the Research Instrument……………………………….  109

References………………………………………………………………………      110

CHAPTER FOUR: DATA PRESENTATION AND ANALYSIS

  •  Data presentation and    analysis…………………………………………….           111
  • Data Presentation…………………………………………………………………     111
  • Data Analysis…………………………………………………………………….        114
  • Analysis of the Relationship of the Contingency Theory and the Five Objectives     126
  • Discussion of Findings………………………………………………………..          139
  • Discussion related to the Contingency Theory and Multi Period Capacity Problem  150

           References………………………………………………………………………..        161

CHAPTER FIVE:  SUMMARY OF FINDINGS, CONCLUSION, RECOMMENDATIONS, CONTRIBUTION TO KNOWLEDGE AND SUGGESTIONS FOR FUTURE RESEARCH

  •  Summary of Major Findings…………………………………………………..           167
  • Conclusion………………………………………………………………………           167
  • Recommendations……………………………………………………………….       169
  • Contribution to Knowledge……………………………………………..        169
  •  Suggestions for Future Research………………………………………          170

          References………………………………………………………………………….       171

Bibliography…………………………………………………………………….           172

Appendix I(Questionnaire) ……………………….……………………………          186

Appendix II(Oral Interview Schedule) ………………..…………………………      191

Appendix III (Dichotomous Oral Interview Schedule on the Contingency Theory of Capacity Planning)……………………………………..          192

Appendix IV (Dichotomous Oral Interview Schedule for Implementing the Capacity Multi-Period Problem…………………………………………        193

Appendix V (Calculation of Cronbach’s Alpha Co-efficient of Reliability)…….       194

Appendix VI (Results related to the Personal Data of the Respondents)…………     195

Appendix VII (Multi-Period Capacity Planning Problem)………………..      199

LIST OF TABLES

     PAGE

Table 4.1: The Presentation of the Response rate of the questionnaires administered…….  111

Table 4.2: The Summary of the Personal Data of the 740 Respondents………………….   112

Table 4.3: The Presentation of the Responses on their Statuses and their experiential years 113

Table 4.4: The Analysis of the Responses related to the Five Objectives…………………  114

Table 4.5: The Analysis of the 12 steps towards developing a Capacity Plan ………..…..  116

Table 4.6: The Analysis of the Responses Opposite in Meaning to the Objectives………    117

Table 4.7: The Analysis of the other Responses related to the First Four Objectives…….   118

Table 4.8: The Computation Details of the First Hypothesis………..…….. 122

Table 4.9: The Computation Details of the Second Hypothesis……….    123

Table 4.10: The Computation Details of the Third Hypothesis………  124

Table 4.11: The Computation Details of the Fourth Hypothesis………..  125

Table 4.12: The Computation Details of the Fifth Hypothesis…………………………….. 126

Table 4.13: The Analysis of the Responses to the Dichotomous Oral Interview Questions…..           127

Table 4.14: The Analysis of the Responses on the Relationship between the Multi-Period Capacity Problem and the Five Objectives………………………. 12

Table 4.15: The Analysis of the Data on how Indigenous Capacity Building Theory relates to the Five Objectives………………………………………………..    131

LIST OF FIGURE

 PAGE

Figure 2.1: Systems Theory of Performance…………………………   59

ABSTRACT

The study investigated the influence of capacity planning on the performance of brewery firms in South Eastern States of Nigeria. The specific objectives of the study were to determine the extent to which capacity planning enhanced the level of performance in the brewing industry in South Eastern Nigeria. The study examined the nature of the relationship between capacity requirement planning and materials requirements planning, to ascertain the extent to which capacity planning sustains organizations competitive advantage, thereby determining the relationship between capacity planning and capacity building, determining the steps toward developing a capacity planning that affects the profitability in the brewing firms in the area studied. The research design adopted in the study was a combination of the survey, oral interview and model modifications. Hypothesis 1,3 and 5 were  tested using Z test of population proportions and 2 and 4 using Spearman’s Rank Correlations revealed that capacity planning to a large extent enhanced the performance in the brewing industry in Southeastern Nigeria, that there was a significant capacity planning to a large extent (p< 0.05) enhanced the performance in the brewery industry in the area studied. Capacity requirement had positive relationship (p< 0.05)with materials requirements planning. Capacity planning to large extent (p< 0.05) sustained the organizations competitive position. There was significant positive relationship (p< 0.05) between capacity planning and capacity building. The steps of the capacity plan positively (p< 0.05) affected profitability. Positive relationship between capacity requirements planning and materials requirements planning, that capacity planning to a large extent sustained the organizational competitive advantage, that there is a positive relationship between capacity planning and capacity building, that the 12 steps of the capacity plans were developed that positively affected the profitability in the brewing industry in the area studied.  In conclusion, the finding that capacity planning enhanced the performance in the brewing industry in Southeastern Nigeria implied that it made the brewing companies studied to achieve their organizational goals and objectives. The finding that there was a significant positive relationship between capacity requirements planning and materials requirements planning implied that there was a positive correlation between them. This means that materials requirements planning which was a method of coordinating the detailed production plans could lead to an enhancement of capacity requirements planning which meant taking future decisions on the items needed for the production capability of the brewing facility.

CHAPTER ONE

1.1 BACKGROUND TO THE STUDY

Capacity Planning has enhanced the performance of the brewing industry in Nigeria right from 1946 when Nigerian Breweries Limited set up the First Brewery in Nigeria (Nigerian Breweries PLC, 2011). The direction has been to increase the number of breweries. Guinness Nigeria Plc set up a Brewery in Lagos in 1963. The magnitude is now five breweries located at Ikeja, Ogba, Benin, Jos and Aba (Guinness Nigeria Plc; 2011). Capacity has continued to be the production capability of a facility in terms of the inputs, throughput and outputs.

In 1989, the Federal Government policy of using local inputs such as sorghum and corn instead of malled barley negatively affected a lot of the breweries. Both Nigerian Breweries Plc and Guinness Nigeria Plc depended on the assistance of the Parent Companies. The Brewing Industry in Nigeria have relied on capacity planning for meeting the increased demand for beer, stout and malt products through Demand Forecasting and Capacity Requirements Planning (Guinness Nigeria Plc, 2011; Nigerian Breweries Plc, 2011).

Capacity building has followed capacity planning in the creation of the enabling environment with appropriate policy and legal frameworks, institutional development including community development (of women in particular). Human Resource Development and strengthening of managerial systems, adding that, UNDP recognizes that capacity building is a long-term, continuing process, in which all stakeholders participate (ministries, local authorities, non-governmental organizations and water user groups, professional associations, academics and other (citation: UNDP). Capacity building is very necessary for capacity planning. Planning is deciding in advance what is to be done, when, where, how and whom it is to be done. In that it bridges the gap from where we are to where we want to go in any business building and performance. It is continuous, periodic managerial activities and reduces uncertainty.  Capacity is the production capability of a facility and it is measured in terms of inputs, throughput and outputs. Manufacturing is that aspect of industry in which products, waste products and services are produced (UNDP, 2012).

By 1992, capacity building became a central concept in Agenda 21 and in other United Nations Conference on Environmental and Development (UNCED) Agreements. By 1998, the UN General Assembly had commissioned and received evaluations of the impact of the UN system’s support for capacity building. These evaluations were carried out by the UN Department of Economic and Social Affairs as part of the United Nations GATT Agreement’s (UNGA’) triennial policy review during which it looks at all UN system development activities (UN Publications Section). Since then, the issue of capacity building has become a major priority within the global conventions, the Global Environmental Facility (GEF) and the International Communities.

In the year 2000, UNDP through its Strategic Partnership with the GEF Secretariat, launched the Capacity Development Initiative (CDI), a consultative process involving extensive outreach and dialogue to identify countries’ priorities issues in capacity development needs, and based on these findings, to develop a strategy and action plan that addresses identified needs to meet the challenges of global environmental action.

In 2002, the World Summit in Sustainable Development (WSSD) and the Second GEF Assembly reaffirmed the priority of building the capacity of development countries. The WSSD recommended that GEF resources be used to provide financial resources to developing countries to meet their capacity needs for training, technical knowhow and strengthening national institutions.

Capacity Building is, however, not limited to international aid work. More recently, the term is being used by governments to transform community and industry approaches to social and environmental problems.

According to Skinner (1985), there are five periods of industrial history that stand out in the development of manufacturing management:

1780 – 1950    Manufacturing leaders as technology capitalists.

1850 – 1890    Manufacturing leaders as architects of mass production.

1890 – 1920    Manufacturing management as movers in the organization.

1920 – 1960    Manufacturing management refines its skills in controlling and stabilizing.

1960 – 1980    Shaking the foundations of industrial management.

During the early years of the indusial revolution, production began to shift from low volume activity to larger-scale operations. Although the scale of these early operations was large, the machinery was not particularly complex and production operations were rigid. The management of these operations remained essentially in the hands of top management with the aid of overseers. Working conditions during this period were often abysmal.

The major thrust of the Industrial Revolution took place in the (second 40-year) period from 1850 – 1890. During this period, the concepts of mass production and the assembly line were born. Since coal could be efficiently transported, plants could be located in a larger variety of locations. The plant foreman had enormous power and influence during this period.

According to Skinner(1985), the job of production manager actually came into being in the period 1890 – 1920. Manufacturing processes became too complex to be handled by top management personnel only. With this complexity came the need for scientific management techniques. Frederick Taylor (often called the father of industrial engineering) is generally credited with being the originator of the concept of scientific management. Most of the scientific management techniques introduced around the turn of the century involved merely breaking a task down into its various components. These techniques are probably less scientific than just orderly. With the new levels of complexity, the single plant foreman could no longer coordinate the demands of producing a varied product line and changing production schedules.

The enormous worldwide depression that took place n the 1930s notwithstanding, in many ways the period 1920 – 1960 can be considered a golden age for the development of industry in the United States. By 1960, the United States was the preeminent economic power in the world. With the growth of the labour movement, working conditions had improved enormously. True scientific methods started finding their way into the factory. Mathematical models for learning, inventory control, quality control, production scheduling, and project management gained acceptance by the user community. Top management often came through the ranks of production professionals during this period.

Since 1960, many American companies have relinquished their domination of certain markets. Products that were traditionally produced in the Untied States are now imported from Germany, Japan, and the Far East. Many products are produced more cheaply and with higher quality overseas. Furthermore, management-employee relations are often better in foreign companies. Quality circles, introduced in Japan, allowed employees to input opinions about product development and production procedures. Far more sophisticated scientific production methods have been adopted in Japan than in other countries. For example, there are many more robots and modern flexible manufacturing systems in Japan than in the United States (Skinner, 1985).

Over the past five years, a broad conceptual framework has emerged. This approach is increasingly being adopted by the development cooperation community. It involves a System Perspective that addresses various levels of environmental management capacities (i.e. capacities of institutions, individuals, overall countries and regions) (Vallejo, 2006). This approach lays greater emphasis on the Capacity Development Process itself, on local ownership of its process and on equal partnership in its support (Lafontaine, 200).Capacity Building involves human resource development, the development of organizations and promoting the emergence of an overall policy environment, conducive to the generation of appropriate responses to emerging needs (UNDP/UNDOALOS, 1994).

The concept of capacity building includes the following issues.

Human resource development, the process of equipping individuals with the understanding, skills and access to information, knowledge and training that enables them to perform effectively.Organizational development, the elaboration of management structures, processes and procedures, not only within organizations but also the management of relationships between the different organizations and sectors (public, private and community).Institutional and legal framework development, making legal and regulatory changes to enable organizations, institutions and agencies at all levels and in all sectors to enhance their capacities.The levels of capacity building are that:The Individual: refers to the process of changing attitudes and behaviours-imparting knowledge and developing skills while maximizing the benefits of participation, knowledge exchange and ownership.The Institution: focuses on the overall organizational performance and functioning capabilities, as well as the ability of an organization to adapt to change.

The System: emphasizes the overall policy framework in which individuals and organizations operate and interact with the external environment (Lafontaine, 2000).

1.2   STATEMENT OF THE PROBLEM


CAPACITY PLANNING AND PERFORMANCE IN THE NIGERIAN BREWING INDUSTRY IN SOUTHEASTERN NIGERIA