IMPACT OF MATERIALS MANAGENENT ON ORGANIZATIONAL

PERFORMANCE: THE CASE OF AMG STEEL FACTORY PLC.

A Thesis Submitted to the Department of Business Management in Partial

Fulfillment of the Requirements for the Award of Master’s Degree in
Business Administration (MBA)

By:

ROBA USMAEL

RIFT VALLEY UNIVERSITY

FACULTY OF BUSINESS AND SOCIAL SCIENCES

DEPARTMENT OF BUSINESS MANAGEMENT

POST GRADUATE PROGRAM

ADVISOR: YEHUALASHET DEMEKE (Ph.D.)

November 2024

Adama, Ethiopia
 DECLARATION
I declare that the work done in the project entitled “the impact of material management on
organizational performance the case of AMG steel factory” is my original work under the
supervision and guidance of Dr. Yehualashet Demeke. This work has not been previously
submitted to any higher institution for any diploma, degree or other similar work.

Roba Usmael

Signature ___________________Date: ________________________

 CERTIFICATION
This is to certify that Roba Usmael has carried out his research work on the topic entitled
“The impact of material management on organizational performance the case of AMG
steel factory”. The study fulfills scientific requirements and accordingly endorsed for
submission to the department for the next level of evaluation deemed oral presentation before
the award of Master’s degree in Business Administration (MBA) to the candidate.

Yehualashet D (Ph.D.)

Signature: ________________________Date: ____________________________

II
 APPROVAL SHEET
As members of thesis Approval Board of Examiner we certify that we have read the thesis

prepared by Roba Usmael , entitled “The impact of material management on

organizational performance” and submitted in partial fulfillment of the requirements for
the degree of Master in Business Administration complies with regulation of the university
and meets the accepted standards as to originality and quality concerns.

Approved by Board of Examiners

__________________________ __________________ ________________

Internal Examiner Signature Date

__________________________ __________________ ________________

External Examiner Signature Date

III
 ACKNOWLEDGMENT
First, I would like to be praise to the Almighty God for his blessing in completing this
Proposal. Secondly and mostly, I would like to express my deepest gratitude to my advisor
Dr. Yehualashet.D (PhD) for his guidance and constructive comments.

IV
 TABLE OF CONTENTS

DECLARATION..........................................................................................................................I

CERTIFICATION.......................................................................................................................II

APPROVAL SHEET.................................................................................................................III

ACKNOWLEDGMENT...........................................................................................................IV

TABLE OF CONTENTS............................................................................................................V

LIST OF TABLES.....................................................................................................................IX

LIST OF FIGURES....................................................................................................................X

ACRONYMS/ ABBREVIATIONS..........................................................................................XI

ABSTRACT.............................................................................................................................XII

CHAPTER ONE..........................................................................................................................1

INTRODUCTION.......................................................................................................................1

1.1. Backgrounds of the study......................................................................................................1

1.2. Statements of the Problem....................................................................................................3

1.3. Objectives of The study........................................................................................................4

1.3.1. General Objectives.............................................................................................................4

1.3.2. Specific Objectives............................................................................................................4

1.4 Research Questions................................................................................................................4

1.5 Hypotheses.............................................................................................................................5

1.6. Significance of the study.......................................................................................................5

1.7. Scope of the study.................................................................................................................5

1.8. Definition of Key terms........................................................................................................6

1.9. Thesis Organization..............................................................................................................7

CHAPTER TWO.........................................................................................................................8

V
REVIEW OF RELATED LITERATURE...................................................................................8

2.1.1 Natures of Materials Management......................................................................................8

2.1.2 Meaning, Scope, and Function of Material Management.................................................11

2.1.3 Impact of Materials Management on Organizational Performance..................................12

2.1.3 The Objectives and Role of Materials Management.........................................................15

2.1.4 Role of Materials Management.........................................................................................15

2.1.5 Importance of Materials Management..............................................................................19

2.1.6 Key Functional Areas of Materials Management.............................................................21

2.1.7 Achieving Organizational Performance through Materials Management........................23

2.1.7.1 Procurement Management.............................................................................................24

2.1.7.2 Inventory Management..................................................................................................27

2.1.7.3 Storage (Warehouse) Management................................................................................28

2.1.7.4 Interdepartmental Coordination (Collaboration)...........................................................30

2.1.8 Organizational performance..............................................................................................31

2.1.9 Measurement of Materials Management..........................................................................32

2.2 Empirical Review.................................................................................................................33

2.3. Conceptual framework of the study....................................................................................36

2.4 Hypotheses Development....................................................................................................37

CHAPTER THREE...................................................................................................................39

RESEARCH DESIGN AND METHODOLOGY.....................................................................39

3.1. Research Design..................................................................................................................39

3.2. Population and Sampling Techniques.................................................................................39

3.2.1 Population.........................................................................................................................39

3.2.2 Sample Size and Sample determination............................................................................40

3.3 Sources and Types of Data..................................................................................................40

VI
3.4. Data collection instruments.................................................................................................40

3.5 Data Collection Procedures..................................................................................................40

3.6 Validity and Reliability........................................................................................................41

3.7. Data Analysis......................................................................................................................42

3.8. Operationalization of variables...........................................................................................42

3.9. Ethical Considerations........................................................................................................43

CHAPTER FOUR......................................................................................................................44

DATA PRESENTATION, ANALYSIS AND DISCUSSIONS...............................................44

4.1 Introduction..........................................................................................................................44

4.2 Response Rate.................................................................................................................44

4.2. Demographic Characteristics of Respondents....................................................................44

4.3 Descriptive Statistics............................................................................................................47

4.3.1 The Impact of Materials Management Functions on Organizational Performance..........47

4.4 Inferential Analysis..............................................................................................................56

4.4.1 Correlation Analysis.........................................................................................................56

4.4.2 Assumption.......................................................................................................................59

4.4.2.1 Test of Linearity Assumption........................................................................................59

4.4.2.2 Test of Normality Assumption.......................................................................................59

4.4.2.3 Test of Multicollinearity Assumption............................................................................61

4.4.2.4 Test of Homoscedasticity Assumption..........................................................................62

4.4.2.5 Test of Autocorrelation Assumption..............................................................................62

4.4.3 Regression Result Analysis...............................................................................................63

4.5 Semi-Structured Open-Ended Question Analysis................................................................70

4.6 Discussion............................................................................................................................72

CHAPTER FIVE.......................................................................................................................74

VII
SUMMARY, CONCLUSIONS AND RECOMMENDATIONS.............................................74

5.1 Summary..............................................................................................................................74

5.2 Conclusion...........................................................................................................................75

5.3 Recommendations................................................................................................................76

5.4 Suggestion for Further Study...............................................................................................77

REFERENCES..........................................................................................................................79

APPENDICES...........................................................................................................................88

Appendix A: Questionnaire for Employees...............................................................................88

VIII
LIST OF TABLES
Table 4.1: Respondent’s Background Information ………………………………………….45

Table 4.2: Organizational Performance ………………………………………………….….47

Table 4.3: Procurement Management ……………………………………………………….49

Table 4.4: Inventory Management…………………………………………………………51

Table 4.5: Storage Management…………………………………………………………….53

Table 4.6: Interdepartmental Collaboration…………………………………………………55

Table 4.7:Correlation b/n Materials Management Functions and Organizational

Performance…………………………………………………………………………………….. 57
Table 4.8: Correlation b/n Overall Materials Management Functions and Organizational
Performance……………………………………………………………………………………..58
Table 4.9: Multicollinearity Diagnosis………………………………………………………….62
Table 4.10: Durbin-Watson………………………………………………………………………………………63
Table 4.11: Model Summary……………………………………………………………………64

Table 4.12: ANOVA of the Variables…………………………………………………………..65

Table 4.13: Regression Coefficients of the Variables…………………………………………..65
Table 4.14: Summary of Expected and Actual Impact of Independent Variables on Dependent
Variable…………………………………………………………………………………………..70

IX
LIST OF FIGURES
Fig 2 Source developed from literature review……………………………………………….37

Figure 4.1: Linearity Test……………………………………………………………………..59

Figure 4.2 Histogram…………………………………………………………………………60

Figure 4.3 Normal P-P Plot……………………………………………………………………61

X
ACRONYMS/ ABBREVIATIONS
AMG – Abdulekim Mohammed Galeto

ABC – Always Better Control

ANOVA – Analysis of Variance

Df – Degree of Freedom

EMM – Effective Materials Management

HRM – Human Resource Management

IDC – Interdepartmental Collaboration

IM – Inventory Management

JIT – Just-In-Time

MIS – Management Information System

MRP – Materials Resource Planning

OP – Organizational Performance

OLS - Ordinary Least Square

PLC – Private Limited Company

PM – Procurement Management

R&D – Research and Development

SM – Storage Management

SPSS – Statistical Package for Social Science

WIP - Work-In-Process

XI
 ABSTRACT
This study examines the influence of materials management on organizational performance
at AMG Steel Factory PLC, focusing on procurement, inventory management, storage
management, and interdepartmental collaboration. Effective materials management is
highlighted as essential for minimizing costs and enhancing efficiency, addressing the
critical issue of material shortages that can disrupt productivity and reduce competitiveness.
Using a descriptive and explanatory design outlined, stratified sampling and purposive
sampling was applied to select participants most knowledgeable about materials processes,
capturing both qualitative and quantitative insights. Data collection included
questionnaires, focus groups, and document analysis, with findings analyzed through
regression and correlation to evaluate the impact of each materials function on
performance. presents the results, showing that inventory management has the strongest
positive influence on performance, reducing costs and increasing operational efficiency.
Interdepartmental collaboration and storage management also play key roles, enhancing
resource use and information flow, while procurement management, though impactful,
showed a relatively smaller effect. concludes with recommendations for AMG Steel Factory
to adopt advanced inventory systems, improve storage practices, and strengthen
departmental collaboration, ensuring sustainable competitive advantage. Future research
should apply this framework across multiple firms for broader insights.

Keywords: Materials Management, Organizational Performance, Inventory Management,

Procurement, Storage Management, Interdepartmental Collaboration, AMG Steel Factory

XII
 CHAPTER ONE
INTRODUCTION
1.1. Backgrounds of the study
Materials management is a crucial business activity that ensures a consistent flow of materials,
including components, raw materials, and semi-finished goods, necessary for manufacturing,
logistics, and other operations. It is a science that focuses on the planning, acquisition, and
supply of materials throughout the supply chain (Christopher, 2020). Effective materials
management enhances organizational performance by optimizing resource utilization,
minimizing costs, and ensuring customer service requirements are met. The process involves
integrated and coordinated activities to ensure that materials are available at the right time, place,
and quantity to meet production needs (Kumar & Gupta, 2019).

Materials management systems are responsible for overseeing planning, sourcing, procurement,
warehousing, and the movement of materials to ensure production runs efficiently and
profitably. Manufacturing firms rely on these systems to control production activities in a way
that minimizes costs and maximizes performance (Baker & Canessa, 2021). Poor materials
management can result in increased production costs, reduced profitability, and inefficiencies,
negatively affecting organizational performance (Adebayo & Oyewole, 2020).

Materials are the lifeblood of manufacturing companies, and their availability at the right price,
quantity, and quality is essential for coordinating production activities (Gupta & Mehta, 2021).
Inefficient management, such as overstocking or understocking, can destabilize a manufacturing
firm, leading to disruptions in production and decreased profitability. The primary goal of
materials management is to ensure that production materials are always available at the point of
use when required, allowing organizations to maintain stability and performance (Jiang &
Zhang, 2022).

Materials management encompasses all functions of operations management, from the

procurement of raw materials through production processes to the delivery of finished products.
It integrates responsibilities for determining manufacturing requirements, scheduling production,
and managing materials procurement, storage, and handling (Christopher, 2020). Key activities
in materials management include materials requirements planning, procurement, inventory
control, warehousing, transportation, and materials handling. Effective materials management is

1
recognized as a critical source of cost reduction and can be treated as a profit center for
manufacturing firms (Baker & Canessa, 2021).

The adoption of advanced technology has further improved materials management processes, as
many functions now rely on shared databases that enhance efficiency. Effective materials
management is fundamental to the sustainability of businesses, industries, and economies, as it
ensures the efficient use of resources (Kumar & Mehta, 2020).

Organizational performance refers to an organization's ability to achieve its goals using

resources efficiently and effectively. It is measured in terms of performance, inventory
reduction, market share growth, and other key metrics (Jacobs & Chase, 2021). Organizational
performance can be evaluated through financial outcomes such as profits, return on assets, and
return on investment, as well as product market performance, including sales and market share
(Abdulaziz & Williams, 2020). Performance metrics such as quality, efficiency, profitability,
and sustainability are used to compare an organization’s success relative to others in the industry
(Thomas, 2019).

International studies have consistently shown that materials account for over 50% of annual
turnover in manufacturing firms, highlighting the importance of materials management in
achieving cost savings, improving production efficiency, and increasing profitability and
competitiveness (Ondiek & Ogbadu, 2019). To survive in today’s globalized business
environment, organizations must adopt strategies that minimize operational costs and maximize
return on investment, ensuring reliable product quality and delivery through coordinated
production and distribution activities (Cross & Blake, 2021).

In Ethiopia, research into materials management has gained attention in recent years, though the
results have not been entirely satisfactory. Studies by Asmara (2015), Dawd (2015), and Tibebu
(2016) revealed inefficiencies in construction materials management, contributing to high costs
and poor quality in the construction industry. Tezera and Yadesa (2017) argued that materials
resource management is critical to organizational success, as the flow of materials to, through,
and out of organizations can determine their performance.

2
Building on this background, this study intends to explore the impact of materials management
on the performance of manufacturing companies, with a specific focus on AMG Steel Industry
PLC.

1.2. Statements of the Problem

Materials management involves the coordination of key activities such as planning, controlling,
organizing, and directing efforts to ensure the efficient procurement, inventory management,
storage, and utilization of inputs in a manufacturing organization. This function is central to
production processes and overall organizational management (Kumar & Mehta, 2021). Effective
materials management not only improves production efficiency but also leads to significant
reductions in material costs, ultimately enhancing a firm’s performance (Gupta & Singh, 2020)

According to recent studies, ineffective materials management disrupts organizational

performance, performance, and profitability. Cross (2021) highlights that poor materials
management, including inefficient purchasing, inventory control, and distribution, can lead to
operational challenges that negatively affect a firm’s ability to meet its strategic objectives.
When materials are not properly integrated, inventoried, stored, and distributed, companies often
face the opposite outcomes, experiencing inefficiencies that hamper performance. This
underscores the importance of materials management in ensuring uninterrupted production runs
and improved operational performance.

An integrated materials management system, particularly one supported by modern technologies

like electronic data processing (ERP), plays a critical role in reducing data processing errors,
monitoring inventory levels, and enabling quick preventive and corrective actions (Akindipe,
2019). Such a system allows for effective coordination of procurement, inventory control, and
storage functions, which is vital for maintaining production efficiency. The importance of
effective planning, organizing, and coordinating material resources before implementation
cannot be overstated, as poor management in these areas can lead to production inefficiencies
and increased costs (Cross & Blake, 2021).

In the Ethiopian context, the management of materials within manufacturing firms has shown
room for improvement. Studies indicate that many manufacturing companies in Ethiopia suffer
from inadequate materials management practices, leading to inefficiencies in procurement,
storage, and inventory control (Tesfaye & Girma, 2022). These inefficiencies contribute to
3
higher operational costs and reduced performance, further demonstrating the critical need for
better materials management systems in the country. Despite the growing recognition of the
importance of materials management, Ethiopian firms have not yet fully adopted integrated
systems, which limits their ability to optimize performance.

The relationship between materials management functions and organizational performance in

Ethiopian manufacturing companies, especially in the steel industry, remains underexplored.
Although materials management is essential for reducing production costs, enhancing efficiency,
and improving profitability, there is insufficient empirical evidence on how specific functions
such as procurement management, inventory control, and interdepartmental collaboration affect
organizational performance in Ethiopia.

This study aims to investigate these relationships, providing insights for optimizing materials
management practices to enhance competitiveness and operational performance at AMG Steel
Factory.

1.3. Objectives of The study

1.3.1. General Objectives
The general objectives of this study is to investigate the impact of materials management on
organizational performance of AMG Steel Factory.

1.3.2. Specific Objectives

 To examine the impact of procurement management on the organizational performance of
AMG Steel Factory.
 To assess the role of inventory control in improving organizational performance at AMG
Steel Factory.
 To evaluate how storage management influences the operational efficiency of the factory.
 To analyses the effect of interdepartmental collaboration on the performance of AMG Steel
Factory.
 To provide recommendations on how materials management functions can be optimized to
improve overall performance.
1.4 Research Questions
The following research questions were answered in this study:

4
 What is the impact of procurement management on organizational performance at AMG
Steel Factory?
 How does inventory control contribute to operational performance in the factory?
 In what ways does storage management influence performance efficiency at AMG Steel
Factory?
 How does interdepartmental collaboration affect performance in the factory’s operations?
 What strategies can be implemented to optimize materials management functions and
improve performance?
1.5 Hypotheses Development
Ha1: To investigate association between procurement management and organizational
performance?

Ha2: To examine relationship between inventory management and firm’s performance?

Ha3: To identify association between storage (warehousing) management and organizational

performance?

Ha4: To evaluate relationship between interdepartmental collaboration and company’s

performance?

1.6. Significance of the study

With an emphasis on the Ethiopian steel sector, this study offered insightful information about
how materials management operations affect manufacturing companies' performance. The results
were useful to Ethiopian managers and legislators, providing tactics for boosting operational
performance and materials management procedures. Through filling in the knowledge gap in the
Ethiopian setting, this study helped create more effective materials management systems that
promote competitiveness and organizational growth.
1.7. Scope of the study
The researcher focused on AMG Steel Factory, a leading steel manufacturing company in
Ethiopia. The study examined key materials management functions procurement, inventory
control, storage management, and interdepartmental collaboration and their relationship with
organizational performance. Data were collected from various departments within the factory,
including procurement, inventory, production, and logistics.

5
1.8. Definition of Key terms
Materials Management is the process of planning and controlling material flows within an
organization. It encompasses various functions, including planning and procuring materials,
evaluating and selecting suppliers, purchasing, managing expenditures, handling shipping and
receipt processes (including quality control), warehousing, inventory management, and
distribution of materials. Effective materials management ensures that the right materials are
available at the right time and place, which is crucial for maintaining operational efficiency and
minimizing costs (Gonzalez et al., 2020).

Procurement Management Procurement management involves the transactional purchasing of

goods and services, integrating seamlessly with accounts payable to complete the source-to-
settle cycle. This process provides the necessary documentation to facilitate the processing of
supplier invoices for payment. (Monczka et al., 2016).

Inventory management Inventory management refers to the systematic process of storing,

ordering, and selling goods and services. This discipline is critical for managing the flow of raw
materials from procurement through to the production of finished products. Effective inventory
management helps prevent stock outs and overstock situations, ensuring that the organization
maintains a balanced inventory that supports production needs and customer demands (Wild,
2017).

Warehouse management Warehouse management involves overseeing the day-to-day

operations of a warehouse, ensuring the smooth execution of activities such as receiving,
inventory management, storage, packing, and shipping of products. An effective warehouse
management system helps streamline processes, reduce costs, and enhance service levels by
improving the accuracy and efficiency of warehouse operations (Frazelle, 2002).

Interdepartmental collaboration refers to the cooperation among individuals and teams from
different departments working together to complete projects or achieve common goals. This
collaborative approach is vital for ensuring that various functional areas within an organization
align their efforts, share information, and leverage their expertise to enhance overall performance
(Huang & Dyer, 2016).

6
Organizational performance is a measure of how efficiently and effectively an organization
utilizes its resources, processes, and strategies to achieve its goals and objectives. It involves
evaluating the collective performance of various departments, teams, and individuals within the
organization. Higher organizational performance indicates a more efficient use of resources,
leading to improved profitability and competitiveness (Becker & Huselid, 2006)

1.9. Thesis Organization

This research paper was organized into five main chapters.
The first chapter of a research paper provides a brief introduction and outline of the topic, as
previously discussed.
The second chapter dealt with review of related literature. It provides theoretical foundation of
the study through exploring the arguments of different theoretical perspectives and empirical
evidences on materials management impact through materials procurement, inventory control,
materials storage (warehouse) and interdepartmental collaboration practices on the performance
of AMG Steel Factory PLC and at the end sets conceptual framework of the study.
The third chapter explains the study approach, including the design and actions conducted by the
researcher. The research methodology covers research design, population, sample size, sampling
methodologies, data collection, analysis, and presentation methods, as well as the study's
reliability and validity.
The fourth chapter is about data analysis and research findings where the researcher presents and
analyzes the results of the questionnaire using appropriate statistical tools for discussion and
interpretation in order to get good understanding about the research issue. The last chapter
(chapter five) contains summary, conclusion and recommendations which will summarizes the
research findings, draws conclusion from the research study and explaining limitations and
further recommendations.

7
 CHAPTER TWO
REVIEW OF RELATED LITERATURE
This chapter provides a theoretical review and empirical models relevant to the study of
materials management. It outlines key factors associated with material management and
establishes a foundation for understanding its concepts. Additionally, it presents findings from
previous research and various authors' insights, which inform the analysis and interpretation of
data regarding the impact of materials management on organizational performance and
profitability. Finally, it establishes the conceptual framework that guides the research focus.

2.1 Theoretical Review of Materials Management

2.1.1 Natures of Materials Management
Due to the fragmentation of essential management functions related to materials in corporate
operations, various individuals and organizations interpret materials management differently.
Some emphasize the importance of purchasing, while others prioritize inventory control and
storage management. Additionally, some scholars argue that quality maintenance and assurance
significantly influence productivity and profitability through cost reduction and lower defect
rates. They contend that controlling quality from the source to the final product enhances
organizational productivity and improves the company’s image. Moreover, effective materials
handling and logistics play a crucial role in ensuring a consistent flow of materials, thus
maintaining a seamless production process (Kumar et al., 2022).

Materials Management and Strategic Purchasing: Recent studies emphasize that materials
management must be seen as a holistic approach where purchasing plays a critical role. The
strategic alignment of purchasing decisions with corporate goals can significantly impact overall
performance. Organizations that prioritize efficient procurement practices experience better cost
control, reduced lead times, and enhanced supplier relationships. This holistic approach not only
improves financial performance but also helps in managing supply chain risks by fostering long-
term partnerships with suppliers (Smith & Johnson, 2023).

Inventory Control and Production Efficiency: In modern business operations, inventory control
is considered vital to achieving operational excellence. By maintaining optimal stock levels,
organizations reduce the risk of stock outs and overstocking, both of which can negatively affect
cash flow and production efficiency. An efficient inventory management system enables

8
companies to respond swiftly to market changes and customer demands, improving their
competitive edge. Additionally, recent advancements in technology, such as AI-driven inventory
tracking, have further enhanced the precision and effectiveness of inventory control measures
(Ahmed et al., 2023).

The Role of Quality Assurance in Profitability: Quality assurance has become a focal point for
companies aiming to increase productivity and reduce costs. According to Johnson et al. (2023),
controlling quality at every stage of the production process, from raw material acquisition to the
final product, directly contributes to profitability. By minimizing defects and maintaining high
product standards, companies not only reduce waste but also enhance customer satisfaction,
which strengthens brand reputation. This approach leads to a long-term competitive advantage in
both domestic and international markets.

Logistics and Materials Handling for Seamless Operations: Effective logistics and materials
handling have emerged as essential functions in ensuring the smooth flow of operations within
manufacturing environments. Modern organizations recognize that streamlined logistics not only
improve production efficiency but also support just-in-time (JIT) inventory models, reducing
holding costs and minimizing delays. Recent trends emphasize the integration of smart logistics
solutions, including real-time tracking and automation, to optimize material flow and reduce
bottlenecks in production lines (Fernandez & Li, 2023).

Holistic Materials Management and Organizational Performance: Materials management should

be viewed as an interconnected system where procurement, storage, and quality control
converge to influence overall performance. Recent research suggests that organizations that
adopt an integrated approach to materials management achieve greater flexibility and resilience
in the face of supply chain disruptions. Such companies are able to maintain continuous
production flows and ensure that quality standards are upheld throughout the supply chain, thus
enhancing both customer satisfaction and profitability (Chowdhury & Zhang, 2023).

Optimizing Inventory Levels for Better Performance: In Ethiopia, many organizations face
challenges with overstocking or stockouts due to inefficient inventory management systems.
These inefficiencies directly affect operational performance, leading to either excessive holding
costs or production delays. As Tesfaye (2023) highlights, companies that have adopted better
inventory optimization strategies, such as just-in-time (JIT) inventory, have experienced
9
improved cash flow and production continuity, significantly boosting organizational
performance.

Technology-Driven Inventory Management and Productivity: With the growth of technology

adoption in Ethiopia’s manufacturing sector, companies using digital inventory management
tools have seen a notable improvement in their performance. These systems, which track stock
levels in real-time, help organizations, avoid shortages that could disrupt production. According
to research by Abebe and Girma (2022), Ethiopian organizations that implement automated
inventory management systems witness improved supply chain efficiency, leading to higher
productivity and reduced operational costs.

The Role of Inventory Control in Cost Reduction: In many Ethiopian organizations, efficient
inventory control has become a key strategy for reducing operational costs. By maintaining an
optimal balance between demand and supply, companies minimize unnecessary storage and
avoid costly emergency orders. As noted by Wolde (2023), organizations in the food processing
and textile industries that have invested in better inventory control mechanisms report a direct
impact on cost reduction, which in turn enhances profitability and overall organizational
performance.

Inventory Management and Customer Satisfaction: In Ethiopia’s retail and manufacturing

sectors, inventory management plays a vital role in maintaining customer satisfaction. Delays in
production or delivery due to stockouts can negatively impact a company’s reputation. A study
by Ayalew and Kebede (2023) demonstrates that firms with effective inventory control are able
to meet customer demand consistently, leading to improved customer loyalty and, consequently,
better organizational performance.

Inventory Efficiency as a Driver of Competitive Advantage: As Ethiopian industries face

increasing competition both locally and internationally, the ability to manage inventory
efficiently has emerged as a competitive advantage. Firms that can quickly adjust their inventory
to respond to market changes, seasonal demand, or supply chain disruptions are more agile and
able to outperform their competitors. According to Alemayehu (2023), organizations with
efficient inventory systems are better positioned to scale their operations, which directly
contributes to improved market share and overall performance.

10
2.1.2 Meaning, Scope, and Function of Material Management
The history of materials management reveals its origins in the manufacturing industries of the
United States. During World War I, the scarcity of materials significantly challenged production
managers in supplying war goods, prompting the establishment of materials management
departments to oversee large inventories and address issues related to inventory control and cost
management. The importance of materials management grew during World War II, becoming a
critical management function embraced by numerous companies, particularly in manufacturing
and construction. For instance, in 1939, Goodyear Company implemented materials management
strategies, followed a decade later by General Electric (GE), to efficiently coordinate the
complex flow of materials within and outside their factories (Smith & Gupta, 2021). Given the
diverse perspectives of various scholars, there is no universally accepted definition of materials
management.

The scope of materials management covers various key functions: Procurement and Purchasing:
Acquiring materials, parts, and supplies required for production. This includes supplier selection,
contract negotiation, and order placement. Inventory Management: Managing stock levels to
avoid overstocking or stockouts. It includes planning, scheduling, and forecasting material
requirements. Storage and Warehousing: Properly handling and storing materials to prevent
damage, minimize wastage, and ensure easy retrieval when needed. Material Handling:
Efficiently moving materials within the organization from the point of entry through production
to shipping and distribution.

Quality Control: Ensuring that materials meet specified standards and quality requirements to
prevent production delays or defects. Logistics and Distribution: Coordinating the transportation
and distribution of materials to ensure timely delivery to the right locations. Vendor
Management: Building and maintaining relationships with suppliers, negotiating terms, and
ensuring timely deliveries to avoid production disruptions. Waste Management: Proper disposal
and handling of materials to reduce waste and minimize environmental impact.

11
2.1.3 Impact of Materials Management on Organizational Performance
Effective materials management has a direct and significant impact on an organization’s overall
performance. Here is how:

Kokila and Ram (2018) describe materials management as encompassing the control of the type,
quantity, location, movement, and timing of various commodities used in production across
manufacturing companies. It involves organizing, guiding, controlling, and coordinating
activities related to materials and inventory requirements, significantly enhancing the
performance of manufacturing firms. Effective materials management must be considered at the
input, process, and output stages to ensure the right quality and quantity of materials are
available when needed, at reasonable costs.

Arnold et al. (2008) define materials management as a specialized area of management focused
on managing material resources. Firms aim to reduce and control costs associated with materials,
which typically represent around 50% of production costs. Thus, effective materials management
provides a competitive advantage by delivering quality products on time and reducing overall
costs.

Materials management serves as a coordinating function responsible for planning and controlling
the flow of materials. Its objectives include maximizing resource utilization and achieving a high
level of customer service (Chapman et al., 2017). Ondiek et al. (2009) emphasize that materials
management is responsible for the coordination of planning, purchasing, obtaining, moving,
storing, and controlling materials in an optimal manner to deliver predetermined services to
customers at minimal costs.

Florence (2018) views materials management as a process that integrates the flow of supplies
into, though, and out of an organization to ensure that the right materials are available at the right
time, place, quantity, quality, and cost. Monday et al. (2012) highlight that materials
management involves planning, procuring, storing, moving, and controlling materials to
effectively use facilities, personnel, resources, and capital. Successful implementation of
materials management concepts leads to benefits such as reduced duplication of functions and
improved delivery of materials.

12
Materials management is essential for maintaining a stable flow of necessary materials,
components, and goods for manufacturing and logistics operations (Anton, 2017). According to
Chandra et al. (2007), the International Federation of Purchasing and Materials Management
defines materials management as a comprehensive concept for planning and controlling all types
of materials and their flow from raw to finished stages, ensuring timely delivery to customers.

Overall, these definitions illustrate the broad scope of materials management, which includes
materials requirements planning, purchasing decisions, procurement, inventory management,
staffing, storage and warehouse management, production, and distribution of finished goods at
minimum costs while ensuring required quality and timely delivery (Ogbadu et al., 2009;
Monday et al., 2012). Fabio, Petrillo, and Monfreda (2013) further define materials management
as the function responsible for optimizing the coordination of planning, sourcing, purchasing,
moving, storing, and controlling materials to provide pre-determined customer service at
minimal costs. The functions of materials management can be classified into purchasing,
inventory control, stores management, material planning and control, standardization,
simplification, specifications, value analysis, ergonomics, and Just-in-Time (JIT) practices.

materials management is fundamental to the success of organizations, especially in industries

such as manufacturing, construction, logistics, and retail. Efficient materials management is
essential to control costs, improve operational efficiency, and ensure timely delivery of quality
products. In an increasingly globalized world, supply chains have become more complex,
stretching across multiple countries and regions. This necessitates effective coordination
between suppliers, manufacturers, and distributors, making materials management a strategic
function for organizations aiming to remain competitive in global markets (Chopra & Meindl,
2021; Christopher, 2016).

Technological advancements are reshaping the field of materials management globally. Tools
such as Enterprise Resource Planning (ERP) systems, artificial intelligence (AI), and data
analytics are now being used to optimize procurement, inventory management, and demand
forecasting. These technologies enable companies to reduce waste, enhance supply chain
visibility, and respond more efficiently to market fluctuations (Golicic & Smith, 2013).
Additionally, the increasing focus on sustainability has prompted companies worldwide to

13
incorporate environmental considerations into their materials management processes, aiming to
minimize waste and maximize resource efficiency (Ivanov & Dolgui, 2020).

In Ethiopia, materials management is a growing area of focus, particularly as the country seeks
to enhance its industrialization efforts. Key sectors like manufacturing, agriculture, and
construction depend heavily on efficient materials management for cost control and operational
effectiveness. However, Ethiopia faces unique challenges, such as inadequate infrastructure, lack
of advanced technology, and logistical difficulties in transporting materials across diverse
terrains (World Bank, 2021).

The rapid growth of Ethiopia’s construction industry, driven by large-scale infrastructure

projects, highlights the importance of effective materials management. Delays in materials
procurement and mismanagement of resources can lead to cost overruns and missed deadlines.
In this context, Ethiopian companies must prioritize procurement efficiency, inventory control,
and resource optimization to avoid such setbacks (Yewale & Agrawal, 2022).

Technological adoption in materials management remains limited in Ethiopia, partly due to the
high cost of advanced systems and inadequate infrastructure. However, the government's push
towards industrialization, through initiatives such as the development of industrial parks, offers
an opportunity to modernize materials management practices.

By adopting global best practices and leveraging technology, Ethiopian businesses can enhance
efficiency, reduce costs, and improve their competitiveness (UNIDO, 2020).

2.1.3 The Objectives and Role of Materials Management

The core objectives of materials management are centered around ensuring the efficient flow of
materials in an organization to optimize production and service delivery. Key objectives include.
Cost Reduction: One of the primary goals is to minimize the total cost of materials by optimizing
purchasing, storage, and handling. This includes negotiating better deals with suppliers, reducing
waste, and avoiding excess inventory (Chopra & Meindl, 2021). Ensuring Quality: Ensuring that
the materials acquired meet the necessary quality standards is critical to avoid defective outputs
and production delays. Effective quality control helps organizations maintain high production
standards (Christopher, 2016). Timely Availability: Ensuring materials are available when

14
needed prevents production delays and downtime. This involves efficient procurement, accurate
forecasting, and good supplier relationships (Yewale & Agrawal, 2022).

Minimizing Inventory: Effective materials management aims to strike a balance between having
enough materials to meet production needs while avoiding excess stock, which can tie up capital
and increase storage costs (Ivanov & Dolgui, 2020). Maximizing Productivity: By ensuring the
right materials are available at the right time and in the right condition, materials management
supports uninterrupted production processes, thereby maximizing organizational productivity
(Negash, 2021). Sustainability: More recently, materials management objectives have expanded
to include sustainability. Companies now aim to reduce material waste and improve resource
efficiency in response to environmental concerns (Golicic & Smith, 2013).

2.1.4 Role of Materials Management

Materials management plays a pivotal role in an organization by coordinating the flow of
materials and ensuring they are available as needed for production. Some of the critical roles
include: Procurement: Materials management involves strategic purchasing of raw materials,
components, and supplies. This includes selecting reliable suppliers, negotiating contracts, and
ensuring timely deliveries. Effective procurement helps reduce costs and ensure material quality
(Chopra & Meindl, 2021). Inventory Management: A core function of materials management is
controlling inventory to ensure optimal stock levels. This role helps prevent stockouts,
overstocking, and reduces the costs associated with carrying excess inventory (World Bank,
2021).

Supplier Relationship Management: Building and maintaining good relationships with suppliers
is crucial to ensuring the consistent availability of materials. Strong supplier relationships can
lead to better pricing, timely deliveries, and improved supply chain resilience (Negash, 2021).
Quality Control: Materials management includes overseeing the quality of materials purchased
to ensure they meet the required specifications for production. This role is essential for
preventing product defects and maintaining customer satisfaction (Christopher, 2016). Logistics
and Distribution: Materials management involves planning and managing the logistics of
material handling, including storage, warehousing, and distribution. Efficient logistics contribute
to minimizing delays and reducing costs associated with material movement (UNIDO, 2020).

15
Waste Reduction and Sustainability: By optimizing material use and reducing waste, materials
management contributes to sustainability efforts. Companies are increasingly adopting eco-
friendly practices to minimize the environmental impact of their operations (Golicic & Smith,
2013).

As Lenders (1992) noted, the objective of materials management is to address material-related

challenges from a holistic organizational perspective by controlling the effectiveness and
performance of various material functions, establishing a communication network, and
managing the flow of materials. He also highlighted the importance of incorporating advanced
technology within companies, which enhances materials management by allowing shared data
needs among materials features through a common database.

The main objectives of materials management include procuring at the lowest price, maintaining
low inventory levels, ensuring continuity of supply, developing reliable sources of supply,
minimizing overall acquisition costs, fostering good supplier relationships, and achieving high
levels of cooperation and coordination with user departments. Fundamentally, materials
management aims to acquire materials and services of the right quality, in the right quantity, at
the right time, from the right source, and at the right price (Wenjie et al., 2022).

According to Saini (2023), the primary objectives of the materials management department are
to achieve low procurement costs, high inventory turnover, low acquisition and possession costs,
continuity of supply, consistent quality, low payroll costs, favorable supplier relationships, and
effective record-keeping.

Secondary objectives include exploring new materials, processes, and products, making
economic make-or-buy decisions, standardization, and product improvement. Taiwo et al. (2022)
and Florence et al. (2023) argue that the objective of materials management is to optimize
organizational effectiveness and performance in meeting customer service requirements for
sustainability while enhancing company profitability through cost minimization and effective
resource utilization, thus achieving a competitive advantage in rapidly evolving, technologically
advanced manufacturing industries.

Wenjie et al. (2022) state that the materials manager's primary role is to ensure the smooth flow
of materials within manufacturing industries, which can be accomplished through effective

16
production planning, procurement, storage control, and distribution. Procurement involves
determining order quantities, processing work orders, handling store requisitions, issuing
requests, evaluating quotations, appraising suppliers, negotiating, placing contracts, tracking
deliveries, and clarifying payments (Monday, 2023).

Storage encompasses responsibilities such as managing storage locations, layout, and equipment;
mechanical handling; stores classification; coding and cataloging; receiving purchased items;
assessing materials; ensuring safety; providing cost data; maintaining stock records; and
disposing of obsolete goods (Chapman et al., 2023). Production Control includes forward
ordering, arranging materials for production, preparing production schedules and sequences,
issuing orders for production emergencies, addressing material shortages, making make-or-buy
decisions, ensuring quality and reliability, and adjusting the supply flow based on production
line needs or sales trends (Chapman et al., 2023).

Johnson and Lee (2022) emphasize the strategic objectives of materials management, which
include ensuring timely procurement, reducing carrying costs, and improving overall supply
chain efficiency. Globally, companies that align their materials management with strategic
objectives, such as optimizing stock levels and establishing reliable supplier networks, achieve
higher operational efficiency and lower production costs. This study shows that effective
materials management reduces the risk of production halts due to material shortages, which
ultimately leads to improved profit margins and customer satisfaction.

Thomas and Patel (2023) focus on the objective of cost control in materials management, where
global organizations implement just-in-time inventory systems and automated procurement
processes to reduce material waste and optimize usage. The study finds that companies that
effectively manage material inflows and outflows benefit from reduced production delays, lower
inventory holding costs, and minimized material wastage, directly impacting profitability. These
practices are crucial in industries where materials account for a significant portion of production
costs.

"Supply Chain Coordination and the Role of Materials Management" by Anderson & Gill (2022)
This study highlights how effective materials management contributes to supply chain
coordination by ensuring that all materials are available when needed, thus preventing
production delays. Anderson and Gill (2022) emphasize the importance of forecasting and
17
demand planning, which are key objectives of materials management in global organizations. By
aligning materials management with supply chain operations, companies reduce lead times and
improve production schedules, leading to better organizational performance. Negash and
Tesfaye (2021) examine the role of materials management in ensuring continuous production in
Ethiopian manufacturing firms, where logistical challenges often cause delays. The authors
highlight that the main objectives of materials management in Ethiopia include securing reliable
suppliers, reducing stockouts, and minimizing costs related to material acquisition and storage.
Companies that effectively manage their materials report fewer disruptions in production and
lower operational costs, which leads to enhanced competitiveness in both domestic and
international markets.

Key Insights:

Ethiopian firms focus on securing reliable suppliers to avoid material shortages. Efficient
materials management reduces stockouts and ensures continuous production. Companies that
manage materials well reduce costs and improve market competitiveness. In Ethiopia, the role of
materials management is critical for improving supply chain efficiency, where delays and
material shortages are common due to infrastructure challenges. Bekele and Abebe (2022)
identify the objectives of inventory optimization and supplier coordination as essential for
Ethiopian companies to minimize the impact of logistical bottlenecks. Ethiopian firms that
implement better materials forecasting and inventory tracking systems are able to reduce delays
in production and enhance overall performance, making them more resilient in the face of supply
chain disruptions.Key Insights: Materials management improves supply chain efficiency by
optimizing inventory and supplier coordination. Overcoming logistical challenges through
materials management enhances production efficiency.Accurate forecasting systems help
Ethiopian firms reduce supply chain delays.

Wolde and Kassa (2023) investigate the role of materials management in Ethiopian SMEs,
emphasizing the objectives of cost control and lean inventory management. Ethiopian SMEs face
challenges such as limited access to capital and technology, but those that adopt effective
materials management practices—such as minimizing waste and leveraging local suppliers—see
significant improvements in operational efficiency. By aligning materials management practices
with their financial and production goals, these SMEs improve their profitability and market

18
share. Key Insights: Ethiopian SMEs benefit from cost control and waste minimization through
effective materials management. Leveraging local suppliers, helps reduce procurement costs and
improve efficiency. Adopting lean inventory practices leads to better performance for Ethiopian
SMEs

2.1.5 Importance of Materials Management

Effective materials management serves as a crucial tool for minimizing costs within
organizations. A robust and scientific approach to materials management can lead to significant
cost savings while simultaneously enhancing production capacity. This can be achieved through
various means, including reducing labor time, lowering inventory costs, minimizing storage
space requirements, decreasing material damage, ensuring a smooth production flow, facilitating
better production control and monitoring, and alleviating employee fatigue. The efficiency of
materials management is vital to the performance of manufacturing firms, as it directly impacts
operational effectiveness. Consequently, the significance of materials management lies in the
ability of materials managers to effectively minimize costs and improve productivity, thereby
enhancing overall organizational performance and increasing the return on investment (ROI)
(Alinaghizadeh et al., 2022; Bae et al., 2023

Kumar and Gupta (2023) emphasize that effective materials management is pivotal in
minimizing operational costs for organizations worldwide. Their study reveals that a systematic
approach to materials management leads to reductions in labor time and inventory costs, while
also ensuring efficient use of storage space. By optimizing materials flow, companies can reduce
waste and damage, contributing to a smoother production process. This efficiency not only
enhances productivity but also alleviates employee workload, leading to a more motivated
workforce. The research concludes that organizations focusing on robust materials management
practices experience improved profitability and higher returns on investment (ROI).

In their analysis, Tran and Jansen (2022) discuss how optimizing materials management
contributes significantly to operational efficiency in manufacturing firms. They highlight that
effective materials management practices such as just-in-time inventory and automated tracking
systems can lead to substantial reductions in storage requirements and costs associated with
excess inventory. Additionally, the study indicates that improved production control and
monitoring foster a more streamlined workflow, reducing employee fatigue and increasing

19
output. The authors argue that organizations that prioritize materials management witness
enhanced organizational performance and ROI.

Robinson and Clark (2023) illustrate that effective materials management is integral to
enhancing production capacity across various sectors. Their research highlights how the
adoption of advanced materials management techniques such as predictive analytics and demand
forecasting enables firms to align their inventory with actual production needs, thus reducing
waste and operational delays. This alignment not only minimizes costs but also supports a more
resilient production environment, which ultimately leads to improved productivity and ROI. The
study concludes that materials managers play a critical role in shaping overall organizational
performance.

In the context of Ethiopian manufacturing, Negash and Tesfaye (2021) investigate the crucial
role of materials management in reducing operational costs and improving productivity. Their
findings indicate that Ethiopian firms that implement effective materials management strategies
—such as optimizing inventory levels and enhancing supplier relationships—experience
significant reductions in labor time and storage costs. The study reveals that these practices not
only facilitate smoother production flows but also improve overall employee productivity, thus
enhancing organizational performance and ROI.

Wolde and Kassa (2023) analyze the challenges faced by small and medium enterprises (SMEs)
in Ethiopia regarding materials management. They emphasize that effective materials
management is critical for these firms to minimize costs and improve productivity. The authors
highlight how implementing lean inventory practices and optimizing supplier networks can help
SMEs reduce material damage and waste, thereby enhancing operational efficiency. The
research suggests that SMEs that prioritize materials management are better positioned to
increase their ROI and compete effectively in the market.

Bekele and Abebe (2022) explore the impact of materials management on operational
performance within Ethiopian industries. Their study shows that companies that adopt effective
materials management techniques such as inventory optimization and supplier relationship
management experience significant cost reductions and improvements in production capacity.
The research highlights that effective materials management not only minimizes operational

20
delays but also enhances overall productivity, thereby contributing to improved ROI and
organizational performance.

2.1.6 Key Functional Areas of Materials Management

Barker et al. (1989) identified five key functional areas within materials management:
purchasing, production and inventory control, quality control, storage and warehousing, and
physical distribution (as cited by James, 2012). Akindipe (2014) emphasized that purchasing and
inventory control are critical for efficient materials management. Additionally, Whyback and
William (1986) expanded these areas to include demand forecasting, supplier and customer
relationship management, developing domestic sources for foreign materials, enhancing
employee skills in materials management, improving interdepartmental efficiency, and
integrating research and development (R&D) efforts. Recent studies by Ondiek et al. (2009) and
James et al. (2012) highlight that the materials management department oversees purchasing,
inventory control, personnel selection for marketing, stores management, and materials handling,
along with necessary training and placement. This indicates the essential role of a materials
management department in supporting production activities and facilitating marketing, sales
promotion, and effective control of materials in terms of quantity, quality, and cost. Scholars
also categorize these functions into primary and secondary functions of materials management,
further underscoring their importance in organizational efficiency (Ali et al., 2021; Chen et al.,
2022).

Johnson and Smith (2021) identify several core functions of materials management, including
purchasing, inventory control, quality assurance, storage and warehousing, and distribution
management. They argue that these functional areas are critical in maintaining supply chain
efficiency. The study also highlights the significance of demand forecasting and supplier
relationship management, which enable organizations to anticipate material needs and build
strong partnerships. Additionally, the authors emphasize the importance of integrating these
functions to ensure a seamless flow of materials throughout the production process, ultimately
enhancing organizational performance.

Tran and Lee (2022) expand on the traditional functions of materials management by including
employee training, interdepartmental efficiency, and R&D integration. Their research indicates
that fostering skills within the workforce is essential for effective materials management, as it

21
directly influences the ability to manage resources efficiently. Furthermore, the study finds that
collaboration between departments leads to improved materials handling, ensuring that products
meet quality standards and are delivered on time. This integration is crucial for organizations
aim Roberts and Chan (2023) discuss how the functional areas of materials management are
evolving in response to global supply chain challenges. They identify supply chain resilience,
risk management, and sustainability as emerging functions that are becoming integral to
traditional materials management roles. The authors highlight that organizations are increasingly
focusing on developing domestic sources for materials and improving supplier relationships to
mitigate risks and enhance sustainability. Negash and Tesfaye (2021) explore the functional
areas of materials management in the context of Ethiopian industries, highlighting purchasing,
inventory control, storage, and distribution as essential components. The study emphasizes that
efficient management of these areas is critical for overcoming challenges related to supply chain
inefficiencies in Ethiopia. The authors note that enhancing supplier relationships and
implementing robust inventory systems can lead to significant improvements in production
capacity and operational efficiency, thereby boosting overall organizational performance.

Wolde and Kassa (2022) focus specifically on the function of inventory control within Ethiopian
manufacturing. They argue that effective inventory control is essential for managing production
schedules and reducing costs associated with excess inventory and stockouts. The authors also
highlight the need for training employees in inventory management practices to improve
operational efficiency. This focus on inventory control underscores its importance as a key
functional area that supports overall materials management and enhances organizational
performan Bekele and Abebe (2023) investigate the integration of various functional areas of
materials management in Ethiopian small and medium enterprises (SMEs). Their research
reveals that effective integration of purchasing, storage, and distribution functions can
significantly enhance operational efficiency in SMEs. The authors emphasize the importance of
fostering strong supplier relationships and improving employee skills to ensure that materials are
handled efficiently and meet quality standards. This integration not only improves productivity
but also contributes to better organizational performance and Competitiveness.

22
2.1.7 Achieving Organizational Performance through Materials Management
Effective and efficient management of materials contributes a major role to achieve
organizational performance and productivity through effective materials purchasing, acquisition,
inventory control, materials handling and movement of materials.

Singh and Gupta (2021) argue that effective materials management serves as a catalyst for
improving organizational performance. Their study emphasizes the importance of efficient
materials purchasing, acquisition, and inventory control as critical factors that influence
productivity. The authors found that companies with streamlined materials handling processes
experience fewer disruptions in production and reduced operational costs. Furthermore, the
research indicates that effective materials movement, supported by technology and data
analytics, enables organizations to respond swiftly to market demands, ultimately enhancing
overall performance.

In their research, Tran and Lee (2022) explore how optimizing materials management
contributes to achieving a competitive advantage in the marketplace. They emphasize that
effective purchasing and inventory control systems are essential for minimizing costs and
maximizing production efficiency. The authors highlight that organizations that invest in
sophisticated materials handling techniques and technologies can significantly improve their
operational performance. Their findings suggest that a focus on efficient materials movement not
only supports productivity but also enhances customer satisfaction through timely deliveries.

Johnson and Roberts (2023) discuss the role of materials management in achieving operational
excellence across various industries. Their research highlights the significance of integrating
materials purchasing, acquisition, and inventory control into broader organizational strategies.
They argue that companies that prioritize efficient materials handling and movement can reduce
lead times and enhance production flow, ultimately leading to improved organizational
performance. The authors also stress the need for continuous improvement in materials
management practices to adapt to changing market conditions.

Negash and Tesfaye (2021) examine the impact of effective materials management on
organizational performance in Ethiopian industries. Their study finds that efficient management
of materials purchasing, acquisition, and inventory control significantly contributes to
productivity improvements. The authors highlight that many Ethiopian companies face
23
challenges related to supply chain inefficiencies, which can be mitigated through better materials
handling and movement processes. The research underscores the importance of investing in
training and technology to enhance materials management practices and achieve organizational
goals.

Wolde and Kassa (2022) focus on the role of inventory control in boosting productivity within
Ethiopian small and medium enterprises (SMEs). Their research highlights that efficient
inventory management practices, including proper materials handling and movement, are
essential for achieving high levels of organizational performance. The authors emphasize that
SMEs that implement effective materials management strategies can minimize operational costs,
reduce waste, and improve delivery timelines, which are crucial for maintaining competitiveness
in the local market.

Bekele and Abebe (2023) explore how materials management can help Ethiopian industries
achieve performance excellence. Their study highlights that effective materials purchasing,
acquisition, and inventory control are key factors in driving productivity and organizational
performance. The authors argue that organizations that streamline their materials handling and
movement processes can enhance production efficiency, reduce costs, and improve customer
satisfaction. The research emphasizes the need for a strategic approach to materials management
to meet the growing demands of the Ethiopian market.

2.1.7.1 Procurement Management

Procurement encompasses a wide array of activities, including purchasing products necessary for
production, storage, movement, receiving, inspection, and retrieval of materials. While
purchasing specifically involves acquiring goods through understanding requirements, selecting
suppliers, and negotiating prices, it significantly influences organizational performance and
profitability (Alinaghizadeh et al., 2022). The procurement process begins with a purchase
requisition, leading to a purchase order (Ibegbulen, 2015).

Successful procurement requires collaboration across departments to obtain materials in the right
quantity, quality, and price (Chapman, 2017). Key objectives include minimizing costs, ensuring
timely delivery, and fostering strong supplier relationships (Chen et al., 2023). The "10 R’s" of
efficient purchasing highlight essential criteria for raw material procurement, while established
purchasing procedures serve as best practices for purchasing departments (Kumar & Sharma,
24
2020; Hassan et al., 2022). Organizations may adopt centralized or decentralized purchasing
approaches based on their structure and needs (Buffa, 1965; Ahi & Searcy, 2021). Furthermore,
purchasing can be categorized into tactical purchasing for day-to-day operations and strategic
sourcing for long-term profitability and collaboration across functions (Saini, 2016; Liu et al.,
2020). Finally, purchases can be classified into individual purchases for personal use and
organizational purchases made on behalf of companies or entities (Tiwari, 2016; Prashar &
Gupta, 2022).

Roberts and Tran (2021) discuss the multifaceted nature of procurement, emphasizing that it
involves not only the purchasing of goods but also storage, movement, inspection, and retrieval
of materials. The authors highlight that effective procurement management is crucial for
organizational performance and profitability. They outline that the procurement process begins
with identifying needs and issuing a purchase requisition, which leads to generating a purchase
order. The study stresses that collaboration across departments is vital for acquiring materials in
the appropriate quantity, quality, and price, which directly influences the overall success of the
organization.

Johnson and Smith (2022) examine the strategic aspects of procurement management, arguing
that organizations must adopt best practices to achieve competitive advantage. They explore the
"10 R’s" of efficient purchasing right quality, right quantity, right time, right place, right source,
right price, right paperwork, right attitude, right relationship, and right process. The authors
emphasize that these criteria are essential for raw material procurement and that organizations
must establish clear purchasing procedures. The study also discusses the differences between
centralized and decentralized purchasing approaches, advocating for a strategic sourcing method
that fosters collaboration across functions to enhance long-term profitability.

Singh and Gupta (2023) explore the distinctions between tactical purchasing and strategic
sourcing in their study. They assert that while tactical purchasing focuses on day-to-day
operational needs, strategic sourcing is vital for building supplier relationships and ensuring
long-term profitability. The authors highlight that organizations should balance both approaches
to meet immediate needs while planning for future requirements. The study also discusses the
classification of purchases, differentiating between individual purchases and organizational
purchases, which can significantly influence procurement strategies.

25
Negash and Tesfaye (2021) investigate the role of procurement management in Ethiopian
industries, highlighting its importance in enhancing organizational performance. The authors
emphasize that effective procurement involves not just purchasing but also ensuring the
movement, storage, and inspection of materials. The study reveals that collaboration between
departments is crucial for obtaining materials that meet quality and price criteria. Furthermore,
the authors discuss the challenges Ethiopian organizations face in implementing effective
procurement processes and the need for clear purchasing procedures to improve efficiency.

Wolde and Kassa (2022) focus on strategic sourcing within Ethiopian small and medium
enterprises (SMEs). Their research highlights the importance of fostering strong supplier
relationships and minimizing costs through effective procurement practices. The authors note
that while many SMEs struggle with procurement due to limited resources, adopting strategic
sourcing can significantly enhance their operational efficiency. They argue that training in
procurement best practices and understanding the differences between tactical and strategic
purchasing can help SMEs improve their competitiveness in the market.

Bekele and Abebe (2023) explore how procurement management impacts organizational
performance in Ethiopian industries. They assert that effective procurement processes, including
purchasing, inventory control, and materials handling, are essential for achieving organizational
goals. The study emphasizes the need for a centralized procurement approach to streamline
processes and ensure that materials are acquired efficiently. The authors also discuss the
importance of collaboration among departments to meet procurement objectives and enhance
overall organizational performance.

2.1.7.2 Inventory Management

Inventory management encompasses the systematic processes involved in maintaining optimal
levels of raw materials, work-in-progress, and finished goods to ensure sufficient supply while
minimizing costs associated with overstocking or shortages (Kotler, 2021). Effective inventory
control is crucial for enhancing organizational profitability and performance by managing costs
related to storage, handling, and stock replenishment (Ibegbulen et al., 2019; Cross et al., 2020).
Techniques such as Economic Order Quantity (EOQ), ABC Analysis, and Just-In-Time (JIT)
methodologies are commonly employed to optimize inventory levels, ensuring that the right
quantity of materials is available at the right time (Biyani, 2022; Chandra et al., 2020).

26
Additionally, adopting a Perpetual Inventory Control System allows for real-time tracking of
inventory levels, enhancing accuracy and efficiency (Arnold et al., 2021). Overall, effective
inventory management supports better decision-making, enhances customer satisfaction by
ensuring product availability, and ultimately contributes to competitive advantage and improved
organizational performance (Simon, 2019; Tekalign, 2021).

Inventory management plays a pivotal role in ensuring the smooth functioning of an

organization's supply chain by maintaining a balance between supply and demand. By
implementing strategies like Just-In-Time (JIT), organizations can reduce excess inventory and
minimize waste, leading to cost savings and improved efficiency (Dharmawan & Nugroho,
2021). Additionally, the use of automation in inventory control systems has gained traction,
allowing for more accurate demand forecasting and better decision-making processes, leading to
enhanced operational performance (Johnson et al., 2023). Moreover, a well-executed inventory
strategy positively influences customer satisfaction by ensuring product availability (Oluwafemi,
2022).

Effective inventory control contributes significantly to cost management and the overall
competitiveness of a firm. The Economic Order Quantity (EOQ) model continues to be widely
used for determining the optimal order size, striking a balance between ordering and holding
costs (Kumar et al., 2023). Advanced software tools, such as Enterprise Resource Planning
(ERP) systems, further enable real-time tracking of stock levels, providing managers with the
data needed to make timely procurement decisions (Greenwood & Foster, 2022). These practices
help firms reduce stockouts, minimize holding costs, and improve order fulfillment rates, which
are critical in maintaining a competitive advantage (Patel et al., 2023).

Inventory management systems are increasingly integrated with predictive analytics, allowing
firms to better forecast demand and optimize their stock levels. Techniques such as ABC
analysis and demand-driven replenishment help categorize inventory based on consumption rates
and business priorities, thereby improving decision-making (Martínez & Cárdenas, 2022). These
methods allow firms to allocate resources more efficiently, reduce carrying costs, and avoid
potential disruptions due to stockouts (Sharma & Gupta, 2021). Companies that adopt these
advanced inventory systems report higher customer satisfaction and enhanced supply chain
agility (Ahmed et al., 2023).

27
Inventory control systems are evolving with the integration of artificial intelligence and machine
learning, providing organizations with enhanced capabilities for real-time inventory tracking and
demand forecasting (Chen & Liu, 2023). Just-In-Time (JIT) inventory management, when
combined with these technologies, can significantly reduce lead times and improve production
efficiency (Ramirez et al., 2022). By adopting such innovations, firms are not only improving
operational performance but also reducing costs associated with excess stock and storage
(Thomas et al., 2023). This technological shift in inventory management practices offers
organizations a strategic advantage in a competitive market (Kim & Park, 2021).

Strategic inventory management practices, such as the Perpetual Inventory System, are
increasingly crucial for businesses aiming to streamline their operations and remain competitive
(Santos & Oliveira, 2023). With the ability to track inventory levels in real-time, businesses can
quickly respond to changes in demand and avoid both overstocking and stockouts (Balogun et
al., 2022). The implementation of cloud-based inventory management solutions has further
enhanced inventory visibility and control, facilitating better decision-making and increasing
operational efficiency (Rodríguez & Pérez, 2023). Organizations leveraging these systems
experience improved customer service and higher profitability (Xu et al., 2023).

2.1.7.3 Storage (Warehouse) Management

Materials storage is a critical aspect of supply chain management, encompassing the systematic
management of stock to optimize cost efficiency and profitability (Cross, 2019). Effective
storage practices involve the careful handling of materials, including their location, layout, and
safety, which can significantly influence operational performance (Kibrom, 2019). The primary
objectives of storekeeping include procuring necessary raw materials, maintaining inventories,
and ensuring the timely delivery of goods across departments (Retish et al., 2021).

Scholars have classified the functions of storage into several key areas: receiving and accounting
for materials, preserving items adequately, minimizing obsolescence, and maintaining accurate
records of inventory (Buffa et al., 2021; Clive et al., 2020). The design and location of
warehouses must align with the specific needs of the organization, considering both physical size
and functional requirements, such as raw materials and finished goods storage (Arnold et al.,
2021). Overall, integrating efficient materials management practices is essential for enhancing an

28
organization's operational effectiveness and meeting customer demands in a cost-effective
manner (Baker, 2021).

materials storage practices are evolving as the country’s industrial and manufacturing sectors
expand. Efficient storage management is becoming more critical due to increased demand in
sectors such as construction, textiles, and agriculture. Ethiopian firms, especially in
manufacturing, are starting to implement better warehouse organization and inventory
management systems to reduce costs and improve operational efficiency (Getahun & Haile,
2022). The introduction of semi-automated storage solutions, while still in its early stages, is
helping some Ethiopian organizations improve their handling of raw materials and finished
goods, supporting faster response times and better service delivery (Gebru et al., 2023).

The Ethiopian manufacturing sector often struggles with materials storage due to inadequate
infrastructure and limited access to advanced technology. However, companies like Adama Steel
Factory are adopting more efficient storage practices by investing in larger, strategically located
warehouses that can hold essential raw materials like steel and iron products (Kebede & Wolde,
2021). This helps mitigate supply chain disruptions and enables continuous production.
Furthermore, organizations are increasingly focusing on warehouse safety and material handling
practices to improve workplace efficiency and ensure the security of stored goods, as the demand
for industrial growth continues to rise in Ethiopia (Teshome et al., 2022).

Warehousing and storage in Ethiopia are being reshaped by efforts to modernize logistics and
improve supply chain reliability. For instance, the government's development of industrial parks
and investment in transportation infrastructure is enhancing the storage capabilities of businesses
(Mekonnen et al., 2022). These changes help reduce the lead times associated with importing
raw materials and exporting finished products, creating more robust supply chains. Local
companies are also adopting new inventory management techniques, such as periodic audits and
digital tracking systems, to better manage stock levels and reduce material losses (Abebe &
Ayele, 2023).

2.1.7.4 Interdepartmental Coordination (Collaboration)

Effective interdepartmental communication is crucial for the success of mid to large-sized
organizations, as it allows different departments to operate cohesively while leveraging the
expertise of skilled professionals in each area. Poor communication can lead to significant
29
inefficiencies, increased employee stress, and ultimately lower organizational performance
(Kumar & Raj, 2021). In the fast-paced and competitive business landscape, human resource
management must prioritize the development of strong managerial skills to enhance
interdepartmental communication (Zhang et al., 2020). Despite the importance of
communication, many organizations struggle due to personal conflicts, inadequate hiring
practices, and insufficient engagement from leadership (Lee & Chen, 2022). Interdepartmental
communication plays a fundamental role in building employee relations, fostering trust, and
providing timely information, all of which contribute to motivation and overall organizational
effectiveness (Norton et al., 2023). To bridge the gap between customer expectations and
delivery, organizations must ensure that all departments communicate effectively to achieve
their performance and profitability goals (Adams & Koç, 2023).

In Ethiopia, interdepartmental communication remains a critical aspect of organizational success,

especially as businesses expand and industrial sectors grow. However, many Ethiopian
organizations face challenges such as hierarchical structures, limited technological adoption, and
a lack of formal communication frameworks, which can hinder effective collaboration between
departments (Beyene & Hailu, 2022). To improve efficiency, organizations are increasingly
adopting ERP systems and other collaborative tools to enhance communication flow. These tools
help synchronize efforts between departments, reducing redundancies and improving project
execution (Gebremariam et al., 2023).

In Ethiopian manufacturing and service industries, effective communication between

departments is often constrained by organizational culture, where decision-making tends to be
top-down, and employee involvement in interdepartmental discussions is limited (Teklu &
Mekonnen, 2021). This dynamic can lead to poor information sharing, delays in decision-
making, and inefficiencies in operations. However, organizations such as banks and large
manufacturers are gradually recognizing the value of transparent communication. By offering
leadership training and encouraging open dialogue, Ethiopian firms are improving their internal
collaboration and overall performance (Alemu & Solomon, 2023).

As the Ethiopian economy becomes more diversified, effective communication between

departments is becoming increasingly important, particularly in sectors like agriculture,
construction, and manufacturing. However, a lack of proper communication infrastructure and

30
low digital literacy levels can act as barriers to interdepartmental communication (Assefa &
Tadesse, 2022). To address this, many Ethiopian organizations are investing in digital
transformation initiatives, aimed at improving connectivity and enabling smoother
communication flows between departments (Abebe & Kassahun, 2023). These initiatives are
particularly crucial for large organizations that require tight coordination between various
departments to meet both domestic and international market demands.

2.1.8 Organizational performance

Organizational productivity is often defined as the ability of an organization to achieve
established goals through efficient and effective use of resources (Adamu, 2020). It reflects the
organization's capacity to meet its objectives, including enhancing productivity, reducing
inventory, and increasing market share over time (Khan et al., 2022). Effective materials
management plays a crucial role in this context, as studies have shown a positive relationship
between efficient materials management and firm success, contributing to cost-effectiveness
(Bola et al., 2021). Organizational performance can be evaluated from various perspectives, such
as quality, efficiency, profitability, and sustainability (Thomas et al., 2019).

Organizational productivity is increasingly recognized as essential for the growth and

competitiveness of businesses, particularly in the industrial and manufacturing sectors. Ethiopian
companies that invest in effective materials and inventory management often experience
improved operational performance, as these practices help reduce costs and increase efficiency
(Beyene & Gebru, 2021). However, many Ethiopian firms face challenges such as limited access
to advanced technologies and inadequate supply chain infrastructure, which can hinder
productivity (Kebede et al., 2022). To overcome these barriers, businesses are exploring digital
solutions and adopting best practices from international firms to enhance their resource
management capabilities (Mekonnen & Bekele, 2023).

Ethiopian manufacturing companies are beginning to realize the importance of inventory

management for improving productivity and profitability. Research shows that inefficient
inventory control and poor materials management often lead to increased operational costs and
production delays (Tadesse & Alemayehu, 2021). In response, many Ethiopian firms are
implementing inventory management systems that allow for better forecasting, timely
procurement, and streamlined production processes (Getahun & Haile, 2022). These efforts are

31
contributing to higher output quality, improved customer satisfaction, and better financial
performance (Teshome et al., 2023).

Organizational performance in Ethiopia is frequently affected by resource limitations,

particularly in terms of technology and skilled labor. However, businesses that prioritize
effective materials management are better positioned to improve productivity and sustainability
(Alemu & Hailu, 2023). For example, companies in sectors like construction and agriculture are
adopting lean practices and modern materials handling techniques to maximize resource
efficiency (Gebremariam & Yohannes, 2023). By enhancing the efficiency of resource use,
Ethiopian firms can reduce costs and improve their market competitiveness, aligning their
performance with national economic growth objectives (Teferi & Tekle, 2022).

2.1.9 Measurement of Materials Management

Effective materials management is crucial for enhancing organizational performance and
productivity, as it encompasses the interlinked functions of purchasing, inventory control, and
storage management. Materials management can be evaluated by the efficiency of these
functions and their collaborative relationships, which collectively contribute to organizational
outcomes (Khalid et al., 2020). Effective inventory management is essential for maintaining
production continuity, optimizing resource utilization, and fulfilling customer demands in a
timely manner (Gonzalez et al., 2021). Furthermore, the purchasing process is central to
optimizing inventory management, significantly influencing storage management across the
organization (Bhatti et al., 2022). Consequently, investments in purchasing represent a
substantial portion of a company's budget, and effective inventory management can lead to cost
savings and service improvements. To achieve sustainable growth in a competitive landscape,
companies must foster strong interdepartmental relationships between purchasing, inventory, and
storage management. This collaboration is vital for maximizing the impact of materials
management on the performance of manufacturing sectors (Chong et al., 2022).

2.2 Empirical Review

Numerous studies have highlighted the vital link between materials management and
organizational performance and profitability. For example, Monday et al. (2022) demonstrated
that manufacturing industries can achieve targeted profitability through effective materials
management practices, particularly in sourcing, receiving, storing, and issuing materials.

32
Suleiman et al. (2019) emphasized that efficient management of material flow is essential for
enhancing production processes, which directly influences profitability. Florence et al. (2021)
found that while materials management functions generally contribute to firm performance, only
materials storage significantly impacts outcomes. Further, Fitsum (2020) reported that although
information technology improves data accuracy and inventory reporting at Habesha Steel Mills
PLC, challenges remain in inventory control, leading to inefficiencies in stock management.

Materials management has long been recognized as a key driver of operational efficiency and
profitability. Globally, firms that implement advanced inventory management techniques, such
as Just-In-Time (JIT) and Economic Order Quantity (EOQ), report reduced wastage and
improved production processes, leading to higher profit margins (Miller & Jackson, 2021). A
study by Ahmed et al. (2023) found that integrating materials management with Enterprise
Resource Planning (ERP) systems allows for better visibility into stock levels, enhancing
decision-making and minimizing overstocking. Similarly, Jiang and Zhao (2022) highlighted
that effective materials management significantly reduces lead times and enhances customer
satisfaction, which is directly linked to organizational performance and competitive advantage.

In the global manufacturing sector, research by Jones and Roberts (2021) revealed that effective
materials procurement and handling processes are critical for reducing production costs and
improving overall efficiency. Their study demonstrated that firms investing in materials
management technologies such as RFID (Radio-Frequency Identification) and automated
warehousing systems experienced significant improvements in inventory accuracy and resource
allocation. Additionally, Kumar and Singh (2022) argued that well-implemented materials
management not only optimizes resource use but also supports sustainability by minimizing
wastage and promoting the use of recyclable materials.

Inventory control has emerged as a critical element in the relationship between materials
management and profitability. Chen et al. (2021) examined how global companies that utilize
real-time inventory tracking systems experience fewer disruptions in production and better cash
flow management. The research also indicated that companies with strong materials
management frameworks are better positioned to withstand economic fluctuations, as they can
adjust stock levels based on demand changes more efficiently (Martínez & Lopez, 2022). This

33
adaptability is particularly important for firms operating in volatile markets where supply chain
disruptions are common.

In the Ethiopian manufacturing industry, research emphasizes the importance of efficient

materials management in driving firm performance. A study by Gebru and Haile (2022) found
that Ethiopian manufacturing firms that adopt proper procurement and storage techniques
experience reduced operational costs and increased productivity. Their findings align with global
trends, showing that firms with effective materials management practices are more capable of
meeting production deadlines and satisfying customer demands. However, the study also
highlighted challenges, such as limited technological adoption and inadequate infrastructure,
which can impede effective materials management in Ethiopia.

A study conducted by Alemayehu (2020) on Ethiopian construction companies revealed that

poor materials management, particularly in procurement and inventory control, leads to project
delays and increased costs. The study emphasized that better planning and coordination between
procurement and storage teams could mitigate these issues. Similarly, Teshome and
Gebremariam (2021) observed that Ethiopian firms that invest in training for employees
responsible for materials management experience improved efficiency in stock management,
resulting in lower wastage and enhanced organizational performance.

Fitsum (2022) explored the role of information technology in enhancing materials management
practices in Ethiopia, focusing on its impact on data accuracy and inventory reporting. The study
found that while many firms in Ethiopia are starting to implement IT solutions to improve their
materials management processes, challenges related to digital literacy, system integration, and
high implementation costs remain significant barriers. Fitsum’s findings highlight the need for
government and industry stakeholders to support the adoption of technological solutions to
improve materials management and, by extension, overall organizational productivity.

Sustainable materials management is also gaining traction in Ethiopia, as more companies

recognize its importance in promoting long-term profitability. A study by Asfaw and Kebede
(2021) found that Ethiopian firms that prioritize sustainable materials sourcing and waste
reduction strategies experience enhanced operational efficiency and better market reputation.

34
The study recommends the adoption of lean manufacturing principles and waste reduction
strategies to help Ethiopian firms improve their resource management and gain a competitive
edge in both domestic and international markets. Research by Stevenson and Hojati (2022)
highlighted that materials management practices, such as automated inventory systems and
predictive analytics, contribute to enhanced resource planning and cost reduction. Their study
found that global companies utilizing these technologies are able to meet customer demand with
lower stock levels, improving both profitability and cash flow.

Effective procurement and inventory management are essential components of successful

materials management. In a study on multinational firms, Zhou et al. (2021) demonstrated that
organizations that streamline procurement through vendor-managed inventory (VMI) and
collaborative planning benefit from shorter lead times and improved inventory turnover. These
methods help minimize stockouts and excess inventory, leading to more efficient production
cycles and better financial performance.

Sustainability and materials management have become increasingly intertwined in global

operations. Garcia and Williams (2023) argued that firms adopting green materials management
practices, such as recycling, waste reduction, and sustainable sourcing, not only achieve
environmental benefits but also report improved brand reputation and market competitiveness.
Their research indicates that sustainable materials management is closely linked to long-term
profitability and organizational success.

Materials handling and warehousing are pivotal in supporting efficient production processes.
Singh and Prasad (2022) found that firms with well-organized warehouses and optimized
materials flow experience higher productivity and lower operational disruptions. The study
emphasized the importance of using technology, such as automated guided vehicles (AGVs) and
smart shelving systems, to enhance materials storage and retrieval efficiency.

According to Abebe and Mekonnen (2023), while challenges remain, Ethiopian firms that invest
in basic IT solutions for tracking materials report improved accuracy in stock levels and reduced
losses due to poor inventory management. Teferi and Asfaw (2021) noted that public-private
partnerships aimed at building infrastructure and improving supply chain logistics have
contributed to more efficient materials handling and storage practices. These developments have

35
helped Ethiopian firms increase their production capacity and meet international quality
standards, thereby improving their competitiveness in regional markets.

2.3. Conceptual framework of the study.

A conceptual framework serves as a structured map of concepts or theories, illustrating the
relationships among research variables. It provides a foundation for explaining how various
factors interact within a study. Specifically, the conceptual framework delineates the relationship
between the independent variable, materials management, and the dependent variable,
organizational performance. Key aspects of the independent variable include procurement,
inventory management, and storage management, along with the collaboration between these
functions. In contrast, the dependent variable organizational performance encompasses elements
such as market position, product/service quality, profitability, and operational efficiency (Khan
et al., 2021)

Dependent variables
Material management practice
(Independent variables)

36
 Procurement management

Inventory management
Organizational performance

Storage (warehouse) management

Interdepartmental coordination

Figure 2 Conceptual framework of the study.

Developed by the researcher based on literature review (2024)

2.4 Hypotheses Development

Materials management functions are widely adopted in enterprises of all sizes. Materials
functions impact organizational performance and meet customer expectations. This research
aims to examine ideas related to improving business performance and accomplishing
organizational objectives.
Procurement management is one of the key functions in managing materials flow in, through and
out of the company. For healthy flow of raw materials, spare parts, equipment, work-in-process
and finished goods the management of procurement plays an essential role in obtaining the right
material, in the right quantities, with the right delivery (time and place), from the right source,
and at the right price that directly impacts organizational performance (Chapman, 2017). Based
on this assumption the next hypothesis was proposed for procurement management function.
Ha1: There is significant association between procurement management and organizational
performance.
Inventory management systems is a set of policies that control and monitor inventory levels,
determining what level should be maintained, how large orders should be made, and when stock
should be supplied to support corporate operations. Maximum customer service, low-cost plant

37
operation, and minimal inventory investment are the primary goals for organizations seeking to
improve organizational performance. Based on these data, the following hypothesis was
suggested for the inventory management function.
Ha2: There is significant relationship between inventory management and firm’s performance.

Cross (2019) argued that storage management includes a careful management of the stock and
maintaining a perfect control over them. Storage management is the combination of planning,
decision-making and controlling inbound, storage and outbound flows. Even in a small factory
the location of the stores can affect work flow and thus productivity and performance. So that
storage management is a key function of materials management that contributes influential role
to the attainment of improved organizational performance. According to this information the
following hypothesis was proposed on storage management function.

Ha3: There is significant association between storage (warehousing) management and

organizational performance.

In order for a business to be successful, organizations need to implement and maintain the
effective interdepartmental communication. Uzma and Muhammud (2020) indicates that,
organizations are composed of social components that come together for production, designed by
individuals with diverse opinions and awareness to accomplish a common goal. Therefore,
interdepartmental collaboration plays a vital role in an organization’s success, and organizations
need to fill the gaps between what the customers expect and what they deliver. Having this
information, the following hypothesis was proposed for interdepartmental collaboration as a key
factor.

Ha4: There is significant relationship between interdepartmental collaboration and company’s

performanc

38
 CHAPTER THREE
RESEARCH DESIGN AND METHODOLOGY
3.1. Research Design
Descriptive research method was employed in this study to get first-hand, detailed and factual
information that describes an existing phenomenon to draw valid general conclusions and to help
the researcher to assess and define the nature, situation and extent of the current circumstance of
materials management practices of the selected firm. And also, it permits the researcher to
collect data through different tools such as questionnaires, interviews and observation as they are
commonly used in researches (Kothari, 2004).

Explanatory research design was also used to investigate the casual relationship between the
dependent and independent variables to be addressed in the research questions. It has importance
to describe the nature of certain relationships, or develop and understand the differences among
groups or the independence of two or more variables. Hence, the effect of independent variables
over dependent variable can be easily identified through explanatory design. Additionally, based
on Creswell (2014), due to the numeric nature of the data quantitative research method which is
commonly and widely used methods in business and management research was also employed in
this study for data collection techniques and analysis procedures. Since the combination of
quantitative and qualitative approaches provides a more complete understanding of a research
problem than either approach alone, a mixed methods approach that incorporates both
quantitative and qualitative approaches were used in this study. Since relevant data was collected
at one point in times that are important to consider the practices of materials management
functions in the selected firm, a cross-sectional data type was used in this the study

3.2. Population and Sampling Techniques

3.2.1 Population
Polit and Hungler (1999:37) refer to the population as an aggregate or totality of all the objects,
subjects or members that conform to a set of specifications. The population of this study is
included employees of AMG steel factory. The total number of employees are 1260 as at 22
September 2024 In order to get relevant information, increase the response rate and to avoid
biasness among the respondents, temporary employees are excluded from the total permanent
employees. Excluding these employees, the population size was become 1121.

39
3.2.2 Sample Size and Sample determination
The researcher used stratified random sampling in order to get the group those who have
sufficient information and daily operation with material management. Then the researcher
selected the general production department, finance department, logistic and supply chain
department, and inventory management department as study areas, and their total population is
400. The researcher also used purposive sampling for this selected population in order to get
relevant information: 22 from finance department, 26 from inventory management department,
20 from the logistic and supply chain departments, and 132 from the general production
department.
3.3 Sources and Types of Data
Saunders et al. (2009) stated that there are two major approaches used by the researcher namely
primary and secondary data. This study was used both the primary and secondary data. Primary
data was collected from respondents and questionnaire incorporated with closed-ended
questions. The Secondary data was gathered from relevant books, thesis and electronic data
from confirmed sources. Documents such as reputable journal articles, annual reports, policies,
training manuals, organizational broaches, publications and website information was used as
secondary data sources for the study.

3.4. Data collection instruments

This study was use primary data through self- administer questionnaire and The Secondary data
was collected from relevant company documents; policy and procedure manual, collective
agreement, organizational reports, company magazines and websites.

3.5 Data Collection Procedures

To examine the impact of materials management on organizational performance at AMG Steel
Factory plc, the research was beginning with a pilot study to test the clarity and reliability of the
questionnaire and interview guide on a small sample.

Once these instruments are validated, the full-scale data collection was proceed. Questionnaires
were distributed to employees those selected by the researcher using physical formats based on
access and preference. A stratified random sampling and purposive sampling method was
employed to ensure representation from various departments and job levels within AMG steel
factory plc. After gathering the questionnaire responses, semi-structured interviews were

40
conducted with selected employees and managers at times that accommodated their schedules.
Additionally, focus group discussions (FGDs) were organized to gather collective insights on
materials management practices and their effect on performance. Supporting this, document
reviews were conducted to analyze performance reports, inventory records, and other relevant
materials. Finally, observations during work hours provided a direct view of employee behavior
and the execution of materials management processes. This comprehensive approach was
ensuring a well-rounded collection of data on how materials management influences
organizational performance at AMG steel factory plc.

3.6 Validity and Reliability

Validity

Kothari (2004) defines validity as the most critical benchmark and indicates the degree to which
an instrument measures what it is supposed to measure. Validity is the extent to which
differences found with a measuring instrument reflect true differences among those being tested.
Validity is the accuracy and meaningfulness of the inferences which are based on the research
results. It is the degree to which results obtained from the analysis of the data actually represents
the phenomena under study. He implies that the validity of the questionnaire data depends on a
crucial way that the ability and willingness of the respondents to provide the information
requested

The validity was verified using Pearson Correlation coefficient values between items using the
Statistical Package for Social Science (SPSS) version 25. Based on the output value computed
using SPSS version 25 the validity of the instruments was tested by the Pearson correlation value
between the items at sig. 2-tailed (0.000) at a significance level of 0.05 with a total survey
respondents of 162 at a df(2, 160). Based on the significant level value obtained by the sig. 2-
tailed 0.000 < 0.05, since all the Pearson Correlation Coefficient values of each items were
greater than the Pearson Critical value at df(2, 160) of 0.159, it can be concluded that all the
items distributed to the respondents were valid.

41
Reliability

Kothari et al., (2004) specified that, the test of reliability is an important test of sound
measurement. A measuring instrument is reliable if it provides consistent results. Reliable
measuring instrument does contribute to validity, but a reliable instrument need not be a valid
instrument.

Mohsen Tavakol and Reg Dennick (2011) stated that, Cronbach’s alpha of ≤ 0.5 is unacceptable,
0.5 < α ≤ 0.6 is poor, 0.6 < α ≤ 0.7 is questionable, 0.7 < α ≤ 0.8 is acceptable, 0.8 < α ≤ 0.9 is
good and finally Cronbach’s α > 0.9 is excellent as cited by Daniel Belay (2017).

The Cronbach's alpha of 0.81 indicates that the questionnaire items have high internal
consistency, making them reliable and valid. After detecting the instrument, improved
questionnaires were printed, duplicated, and sent to targeted respondents. The pilot study
employees from the steel industry.
3.7. Data Analysis
The purpose of any research undertaken is to provide information in order to help answer the
research question (Saunders et al., 2003 and Zikmund, 2003). Therefore, the researcher gathers
raw data that is processed to generate the needed information. This transformation is aided by
the use of analytical methods that convert data into information needed to make decisions
(Davis, 1996). Statistical analysis of the data was tested through the statistical software package
‘’SPSS 25’’ to determine the most significant and influential explanatory variables affecting
employee retention. Then, appropriate graphs and tables were presented the inferential statistics
results.

3.8. Operationalization of variables

In this study, the independent variables procurement management, inventory management,
storage management, and interdepartmental coordination are all key components of materials
management that directly influence the dependent variable, organizational performance.
Effective procurement management ensures timely and cost-effective sourcing of materials,
reducing delays and lowering costs, which in turn enhances production efficiency and
profitability.

42
Inventory management plays a crucial role in maintaining optimal stock levels, preventing
disruptions in production, and minimizing holding costs, all of which contribute to smoother
operations and improved financial performance. Similarly, storage management ensures that
materials are stored under appropriate conditions, reducing material loss and waste, and
ultimately leading to better production outcomes and cost control. Lastly, interdepartmental
coordination is essential for aligning the efforts of procurement, production, and logistics
departments, ensuring a seamless flow of materials and minimizing operational inefficiencies.
Together, these independent variables influence critical aspects of organizational performance,
such as production efficiency, profitability, and operational costs, highlighting the central role
that materials management plays in achieving sustainable organizational growth at AMG Steel
Factory.

3.9. Ethical Considerations

This study has fully considered the ethical matters of the organization. The study was observing
the non-negotiable value of honesty and fairness. Respect for persons was maintained properly.
Employees were informed about the research, their response is confidential, and the research is
for academic purposes.

43
 CHAPTER FOUR
DATA PRESENTATION, ANALYSIS AND DISCUSSIONS
4.1 Introduction
This chapter presents the data, analyzes, and interprets the findings of the study, which focuses
on evaluating the impact of materials management on the organizational performance of
manufacturing companies, specifically AMG Steel Factory PLC. Data was gathered using a five-
point Likert scale questionnaire along with semi-structured open-ended questions.

4.2Response Rate
To collect primary data, 200 tailored questionnaires were delivered to One top manager, seven
vice managers and 192 employees at AMG Steel Factory who have awareness and contact with
material using a purposive sampling method. One top manager, seven vice managers, and 154
employees returned their questionnaires, providing a total of 162 valid replies for an excellent
response rate of 81%. The remaining 38 questionnaires were not returned, yielding a non-
response rate of 19%.
The quantitative data collected through the questionnaires was analyzed using the Statistical
Package for Social Sciences (SPSS) version 25. Additionally, the qualitative data gathered from
semi-structured open-ended questions is also analyzed and discussed in this chapter. The analysis
begins with a statistical description of the respondents' socio-demographic characteristics and
addresses the study’s objectives by answering the research questions and testing the significance
of the stated hypotheses.
4.2. Demographic Characteristics of Respondents
The demographic characteristics and background information of the managers, department
heads, and employees of AMG Steel Factory PLC need to be presented and analyzed. Examining
the respondents' demographic profile is important for ensuring the reliability and validity of the
collected data. As such, respondents were asked to provide information regarding their gender,
age group, educational background, years of experience, and their position within the company’s
organizational structure.

44
Table 4.1: Respondent’s Background Information

Respondent’s Personal Background Frequency Percent Valid Percent Cumulative Percent

Gender Male 101 62 62 62

Female 61 38 38 100

Total 162 100.00 100.00

Age 21-30Years 90 55.60 55.60 55.60

31-40Years 32 19.80 19.80 75.30

41-50Years 32 19.80 19.80 95.10

Above 50Years 8 4.90 4.90 100.00

Total 162 100.00 100.00

Education Level Diploma 30 19 19 19

BA/BSC 110 68 68 87

MA/MSC 22 14 14 100.00

Total 162 100.00 100.00

Work ≤5Years 40 25 25 25

Experience 6-10Years 68 42 42 67

11-15Years 28 17 17 84

16-20Years 20 12 12 96

>20Years 6 4 4 100.00

Total 162 100.00 100.00

Work Position Top Manager 3 1.90 1.90 1.90

Dep. Head 7 4.30 4.30 6.20

Employee 152 93.80 93.80 100.00

45
 Total 162 100.00 100.00

Source: Own Survey, 2024

According to the results shown in Table 4.1, the majority of the respondents from AMG Steel
Factory PLC were male, with 101 respondents (62%) identifying as male and 61 respondents
(38%) as female.

The age distribution of the respondents is also presented in Table 4.1. The respondents were
grouped into age categories with 10-year intervals, except for those over 50 years. The results
show that 55.6% (90 respondents) were aged between 20 and 30 years, 19.8% (32 respondents)
were between 31 and 40 years, and another 19.8% (32 respondents) were between 41 and 50
years. Only 4.9% (8 respondents) were aged above 50 years. This indicates that the majority of
the respondents are within the 20-30 and 31-40 age groups, representing 55.6% and 19.8%,
respectively, followed by the 41-50 age group, also at 19.8%, while a smaller proportion, 4.9%,
were over 50 years of age.

Regarding educational attainment, as seen in Table 4.1, the majority of the respondents (68%)
held a first-degree qualification. This was followed by 19% who held to a diploma, while 14%
had earned a second degree (master’s degree). From this, it can be inferred that most respondents
possess at least a first-degree qualification, which suggests they are well-equipped to understand
and assess the materials management practices and their impact on the company’s performance.

In terms of work experience, Table 4.1 shows that 42% of respondents had between 6 and 10
years of experience, followed by 25% with 5 years or less of experience. Additionally, 17% had
between 11 and 15 years of experience, while 12% had 16-20 years of experience. Only 4% of
respondents had more than 20 years of experience. This implies that the majority of respondents
(75%) had sufficient experience to provide informed insights into the company’s materials
management functions, while 25% had less experience

Lastly, the survey examined the respondents' job positions. As shown in Table 4.1, 1.9% of
respondents were top managers, 4.3% were department heads, and 93.8% were functional-level
employees. This indicates that most respondents were operational-level employees (93.8%),
followed by department heads (4.3%), and top managers (1.9%), highlighting a diverse range of
educational backgrounds and positions within the company.

46
4.3 Descriptive Statistics
4.3.1 The Impact of Materials Management Functions on Organizational
Performance
This section presents the survey results aimed at answering the research questions related to
assessing the impact of materials management on organizational performance at AMG Steel
Factory PLC. The findings are interpreted through the use of frequencies and percentages based
on the measurements of materials management and organizational performance.

Table 4.2: Organizational Performance

Response Rate
Items Response
Frequency Percent
Materials management functions have high impact on Disagree 3 1.90
organizational performance and competitiveness.
Neutral 23 14.20

Agree 74 45.60

Strongly 62 38.30
Agree

Total 162 100.00

Materials procurement management sustains greatly the Disagree 6 3.70

performance of an organization.
Neutral 38 23.50

Agree 65 40.10

Strongly 53 32.70
Agree

Total 162 100.00

Organizational performance is highly affected by materials Disagree 9 5.60

inventory control systems.
Neutral 44 27.20

Agree 50 30.80

Strongly 59 36.40
Agree

Total 162 100.00

The organizational performance can be enhanced less by Disagree 3 1.90

materials storage (warehousing) system.
Neutral 78 48.10

Agree 56 34.60

Strongly 25 15.40

47
 Agree

Total 162 100.00

The organizational performance can be impacted Disagree 6 3.70

significantly by interdepartmental collaboration.
Neutral 45 27.80

Agree 57 35.20

Strongly 54 33.30
Agree

Total 162 100.00

Source: Own Survey, 2024

According to Table 4.2, just 1.9% of respondents disagreed with the majority (83.9%) who
agreed that materials management functions significantly affect AMG Steel Factory PLC's
organizational performance and competitiveness. Furthermore, 14.2% of respondents were
undecided, meaning they had no opinion on how materials management affects performance.
Regarding materials procurement management, 72.8% of respondents indicated that it greatly
sustains organizational performance, while 23.5% remained neutral, and 3.7% disagreed with
this statement.

In terms of materials inventory, 67.2% of respondents stated that the performance of AMG Steel
Factory is highly affected by inventory management, while 27.2% were uncertain, and 5.6%
disagreed.

For materials storage (warehousing) systems, 50% of respondents believed that they enhance
performance to a lesser extent, while 48.1% neither agreed nor disagreed, and 1.9% disagreed.

Lastly, 68.5% of respondents supported the view that interdepartmental collaboration

significantly impacts organizational performance, while 27.8% were neutral on this point.

In summary, based on the survey results in Table 4.2, the majority of AMG Steel Factory
management staff and employees recognized the positive impact of materials management
functions on organizational performance. This was followed by a group of respondents who
expressed neutrality, while a small number denied the impact of materials management on
organizational performance.

48
 Table 4.3: Procurement Management
Response Rate
Items Response
Frequency Percent

Most of the time the firm’s purchasing management Disagree 28 17.30

practices affects the overall organizational
performance in profit generation procedures. Neutral 58 35.80

Agree 39 24.10

Strongly Agree 37 22.80

Total 162 100.00

Procurement (purchasing) procedures highly affect Disagree 20 12.30

organizational performance.
Neutral 63 38.90

Agree 59 36.50

Strongly Agree 20 12.30

Total 162 100.00

The procurement system of the steel industry is Disagree 34 21.00

managed by trained and skillful personnel.
Neutral 69 42.60

Agree 30 18.50

Strongly Agree 29 17.90

Total 162 100.00

Effect of procurement of materials enhances the steel Strongly 4 2.50

industry’s productivity. Disagree

Disagree 30 18.50

Neutral 66 40.70

Agree 32 19.80

Strongly Agree 30 18.50

Total 162 100.00

The purchasing department made a check and balance Disagree 29 17.90

between the planned and the purchased materials
quantity and quality. Neutral 59 36.40

Agree 45 27.80

Strongly Agree 29 17.90

Total 162 100.00

Source: Own Survey, 2024

49
According to Table 4.3, 46.9% of respondents said that AMG Steel Factory's buying
management procedures often had a major impact on the business's overall performance in terms
of profit generation, while 17.3% disagreed. Furthermore, regarding whether the company's
profit-generating processes are impacted by buying management techniques, 35.8% of
respondents were undecided.

According to Table 4.3, 48.7% of respondents stated that procurement procedures have a strong
effect on AMG Steel Factory’s organizational performance, whereas 12.3% disagreed.
Meanwhile, 38.9% of respondents had no opinion on whether procurement procedures have a
significant impact on performance.

In terms of procurement personnel, 36.4% of respondents agreed that trained and skilled staff
manage the AMG steel factory procurement system, while 21% disagreed. Additionally, 42.6%
of respondents remained neutral on whether the procurement system is managed by competent
personnel. Table 4.3 also shows that 38.3% of respondents believe that effective procurement
enhances the productivity of the AMG steel factory, while 21% disagreed. Moreover, 40.7% of
respondents had no suggestion on whether effective procurement improves the company's
productivity.

Lastly, 45.7% of respondents affirmed that the purchasing department ensures a check and
balance between the planned and actual materials quantity and quality, while 17.9% disagreed.
Meanwhile, 36.4% of respondents were neutral on this issue.

In summary, based on the survey results in Table 4.3, nearly half of AMG Steel Factory
employees supported the view that procurement management practices positively impact the
company’s performance. A significant portion of respondents remained neutral, while a smaller
group did not support the given statements.

Table 4.4: Inventory Management

50
 Response Rate
Items Response
Frequency Percent

Inventory management practices enable the industry Disagree 20 12.30

to meet the targeted objectives.
Neutral 91 56.20

Agree 31 19.10

Strongly Agree 20 12.30

Total 162 100.00

Knowing stock at hand and expected stock enhances Disagree 14 8.60

organizational growth.
Neutral 72 44.40

Agree 63 38.90
Strongly Agree 13 8.10

Total 162 100.00

The firm has computerized all Disagree 22 13.60

inventory management systems.
Neutral 84 51.80

Agree 44 27.20

Strongly Agree 12 7.40

Total 162 100.00

The firm paid maximum attention to those inventories Strongly 2 1.20

whose value is highest. Disagree

Disagree 22 13.60

Neutral 64 39.50

Agree 60 37.10

Strongly Agree 14 8.60

Total 162 100.00

Growth of a firm is measured based on the level of Disagree 26 16.00

stock it has.
Neutral 66 40.70

Agree 48 29.70

Strongly Agree 22 13.60

Total 162 100.00

Source: Own Survey, 2024

According to Table 4.4, 31.4% of respondents indicated that inventory management practices
help AMG Steel Factory achieve its targeted objectives, while 12.3% disagreed with this

51
assertion. A larger portion, 56.2%, expressed neutrality, neither agreeing nor disagreeing about
the effectiveness of inventory management in meeting the company’s objectives.

In terms of stock awareness, 47% of respondents supported the idea that knowing the current and
expected stock levels contributes to the growth of AMG Steel Factory, while only 8.6%
disagreed. Additionally, 44.4% of respondents had no opinion on this matter.

As highlighted in Table 4.4, 34.6% of respondents stated that the company has computerized its
inventory management systems, while 13.6% did not support this claim. More than half of the
respondents (51.8%) were unsure whether the firm has implemented a computerized inventory
management system.

The survey results indicated that 45.7% of respondents believed that the steel industry pays
significant attention to high-value inventories, whereas 14.8% disagreed with this assertion.
Additionally, 39.5% of respondents were neutral regarding this item.

Furthermore, 43.3% of respondents clarified that the growth of AMG Steel Factory is measured
by its stock levels, while 16% disagreed with this statement. Meanwhile, 40.7% of respondents
remained neutral on whether the firm's growth is assessed based on its stock levels.

In conclusion, the survey results in Table 4.4 reveal that a significant number of respondents had
no clear opinions or judgments regarding the inventory management practices at AMG Steel
Factory. This was followed by those who supported the indicated items, while fewer respondents
did not agree with the inventory management practices in place.

Table 4.5 storage management

Items Response Response Rate

Frequency Percent

52
 The storage (warehouse) management has a significant role in Strongly Disagree 2 1.20
achieving firm’s objective.
Disagree 20 12.30

Neutral 65 40.10

Agree 63 38.90

Strongly Agree 12 7.50

Total 162 100.00

The firm pays great attention to the storage management in order to Strongly Disagree 2 1.20
handle items properly.
Disagree 42 25.90

Neutral 61 37.70

Agree 50 30.90

Strongly Agree 7 4.30

Total 162 100.00

Storage of materials ensures continuity of production and Disagree 40 24.70

productivity.
Neutral 72 44.40

Agree 44 27.20

Strongly Agree 6 3.70

Total 162 100.00

Most of the time, in your firm’s warehouse, items are placed in the Strongly Disagree 4 2.50
correct location.
Disagree 8 4.90

Neutral 71 43.80

Agree 59 36.50

Strongly Agree 20 12.30

Total 162 100.00

We are successful in minimizing total product damage in the Strongly Disagree 2 1.20
warehouse.
Disagree 31 19.10

Neutral 61 37.70

Agree 49 30.20

Strongly Agree 19 11.80

Total 162 100.00

Source: Own Survey, 2024

As shown in Table 4.5, 46.4% of respondents believe that storage (warehouse) management
plays a crucial role in achieving the objectives of AMG Steel Factory PLC, while 13.5%
disagreed with this statement. Additionally, 40.1% of respondents remained neutral, neither

53
agreeing nor disagreeing on the significance of storage management in meeting the firm's
objectives.

According to Table 4.5, 35.2% of respondents indicated that AMG Steel Factory pays
considerable attention to storage management for proper item handling, whereas 27.1% did not
support this assertion. The remaining 37.7% of respondents expressed no opinion on whether the
firm adequately focuses on storage management.

The survey results also revealed that 30.9% of respondents stated that effective material storage
ensures continuity in production and productivity. Meanwhile, 44.4% had no opinion on this
issue, and 24.7% disagreed that storage of materials contributes to sustained production and
productivity. As presented in Table 4.5, 48.8% of respondents indicated that, most of the time,
items in the warehouse of AMG Steel Factory PLC are stored in their correct locations. In
contrast, 7.4% disagreed, stating that items are not typically placed correctly.

Additionally, 43.8% of respondents remained neutral, neither agreeing nor disagreeing regarding
the proper placement of items in the warehouse.

According to Table 4.5, 42% of respondents reported success in minimizing overall product
damage in the warehouse, while 20.3% indicated that they were not successful in this regard.
The remaining 37.7% of respondents expressed no opinion on whether they had effectively
minimized product damage.

Thus, approximately 40.66% of respondents generally supported the notion that storage
management positively impacts organizational performance. Conversely, around 40.74% of
respondents had no opinion on the effect of storage management on organizational performance,
while 18.6% did not support the claim that storage management influences organizational
performance.

54
 Table 4.6: Interdepartmental Collaboration
Response Rate

Items Response Frequency Percent

The interdepartmental coordination between all the firm’s Disagree 6 3.70

departments plays a significant role for the performance of
the steel industry. Neutral 37 22.80

Agree 48 29.70

Strongly Agree 71 43.80

Total 162 100.00

The entire firm’s departments perform their duties Disagree 6 3.70

collaboratively in order to achieve its objectives.
Neutral 38 23.50

Agree 79 48.70

Strongly Agree 39 24.10

Total 162 100.00

The top management focuses particularly to the Disagree 4 2.50

interdepartmental coordination of the firm’s departments.
Neutral 51 31.50

Agree 42 25.90

Strongly Agree 65 40.10

Total 162 100.00

There is a use of open and positive communication between Disagree 6 3.70

all the firm’s departments.
Neutral 34 21.00

Agree 57 35.20

Strongly Agree 65 40.10

Total 162 100.00

The firm’s human resource management practices enhance Disagree 3 1.90

good interdepartmental coordination.
Neutral 34 21.00

Agree 44 27.10

Strongly Agree 81 50.00

Total 162 100.00

Source: Own Survey, 2024

Based on the findings in Table 4.6, a significant majority of respondents (73.5%) believe that
interdepartmental coordination among all departments is crucial for the organizational

55
performance of AMG Steel Factory PLC, while only 3.7% disagreed with this assertion. The
remaining 22.8% of respondents had no opinion on the significance of interdepartmental
coordination.

Similarly, 72.8% of respondents indicated that all departments work collaboratively to achieve
the company’s objectives, while 3.7% disagreed. Additionally, 23.5% of respondents were
neutral regarding the collaboration among departments.

According to Table 4.6, 66% of respondents noted that the top management of AMG Steel
Factory pays particular attention to interdepartmental coordination, with 2.5% disagreeing. The
remaining 31.5% of respondents expressed no opinion on the management's focus in this area.

Furthermore, 75.3% of respondents stated that open and positive communication exists among
all departments, while 21% did not express an opinion on this matter. A small percentage (3.7%)
disagreed with this claim.

Additionally, a majority of respondents (77.1%) believe that the human resource management
practices at AMG Steel Factory promote effective interdepartmental coordination, while 21%
had no opinion, and only 1.9% disagreed.

In summary, on average, about 72.95% of respondents supported the notion that

interdepartmental collaboration positively impacts organizational performance. In contrast,
approximately 23.95% had no opinion on this effect, while 3.1% did not support the idea that
interdepartmental coordination contributes to organizational performance.

4.4 Inferential Analysis

4.4.1 Correlation Analysis
Correlation is a type of bivariate analysis that assesses the strength and direction of the
relationship between two or more variables. The correlation coefficient, which measures this
association, ranges between -1 and +1. A value of ±1 signifies a perfect relationship between the
variables, while values closer to 0 indicate a weaker relationship. The sign of the coefficient
determines the direction of the relationship: a positive sign (+) indicates that as one variable
increases, the other does as well, while a negative sign (-) shows that as one variable increases,
the other decreases (Saunders, Lewis, & Thornhill, 2009).

56
In this context, correlation analysis is used to determine the strength and direction of
relationships between two or more quantitative variables. A correlation coefficient between +0.5
and +1 suggests a strong positive relationship, meaning both variables tend to increase
simultaneously. Conversely, a coefficient between -0.5 and -1 indicates a strong negative
relationship, where one variable increases as the other decreases. A score of 0 reflects no
correlation or relationship between the variables (Saunders et al., 2009).

Table 4.7: Correlation between Materials Management Functions and Organizational

Performance
PM IM SM IDC OP

PM Pearson Correlation 1

Sig. (2-tailed)

N 162

IM Pearson Correlation .522** 1

Sig. (2-tailed) .000

N 162 162

SM Pearson Correlation .495** .892** 1

Sig. (2-tailed) .000 .000

N 162 162 162

IDC Pearson Correlation .570** .739** .667** 1

Sig. (2-tailed) .000 .000 .000

N 162 162 162 162

OP Pearson Correlation .616** .831** .803** .779** 1

Sig. (2-tailed) .000 .000 .000 .000

N 162 162 162 162 162

Correlation is significant at the 0.01 level (2-tailed).

N = 162

Source: Own Survey, 2024

Table 4.7 presents the correlation matrix between materials management functions procurement
management, inventory management, storage management, and interdepartmental collaboration
and the organizational performance of AMG Steel Factory PLC. Among these functions,

57
inventory management shows the strongest positive relationship with organizational
performance, evidenced by a high correlation coefficient of 0.831, controlling for other
variables. Following this, storage management also exhibits a very strong positive correlation
with performance, with a coefficient of 0.803. Interdepartmental collaboration ranks third, with a
strong positive relationship to performance, reflected by a correlation coefficient of 0.779, again
controlling for other variables. Comparatively, procurement management shows a positive but
more moderate relationship with organizational performance, with a correlation coefficient of
0.616, while still controlling for other influencing factors.

Table 4.8: Correlation b/n Overall Materials Management Functions and Organizational
Performance
Materials Organizational
Performance
Management

Materials Pearson Correlation 1

Management Sig. (2-tailed)

N 162

Organizational Pearson Correlation .882** 1

Performance
Sig. (2-tailed) .000

N 162 162

Correlation is significant at the 0.01 level (2-tailed).

N = 162

Source: Own Survey Results and Computation, 2024

Table 4.8 illustrates the relationship between effective materials management and the
organizational performance of AMG Steel Factory. The results show that effective materials
management is very strongly correlated with the factory’s organizational performance, with a
high correlation coefficient of 0.882. This indicates that the company’s materials management
functions inventory management, interdepartmental collaboration, storage management, and
procurement management play a highly significant and positive role in its overall performance.
Therefore, there is a very strong, positive, and highly significant correlation between effective
materials management and the organizational performance of AMG Steel Factory.

58
4.4.2 Assumption
4.4.2.1 Test of Linearity Assumption
Linear regression requires a linear relationship between the independent variables (procurement,
inventory, storage management, and interdepartmental collaboration) and the dependent variable
(organizational performance). This assumption of linearity can be effectively assessed using
scatter plots. The linearity assumption implies that the predictor (independent) variables and the
outcome (dependent) variable have a straight-line relationship. If the residuals are normally
distributed and exhibit homoscedasticity, linearity is generally not a concern (Statistics
Solutions, n.d.). In this study, since the observations for all explanatory variables against the
dependent variable can be represented roughly along a straight line, and the variance between the
upper and lower cases of the observations is reasonably consistent, linearity is not a significant
issue for the analysis at AMG Steel Factory PLC.

Figure 4.1 Linearity Test

4.4.2.2 Test of Normality Assumption

The assumption of normality requires that the collected data follow a bell-curve distribution
before applying certain statistical tests or regression analyses. This assumption can be tested
using graphical methods, such as histograms and dot plots. A popular approach is the histogram,
which provides a clear visual representation of whether the data fits the normality assumption. If
the data resembles a bell curve, it likely follows a normal distribution. Alternatively, if the fitted
line in the Normal P-P plot of regression is approximately straight, it suggests that the variables
are normally distributed (Statistics How To, n.d.). In this study, since the fitted line on the P-P

59
plot is close to a straight line, it can be concluded that the residuals of the model are
approximately normally distributed, indicating that the normality assumption is satisfied for the
data at AMG Steel Factory

Figure 4.2 Histogram

60
 Figure 4.2 Normal P-P Plot

4.4.2.3 Test of Multicollinearity Assumption

Once the normality assumption in the regression model is met, the next important step is to
assess whether there is similarity between the independent variables in the model. If the
independent variables such as procurement, inventory, storage management, and
interdepartmental collaboration are highly correlated, it indicates the presence of
multicollinearity. This occurs when the independent variables are too strongly related to one
another.

To test for multicollinearity, the Variance Inflation Factor (VIF) is commonly used. A VIF value
between 1 and 10 suggests no multicollinearity, while a value outside this range (< 1 or > 10)
would indicate the presence of multicollinearity among the variables. Another indicator is the
tolerance value, which measures the impact of one independent variable on the others. A
tolerance value less than 0.1 suggests possible multicollinearity, and if it falls below 0.01,
multicollinearity is confirmed (Statistics Solutions, n.d.).

In this study, based on the results shown in Table 4.7, the VIF values for all independent
variables were below 10, and the tolerance values were above 0.1. Therefore, the model does not
violate the assumption of multicollinearity, indicating that there is no significant

61
multicollinearity between the independent variables in the regression model applied to AMG
Steel Factory PLC.

Table 4.9: Multicollinearity Diagnosis

Collinearity Statistics

Toleranc VIF
Model e

Procurement Management .649 1.540

Inventory Management .166 6.038

Storage Management .202 4.940

Interdepartmental Collaboration .407 2.460

Dependent Variable: Organizational Performance Source: Own Survey Results and

Computation, 2024

4.4.2.5 Test of Autocorrelation Assumption

Autocorrelation refers to the correlation of a variable with itself over successive time intervals,
indicating a pattern or similarity in the data over time. When autocorrelation is present in the
residuals of a model, it suggests that the model may be incorrectly specified or unreliable, often
because a key variable or set of variables has been omitted.

The Durbin-Watson test is the standard method used to detect autocorrelation. This test generates
a statistic that ranges between 0 and 4. Values close to 2 indicate minimal autocorrelation, while
values closer to 0 or 4 suggest higher levels of positive or negative autocorrelation, respectively.
A Durbin-Watson statistic in the range of 1.50 to 2.50 is considered acceptable, indicating that
the model is less likely to suffer from autocorrelation issues (Statistics Solutions, n.d.).

Table 4.10: Durbin-Watson

model Durbin watson
1 2.125

Predictors: (Constant), Interdepartmental Collaboration, Storage Management, Inventory

Management, Procurement Management

Dependent Variable: Organizational Performance

62
Source: Own Survey, 2024

According to the result in Table 4.8 above, the Durbin-Watson statistic value is 2.152 which are
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 autocorrelation
problem in the survey study model.

4.4.3 Regression Result Analysis

Regression analysis focuses on describing and evaluating the relationship between a dependent
variable and one or more independent variables. It helps in understanding this relationship and
predicting the dependent variable's value based on the independent variables (Gujarati et al.,
2009). This relationship is summarized in the model summary table, which outlines the statistical
connection between the independent variables procurement management, inventory
management, storage management, and interdepartmental collaboration and the dependent
variable, organizational performance.

The results in Table 4.11 indicate that the independent variables (the materials management
functions) significantly predict the overall performance of AMG Steel Factory. The model
summary shows a strong correlation, represented by an R value of 0.886, between the materials
management functions and organizational performance.

Furthermore, Table 4.11 reveals that these materials management functions collectively account
for 78.5% of the firm's performance, as indicated by an R-Squared (R²) value of 0.785. This
suggests that, on average, 78.5% of the variation in organizational performance can be explained
by the variations in the materials management functions, while the remaining 21.5% is attributed
to factors not included in the model. This finding aligns with Cross (2019), which highlights the
positive and significant relationship between materials management and an organization’s
productivity.

Table 4.11: Model Summary

Mode R R Adjusted R Std. Error of the Durbin-

l Square
Square Estimate Watson

63
 1 .886 .785 .780 .31775 2.152
a

a. Predictors: (Constant), Interdepartmental Collaboration, Storage

Management, Procurement Management, Inventory Management
b. Dependent Variable: Organizational Performance

Source: Own Survey, 2024

Based on the model presented in Table 4.11, the independent variables (materials management
functions) significantly influence the performance of AMG Steel Factory, as indicated by an
Adjusted R-Square value of 0.780. This suggests that procurement, inventory management,
storage management, and interdepartmental collaboration collectively account for 78% of the
impact on organizational performance. These findings align with the research of Florence and
Oyebamiji (2018), which demonstrates a positive and significant relationship between materials
management and organizational performance. Additionally, this outcome is consistent with the
work of Taiwo, Claudius, and James (2012), which highlights a positive and significant
correlation between effective materials management and a firm's profitability.

Table 4.12: ANOVA of the Variables

Sum of Mean
Squares
Model df Square F Sig.

1 Regressio 57.901 4 14.475 143.36 .000b

n 6

Residual 15.852 157 .101

Total 73.753 161

a. Dependent Variable: Organizational Performance

b. Predictors: (Constant), Interdepartmental Collaboration,
Storage Management, Procurement Management, Inventory
Management

64
Table 4.13: Regression Coefficients of the Variables
Unstandardized Standardized
Coefficients Coefficients

B Std. Beta
Model Error t Sig.

1 (Constant) .585 .150 3.904 .000

Procurement Management .147 .041 .166 3.620 .000

Inventory Management .287 .089 .294 3.230 .002

Storage Management .243 .076 .265 3.218 .002

Interdepartmental .271 .054 .290 5.002 .000

Collaboration

a. Dependent Variable: Organizational Performance

Source: Own Survey Results and Computation, 2024

The regression model underwent significant testing, as shown in Table 4.12. The ANOVA
results indicate a p-value of 0.000, confirming that the model is valid for regression analysis.
Specifically, the findings in Table 4.12 reveal an F statistic of F (2, 160) = 143.366 and a
probability value of p = 0.000, which is statistically significant at the p < 0.05 level. This
indicates that interdepartmental collaboration, storage management, inventory management, and
procurement management all have a statistically significant impact on the organizational
performance of AMG Steel Factory. These results are consistent with Ogbadu's (2009) findings,
which highlight a positive and significant relationship between materials management functions
and organizational profitability. Additionally, Ibegbulem (2015) supports the conclusion that
materials management significantly influences organizational performance. Similarly, Cross
(2019) found a significant relationship between materials management functions and the
frequency of plant breakdowns in his study on the effects of materials management on
organizational productivity.

Furthermore, Table 4.13 illustrates the impact of materials management functions on the
performance of AMG Steel Factory in relation to the regression coefficients of the explanatory
variables. The results demonstrate that all four materials management functions procurement

65
management, inventory management, storage management, and interdepartmental collaboration
have a positive and significant impact on organizational performance.

The unstandardized regression coefficients between the independent variables (materials

management functions: PM, IM, SM, IDC) and the dependent variable (organizational
performance, OP) are described in the form of regression equation.

The established regression function is:

Organizational Performance = βo + β1X1 + β2X2 + β3X3 + β4X4 + ei Organizational

Performance = βo + β1PM + β2IM + β3SM + β4IDC

OP = 0.585 + 0.147PM + 0.287IM + 0.243SM + 0.271IDC

From this regression coefficient results, we can analyze the following points:

 Procurement Management
The results presented in Table 4.13 confirm that the beta (B) value for procurement management
is 0.147, with a p-value of (p < 0.05). This indicates that, on average, a 1% improvement in
procurement management is associated with a 14.7% increase in the performance of AMG Steel
Factory, assuming all other factors remain constant. The p-value of less than 0.05 suggests that
the impact of procurement management is significant at the 5% level. Therefore, we can
conclude that procurement management has a statistically significant relationship with the
performance of the steel industry.

 Inventory Management
As shown in Table 4.13, the beta (B) coefficient for inventory management is 0.287, which
means that, on average, a 1% increase in inventory management will lead to a 28.7%
improvement in the performance of AMG Steel Factory, assuming all other factors remain
constant. This suggests a positive and statistically significant relationship between inventory
management and organizational performance. The p-value of (p < 0.05) indicates that the impact
of inventory management is significant at the 5% level. Consequently, inventory management
has a positive and statistically significant effect on the performance of the steel industry,
indicating that the firm's inventory management system is being effectively maintained.

 Storage/Warehouse Management

66
The regression results in Table 4.13 indicate that storage management has a positive and
statistically significant relationship with the performance of AMG Steel Factory. The beta (B)
value for storage management is 0.243, meaning that, on average, a 1% enhancement in storage
management will lead to a 24.3% increase in the performance of the steel industry, assuming all
other factors remain constant. The p-value of (p < 0.05) indicates that the impact of storage
management is significant at the 5% level. This suggests that finished products, defective
materials, scraps, and surplus materials are effectively managed within the company’s
warehouse.

4. Interdepartmental Collaboration

As indicated in Table 4.13, the beta (B) coefficient for interdepartmental collaboration is 0.271,
suggesting that, on average, a 1% improvement in interdepartmental collaboration will lead to a
27.1% increase in the performance of AMG Steel Factory, assuming all other factors remain
constant. This demonstrates a positive and statistically significant relationship between
interdepartmental collaboration and organizational performance. The p-value of (p < 0.05)
confirms that the impact of interdepartmental collaboration is significant at the 5% level. Thus,
interdepartmental collaboration positively and significantly influences the performance of the
steel industry, indicating that there is a healthy communication channel among the company's
departments, although improvements are still needed.

From the regression model analysis, all independent variables procurement management,
inventory management, storage (warehousing) management, and interdepartmental collaboration
show a positive and statistically significant effect on the organizational performance of the steel
industry. The impacts of these explanatory variables on organizational performance are
presented in order of significance along with their respective beta values.

The inventory management system emerges as the strongest predictor of organizational

performance, with a beta (B) value of 0.287 and a significance level of (0.002). This is followed
by interdepartmental collaboration, which has a beta (B) value of 0.271 and a significance level
of (0.000). The third most significant predictor is storage (warehouse) management, with a beta
(B) value of 0.243 and a significance level of (0.002).

67
 Lastly, procurement management is the least significant predictor, with a beta (B) value of
0.147 and a significance level of (0.000) compared to the other explanatory variables examined
in this study.

Hypothesis testing is a key procedure in an inferential statistic. This part of the research work is
used to test the research hypotheses as follows.

Ha1: There is significant association between procurement management and firm’s

performance

According to the results in Table 4.13, the coefficient for procurement management is positive
(0.147) and highly significant (p-value = 0.000), suggesting a clear impact on organizational
performance. Since the p-value (0.000) is lower than the t-statistic of 9.893, with a standard error
of 0.041, the null hypothesis is rejected in favor of the alternative. This indicates a positive and
significant relationship between procurement management and the performance of firms in the
steel industry.

Ha2: There is significant relationship between inventory management and organizational

performance

The results in Table 4.13 show that the coefficient for inventory management is positive (0.287)
and highly significant (p-value = 0.002), indicating a strong contribution to organizational
performance. With a p-value of 0.000, which is lower than the t-statistic of 8.271 and a standard
error of 0.089, the null hypothesis is rejected, and the alternative hypothesis is accepted. This
confirms a positive and significant relationship between inventory management and
organizational performance in the steel industry.

Ha3: There is significant association between storage/warehouse management and

organizational performance

Regarding to the result in Table 4.13, the coefficient value for storage management is positive
(0.243) and is highly significant (0.002) which verifies organizational performance. The p-value
of 0.002 is less than the t-statistic value of 10.557 with a standard error value of 0.076. This
indicates that, on average, other things remain constant; a unit increase in storage management
will lead to increases organizational performance by 0.738. Thus, the null hypothesis is rejected,

68
and the alternative hypothesis is accepted which means that there is a positive and significant
association between storage management and organizational performance of the steel industry.

Ha4: There is significant relationship between interdepartmental collaboration and

company’s performance

Concerning to the results figured in Table 4.13 above, the coefficient value for interdepartmental
collaboration is positive (0.271) and is highly significant (0.000) which make sure organizational
performance. The p-value of 0.000 is less than the t-statistic value of 15.702 with a standard
error value of 0.054. Therefore, the null is rejected, while the alternative hypothesis is accepted
which means that there is a positive and significant relationship between interdepartmental
collaboration and company’s performance of the steel company.

The implication of these results obtained in the hypotheses tests is that, there is a positive and
statistically significant relationship between effective materials management functions and
performance of the steel industry in the study. This finding is in line with Florence and
Oyebamiji (2018) that materials management dimensions jointly influenced the performance of
cement manufacturing industries in Nigeria. And also this result is matched with Suleiman
(2010) that effective management and control of materials contribute to the performance of an
organization in Nigeria. This implies that there is a need of taking improving actions on
materials management functions to make sure the organizational performance of the steel
industry.

Table 4.14: Summary of Expected and Actual Impact of Independent Variables on

Dependent Variable

Independent Variable Dependent Expecte Actual Significance

Variable d Sign Sign Level

Procurement OP Positive Positive 0.000

Management

Inventory OP Positive Positive 0.002

Management/control

Storage Management OP Positive Positive 0.002

69
 Interdepartmental OP Positive Positive 0.000
collaboration

From Table 4.14 the variables are statistically significant at 5% significance level was
considered as the independent variables have statistically significant impact on the dependent
variable.

4.5 Semi-Structured Open-Ended Question Analysis

In addition to the quantitative data, a semi-structured open-ended question was shared with
respondents to complement the quantitative findings. Out of 116 respondents who provided
answers to the closed-ended quantitative questions, 91 (78.45%) also responded to the semi-
structured open-ended question. Although respondents expressed their ideas differently, a
common theme emerged around similar challenges the company faces. Given the 78.45%
response rate, which is substantial for analysis, the researcher synthesized and summarized these
qualitative responses.

One primary challenge highlighted by respondents is the shortage of raw materials, which has
limited the company's operational capacity. Another issue frequently raised was the difficulty in
securing foreign exchange, specifically the lack of access to U.S. dollars, which has hindered the
ability to import necessary materials. This scarcity has meant that the company is unable to
operate at full capacity, leading to reduced performance, despite high market demand for steel
products. Consequently, machinery does not operate at maximum capacity due to raw material
constraints, resulting in lower production volumes.

Respondents also noted weak interdepartmental coordination as a critical challenge. According

to the responses, the company’s departments are not well-aligned in working towards shared
goals. While human resource management is responsible for interdepartmental coordination,
respondents indicated that this department operates with low efficiency, which impacts the
overall collaborative effort across teams. This lack of interdepartmental cooperation is seen as an
area needing improvement to achieve the company’s performance objectives.

Another concern raised by respondents relates to the company’s storage or warehousing

practices. They noted that finished products and defective items are stored together, often in the

70
same operational area, and that raw materials and finished products are scattered throughout the
facility. This practice has led to product damage, and there is a risk that defective and finished
products could be mixed. Additionally, unskilled employees manage the storage room,
underscoring the need for improved warehousing practices and skilled personnel to ensure the
company meets its profit goals.

The respondents also expressed concerns regarding the procurement department. They indicated
that the department lacks trained and skilled personnel, sometimes leading to the purchase of
low-quality raw materials, which increases defective product rates and lowers productivity. This
underscores the need for qualified staff in the procurement department to support organizational
performance improvements.

4.6 Discussion
The findings from the analysis based on respondents' feedback provide insights into the impact
of materials management functions on organizational performance, effectively addressing the
study's research questions. The results reveal that materials management practices collectively
play a positive and significant role in enhancing AMG Steel Factory's performance. Specifically,
all materials management functions studied including procurement, inventory control, storage
handling, and interdepartmental collaboration exhibit positive and statistically significant
relationships with the company's performance.

These findings align with studies by Cross (2019), Florence and Oyebamiji (2018), Suleiman
(2010), and Ogbadu (2009), who similarly found that effective materials management
contributes to improved organizational performance. Additionally, this is consistent with the
findings of Taiwo, Claudius, and James (2012), which indicate a positive and significant
correlation between efficient materials management and company performance, emphasizing the
role of materials management as a primary predictor of organizational success.

The analysis also identifies inventory management as the primary predictor among materials
management functions, with a strong positive association with organizational performance. This
aligns with Eneje's (2012) findings that efficient inventory management significantly affects the
performance of Nigerian brewery factories, as well as Uman's (2012) research, which recognizes
effective inventory management as crucial for organizational success. However, these findings

71
differ from those of Dagim (2018) and Florence and Oyebamiji (2018), who noted a positive but
statistically insignificant effect of inventory management on firm performance.

Interdepartmental collaboration emerged as the second most impactful materials management

factor, with a positive and significant relationship to organizational performance, echoing the
findings of Adarsh, Shiva, Asisha, and James (2015) regarding its influence on the performance
of beverage and spice manufacturing firms in India. This finding contrasts with Florence (2018),
who found interdepartmental collaboration to have an insignificant effect on company
performance. Storage management is the third key materials management function identified,
showing a significant and positive effect on organizational performance. This finding aligns with
studies by Asmelash (2017), Ibegbulem and Okorie (2015), and Florence (2018), which
highlight the positive influence of effective storage management on firm performance.

Procurement management, while contributing positively to performance, is the least impactful

predictor among materials management functions in this study. This result diverges from
Florence and Oyebamiji's (2018) findings, which noted a positive yet statistically insignificant
effect of procurement management on performance. However, the result supports studies by
Suleiman (2010) and Abimbola (2017), which suggest that effective procurement management
promotes production efficiency, reduces costs, and enhances profitability, ultimately improving
organizational performance.

In summary, these findings provide a comprehensive answer to the research questions by

illustrating how AMG Steel Factory has leveraged materials management functions—
particularly inventory control, storage management, procurement practices, and
interdepartmental collaboration—to achieve improved organizational performance and
competitiveness. Among these, inventory management exerts the strongest influence on
performance, followed by interdepartmental collaboration and storage management, with
procurement management having the least impact.

72
 CHAPTER FIVE
SUMMARY, CONCLUSIONS AND RECOMMENDATIONS
This chapter presents a summary of the study, outlines the conclusions drawn from the findings,
and offers recommendations for improvement and suggestions for future research on the topic.

5.1 Summary
This study aimed to evaluate the impacts of materials management practices on manufacturing
firms' performance, with a particular focus on AMG Steel Factory PLC. It looked at four
essential materials management functions: procurement management, storage management,
inventory management, and interdepartmental cooperation. The study utilized an explanatory
design to examine causal relationships among variables, while a descriptive research approach
was utilized to gather precise and comprehensive data. A mixed-method approach was used to
gather a comprehensive perspective based on insights from a limited group of respondents at
AMG Steel Factory. This technique included both quantitative and qualitative research
approaches. The study also used a cross-sectional data model to provide a succinct summary of
the results.
According to the findings, most respondents think that materials management procedures have a
significant impact on the productivity and financial success of manufacturing companies. For
example, 83.9% of respondents agreed that problems with materials management have a major
impact on the target industry's performance, compared to just 14.2% who were unsure and 1.9%
who disagreed. These results highlight how important good materials management techniques
are to improving manufacturing firms' performance.
The study's conclusions show that, despite the need for qualified and experienced staff in this
field, the majority of respondents (72.8%) regarded procurement management as a major factor
influencing business performance. 3.7% disagreed, while 23.5% of respondents had no view
about the impact of procurement. This suggests a strong and favorable correlation between
organizational success and procurement management.
Regarding inventory management, 67.2% of respondents confirmed that effective inventory
control enhances performance by reducing storage and handling costs. However, 27.2% were

73
uncertain of its impact, while 5.6% disagreed. These results suggest that implementing a
computerized inventory management system could enhance competitiveness and support
organizational objectives. Additionally, about half of the respondents (50%) agreed that profits
could be achieved through effective management of store locations, layout, equipment safety,
production issues, stock records, and obsolete material disposal. Nearly as many respondents
(48.1%) had no opinion on storage management’s impact, and 1.9% disagreed. This indicates a
need for improved storage practices to better support organizational goals. The study found that
68.5% of respondents believe that effective interdepartmental collaboration is crucial for
competitiveness and success, while 27.8% had no opinion, and 3.7% disagreed. This implies that
AMG Steel Factory is working to enhance interdepartmental coordination to achieve its goals.

The correlation analysis showed a strong positive relationship between the independent variables
(inventory management, storage management, interdepartmental collaboration, and procurement
management) and the dependent variable (organizational performance), with correlation
coefficients of 0.831, 0.803, 0.779, and 0.616, respectively, for AMG Steel Factory PLC.

Regression analysis further identified inventory management as the strongest predictor of AMG
Steel Factory’s performance, with a coefficient of determination of 0.287, followed by
interdepartmental collaboration (0.271) and storage management (0.243). Procurement
management, while still positively impactful, was the least predictive factor, with a coefficient of
determination of 0.147.

In conclusion, this study assesses the role of materials management in driving organizational
performance within the manufacturing sector, specifically at AMG Steel Factory PLC. The
findings demonstrate that materials management functions including inventory control, storage
handling, procurement processes, and interdepartmental collaboration each contribute positively
and significantly to enhancing company performance.

5.2 Conclusion
According to the study's findings, materials management procedures are crucial and continuous
operations in manufacturing companies. Improved organizational performance is directly
impacted by the efficient management of raw materials, work-in-progress, and completed goods,
which is made possible by systematic materials management approaches. This study's goal is to
assess how materials management operations affect Ethiopian manufacturing enterprises'
74
performance, utilizing AMG Steel Factory PLC as the case study. The study's dependent
variable is organizational performance, and its independent variables are the four fundamental
components of materials management: inventory management, storage management,
procurement management, and interdepartmental collaboration.

Hypotheses were developed to examine both the overarching effects of materials management
practices and the specific impacts of each function on organizational performance. The findings
led to the rejection of all null hypotheses, confirming the acceptance of the alternative
hypotheses.

Results from this research underscore that materials management practices significantly and
positively impact the performance of AMG Steel Factory. Implementing effective materials
management strategies enhances competitive advantages, including reduced inventory costs
through well-balanced stock levels, decreased obsolescence, improved coordination among
departments, a more conducive production environment, lower storage and transportation costs,
better pricing and delivery conditions, increased flexibility locally and internationally, access to
advanced technology, expanded market share, and reliable, timely responses to customer needs
all of which contribute to improved organizational performance.

The study model also indicates a positive and statistically significant relationship between the
four materials management functions inventory management, storage management, procurement
management, and interdepartmental collaboration and the performance of AMG Steel Factory.
Among these functions, inventory management is the strongest predictor of performance,
followed by interdepartmental collaboration, both of which have significant, positive impacts on
the company’s performance. Storage management is the third most influential predictor, while
procurement management, though positively associated, ranks as the least influential predictor of
performance.

In summary, the study concludes that efficient materials management is a powerful tool for
achieving cost savings, production efficiency, and overall improvement in organizational
performance.

75
5.3 Recommendations
Materials management is a key component and area of concentration for accomplishing
corporate goals in manufacturing firms. In order to determine what needed to be improved, this
study evaluated the current materials management procedures at AMG Steel Factory PLC using
the fundamental materials management functions. By generating substantial cost savings,
increasing manufacturing efficiency to produce high-quality products, and eventually improving
organizational performance, these enhancements are meant to help the business. The following
suggestions are put forth in light of the study's findings:

The concept of materials management is vital for AMG Steel Factory. Effective control of raw
materials, work-in-progress, and finished goods/products has a substantial impact on the success
of the company’s performance. Therefore, it is recommended that AMG Steel Factory prioritize
the application of effective materials management practices to ensure optimal coordination
across departments.

To improve organizational performance and address global trends in materials management, the
study suggests the adoption of efficient procurement procedures. This approach is recommended
to enhance and secure the company’s future performance.

The study’s findings reveal that AMG Steel Factory should maintain robust inventory control, as
effective inventory management significantly contributes to operational performance. Therefore,
it is recommended that the company enhance its inventory management by implementing a more
comprehensive inventory control system to boost organizational performance.

Finished and defective products were found to be kept together in the company's storage space,
indicating a clear storage management gap. It is advised that AMG Steel Factory separate
materials, work-in-progress, finished goods/items, and defective products in order to address this
issue and create a well-organized warehouse plan that improves the efficiency of the business.

Despite the fact that the study found a positive correlation between organizational performance
and interdepartmental collaboration, the procurement, inventory, and storage departments'
coordination was lacking. In order to improve organizational performance, the management of
AMG Steel Factory should encourage greater interdepartmental cooperation, especially between

76
the departments of procurement, inventory, and storage. This would facilitate more efficient
information flow and communication.
5.4 Suggestion for Further Study
Although the study "the impact of materials management on organizational performance: the
case of AMG steel factory plc" substantially improved our knowledge of materials management
functions and how they affect organizational performance, it had a number of drawbacks.
One significant obstacle was the paucity of previous studies in this particular field, which made
it difficult to expand on earlier research. Furthermore, because results from a single
manufacturing company cannot accurately reflect the experiences of others, the study's
generalizability is limited by the fact that it only focused on one company for a single year.
Broader, more representative insights would be possible if the study was extended to cover more
firms and a longer time period.
Another drawback was the narrow range of variables, since the study only looked at how four
materials management functions procurement, inventory control, storage, and interdepartmental
cooperation affect organizational performance, leaving out other possible materials management
functions that might be pertinent to AMG Steel Factory.
As a starting point, this study emphasizes the necessity of more investigation into how materials
management affects manufacturing firms' performance. In order to enable a more thorough
examination, it is advised that future studies expand the scope by incorporating many firms and
spanning several years. Such research would strengthen the foundation for generalization and
advance knowledge of how materials management affects the performance of the nation's
industrial firms.

77
 REFERENCES
Adeyemi, S. L., & Salami, A. O. (2023). Inventory management: A tool for optimizing resources in

manufacturing industries. Journal of Supply Chain Management, 29(4), 135-142.

Agu, A. O., Obi-Anike, H. O., & Nnate, E. C. (2022). Effect of inventory management on

organizational performance of selected manufacturing firms. International Journal of

Business and Economics, 7(4).

Akindipe, O. S. (2021). The role of raw materials management in production operations: A review.

International Journal of Supply Chain Management, 14(3), 37-43.

Anton, S. (2020). Development of materials management systems: Focusing on inventory

replenishment system and cost modeling. Operations Research Journal, 12(3), 98-105.

Arnold, J. R., Chapman, S. N., & Clive, L. M. (2019). Introduction to materials management (8th

ed.). New Jersey: Pearson Prentice Hall.

Baker, P. (2021). An exploratory framework of the role of inventory and warehousing in

international supply chains. Journal of International Logistics, 23(5), 67-82.

Banjoko, S. A. (2022). Production and operations management (2nd ed.). Lagos: Saban Publishers.

Barker, T. (2021). Essentials of materials management (3rd ed.). McGraw Hill Education.

78
Brown, C. (2023). Strategies for improving business communication in manufacturing. Journal of

Business Communication, 31(2), 201-215.

Buffa, E. S. (2021). Modern production and operations management (5th ed.). John Wiley and Sons.

Chandra, M. S., & Ritesh, C. S. (2021). Materials and financial management (4th ed.). New Delhi:

New Age International Publishers.

Chase, R. B., Jacobs, R. F., Aquilano, N. J., & Agarwal, N. K. (2020). Operations management for

competitive advantage (14th ed.). New Delhi: McGraw Hill.

Connelly, L. M. (2022). Pilot studies in organizational research: Applications and outcomes. Journal

of Research in Nursing, 29(3), 411-421.

Creswell, J. W. (2021). Research design: Qualitative, quantitative, and mixed methods approaches

(5th ed.). Thousand Oaks, CA: SAGE Publications Inc.

Cross, O. D. (2023). Effects of materials management on organizational productivity: A case study.

World Journal of Management Studies, 8(2), 16-32.

Datta, A. K. (2022). Materials management procedures, text and cases (3rd ed.). New Delhi:

Prentice-Hall of India Private Limited.

Edoze, E. (2020). Materials management and organizational effectiveness in telecommunication

firms: A Nigerian case study. African Journal of Business Management, 15(1), 102-112.

Fabio, D. F., Petrillo, A., & Monfreda, S. (2021). Operation management: Challenges and

opportunities in modern supply chains. Global Supply Chain Journal, 17(2), 22-38.

Fessha, A. (2020). Stores management and materials handling in the Ethiopian manufacturing sector.

African Journal of Management, 9(3), 88-101.

79
Fitsum, M. (2022). Assessment of inventory management practices: A case study of Addis Ababa.

Ethiopian Business Journal, 8(1), 55-72.

Florence, A., & Oyebamiji, F. (2023). Materials management and its impact on manufacturing sector

performance: A global perspective. Journal of Supply Chain Innovation, 9(4), 1-14.

Gujarati, D. N., & Porter, D. C. (2022). Basic econometrics (6th ed.). New York: McGraw

Hill/Irwin.

Henry, K. W. (2021). Factors affecting materials management in small and medium-sized

enterprises. Strategic Journal of Business and Change Management, 8(2), 320-342.

Ibegbulen, A. B. (2022). Assessment of materials management and profitability in manufacturing

firms. Journal of Policy and Development Studies, 15(3), 198-216.

Jacobs, R. F., Chase, R. B., & Aquilano, N. J. (2020). Operations and supply management (14th ed.).

New York: McGraw Hill Education.

James, M. U. (2022). Materials management as a key factor in business success. International

Journal of Economics and Management Sciences, 5(2), 68-80.

Kalla, H. K. (2021). Integrated internal communications: A multidisciplinary approach. Corporate

Communications: An International Journal, 27(1), 202-223.

Kibrom, H. (2023). Effect of warehousing practices on organizational performance in Ethiopia.

African Journal of Operations Management, 15(2), 125-138.

Kokila, R., & Ram, A. (2022). Assessing the role of materials management in construction projects.

International Journal of Construction Management, 10(3), 59-72.

80
Kothari, C. R. (2021). Research methodology: Methods and techniques (4th ed.). New Delhi: New

Age International Publishers.

Lenders, M. (2022). Purchasing and material management (11th ed.). New Delhi: Universal Book

Publishers.

Masudin, I., Mohammed, S. K., Fien, Z., & Dewi, S. K. (2023). The impact of inventory

management on organizational performance: A study in Southeast Asia. Singaporean Journal

of Business Economics and Management Studies, 10(1), 40-55.

Molla, K. (2021). Materials resource management in secondary schools: The case of Addis Ababa.

Ethiopian Journal of Education Management, 12(4), 102-115.

Morgan, H. C. (2020). Inventory management performance in the digital age. Journal of Industrial

Technology, 21(3), 188-198.

Neuman, W. L. (2020). Social research methods: Qualitative and quantitative approaches (8th ed.).

Pearson Education.

Ogbadu, E. E. (2021). Profitability through effective management of materials. Journal of

Economics and International Finance, 12(1), 50-63.

Ondiek, G. O. (2022). An assessment of materials management practices in Kenyan manufacturing

firms. Journal of Business Studies Quarterly, 15(1), 70-85.

Rolstadas, A. (2021). Enterprise performance measurement: A modern approach. International

Journal of Operations and Production Management, 22(3), 12-19.

Saunders, M., Lewis, P., & Thornhill, A. (2021). Research methods for business students (8th ed.).

Pearson Education.

81
Simon, P. (2023). The role of inventory management in improving organizational performance.

International Journal of Operations Research, 18(4), 312-325.

Stukhart, G. (2020). Materials management in small-scale industries: Current approaches. Journal of

Small Business Operations, 14(2), 45-60.

Suleiman, A. B. (2021). The impact of effective materials management on profitability in Nigerian

organizations. African Journal of Social Policy and Administration, 9(2), 25-38.

Taiwo, O. A., Claudius, J. A., & James, M. U. (2022). Materials management as a tool for

optimizing profitability in manufacturing firms. Journal of Trends in Economics and

Management Science, 12(3), 35-49.

Adeyemi, S. L., & Salami, A. O. (2023). Inventory management: A tool for optimizing resources in

manufacturing industries. Journal of Supply Chain Management, 29(4), 135-142.

Agu, A. O., Obi-Anike, H. O., & Nnate, E. C. (2022). Effect of inventory management on

organizational performance of selected manufacturing firms. International Journal of

Business and Economics, 7(4).

Akindipe, O. S. (2021). The role of raw materials management in production operations: A review.

International Journal of Supply Chain Management, 14(3), 37-43.

Anton, S. (2020). Development of materials management systems: Focusing on inventory

replenishment system and cost modeling. Operations Research Journal, 12(3), 98-105.

Arnold, J. R., Chapman, S. N., & Clive, L. M. (2019). Introduction to materials management (8th

ed.). New Jersey: Pearson Prentice Hall.

82
Baker, P. (2021). An exploratory framework of the role of inventory and warehousing in

international supply chains. Journal of International Logistics, 23(5), 67-82.

Banjoko, S. A. (2022). Production and operations management (2nd ed.). Lagos: Saban Publishers.

Barker, T. (2021). Essentials of materials management (3rd ed.). McGraw Hill Education.

Brown, C. (2023). Strategies for improving business communication in manufacturing. Journal of

Business Communication, 31(2), 201-215.

Buffa, E. S. (2021). Modern production and operations management (5th ed.). John Wiley and Sons.

Chandra, M. S., & Ritesh, C. S. (2021). Materials and financial management (4th ed.). New Delhi:

New Age International Publishers.

Chase, R. B., Jacobs, R. F., Aquilano, N. J., & Agarwal, N. K. (2020). Operations management for

competitive advantage (14th ed.). New Delhi: McGraw Hill.

Connelly, L. M. (2022). Pilot studies in organizational research: Applications and outcomes. Journal

of Research in Nursing, 29(3), 411-421.

Creswell, J. W. (2021). Research design: Qualitative, quantitative, and mixed methods approaches

(5th ed.). Thousand Oaks, CA: SAGE Publications Inc.

Cross, O. D. (2023). Effects of materials management on organizational productivity: A case study.

World Journal of Management Studies, 8(2), 16-32.

Datta, A. K. (2022). Materials management procedures, text and cases (3rd ed.). New Delhi:

Prentice-Hall of India Private Limited.

83
Edoze, E. (2020). Materials management and organizational effectiveness in telecommunication

firms: A Nigerian case study. African Journal of Business Management, 15(1), 102-112.

Fabio, D. F., Petrillo, A., & Monfreda, S. (2021). Operation management: Challenges and

opportunities in modern supply chains. Global Supply Chain Journal, 17(2), 22-38.

Fessha, A. (2020). Stores management and materials handling in the Ethiopian manufacturing sector.

African Journal of Management, 9(3), 88-101.

Fitsum, M. (2022). Assessment of inventory management practices: A case study of Addis Ababa.

Ethiopian Business Journal, 8(1), 55-72.

Florence, A., & Oyebamiji, F. (2023). Materials management and its impact on manufacturing sector

performance: A global perspective. Journal of Supply Chain Innovation, 9(4), 1-14.

Gujarati, D. N., & Porter, D. C. (2022). Basic econometrics (6th ed.). New York: McGraw

Hill/Irwin.

Henry, K. W. (2021). Factors affecting materials management in small and medium-sized

enterprises. Strategic Journal of Business and Change Management, 8(2), 320-342.

Ibegbulen, A. B. (2022). Assessment of materials management and profitability in manufacturing

firms. Journal of Policy and Development Studies, 15(3), 198-216.

Jacobs, R. F., Chase, R. B., & Aquilano, N. J. (2020). Operations and supply management (14th ed.).

New York: McGraw Hill Education.

James, M. U. (2022). Materials management as a key factor in business success. International

Journal of Economics and Management Sciences, 5(2), 68-80.

84
Kalla, H. K. (2021). Integrated internal communications: A multidisciplinary approach. Corporate

Communications: An International Journal, 27(1), 202-223.

Kibrom, H. (2023). Effect of warehousing practices on organizational performance in Ethiopia.

African Journal of Operations Management, 15(2), 125-138.

Kokila, R., & Ram, A. (2022). Assessing the role of materials management in construction projects.

International Journal of Construction Management, 10(3), 59-72.

Kothari, C. R. (2021). Research methodology: Methods and techniques (4th ed.). New Delhi: New

Age International Publishers.

Lenders, M. (2022). Purchasing and material management (11th ed.). New Delhi: Universal Book

Publishers.

Masudin, I., Mohammed, S. K., Fien, Z., & Dewi, S. K. (2023). The impact of inventory

management on organizational performance: A study in Southeast Asia. Singaporean Journal

of Business Economics and Management Studies, 10(1), 40-55.

Molla, K. (2021). Materials resource management in secondary schools: The case of Addis Ababa.

Ethiopian Journal of Education Management, 12(4), 102-115.

Morgan, H. C. (2020). Inventory management performance in the digital age. Journal of Industrial

Technology, 21(3), 188-198.

Neuman, W. L. (2020). Social research methods: Qualitative and quantitative approaches (8th ed.).

Pearson Education.

Ogbadu, E. E. (2021). Profitability through effective management of materials. Journal of

Economics and International Finance, 12(1), 50-63.

85
Ondiek, G. O. (2022). An assessment of materials management practices in Kenyan manufacturing

firms. Journal of Business Studies Quarterly, 15(1), 70-85.

Rolstadas, A. (2021). Enterprise performance measurement: A modern approach. International

Journal of Operations and Production Management, 22(3), 12-19.

Saunders, M., Lewis, P., & Thornhill, A. (2021). Research methods for business students (8th ed.).

Pearson Education.

Simon, P. (2023). The role of inventory management in improving organizational performance.

International Journal of Operations Research, 18(4), 312-325.

Stukhart, G. (2020). Materials management in small-scale industries: Current approaches. Journal of

Small Business Operations, 14(2), 45-60.

Suleiman, A. B. (2021). The impact of effective materials management on profitability in Nigerian

organizations. African Journal of Social Policy and Administration, 9(2), 25-38.

Taiwo, O. A., Claudius, J. A., & James, M. U. (2022). Materials management as a tool for

optimizing profitability in manufacturing firms. Journal of Trends in Economics and

Management Science, 12(3), 35-49.

Tekalign, N. K. (2022). Assessing inventory management practices in Ethiopian manufacturing

firms. International Journal of Current Research, 13(2), 255-270.

Tezera, D., & Yadesa, D. (2022). Material resource utilization and challenges in Ethiopia: A case

study of Addis Ababa industries. Journal of Business and Industrial Management, 15(1), 55-

70.

86
Vaske, J. J., Beaman, J., & Sponarski, C. C. (2023). Rethinking internal consistency in Cronbach’s

alpha: Implications for modern research. Leisure Science, 45(2), 150-175.

Wayne, M. J., & Joseph, J. M. (2021). Human resource management (15th ed.). Pearson Education.

Wenjie, Z. (2022). Materials management in small and medium enterprises in China’s processing

industries. Journal of Supply Chain Management, 26(3), 80-95.

APPENDICES
Appendix A: Questionnaire for Employees
Rift Valley University

Faculty of Business and Social Sciences

Department of Business Management

MBA Program
Survey Questionnaires to filled by employees of AMG Steel Factory.

Dear Respondents:

This questionnaire is developed to collect valuable insights for the study titled “The Impact of
Materials Management on Organizational Performance: The Case of AMG Steel Factory PLC,”

87
as part of the requirements for the Master of Business Administration (MBA) degree in
Management. The purpose of the questionnaire is to gather data relevant to this research, and
your participation is kindly requested to contribute to the study's success by providing the
necessary information. Your voluntary involvement is crucial, and rest assured that the
information you provide will remain confidential and will only be used for the academic
purposes mentioned. It would not affect you in any way, but it may offer insights that could
enhance the materials management practices in your organization. Therefore, your honest,
prompt, and sincere responses are essential to the success of this research. I would like to express
my gratitude in advance for your time, cooperation, and thoughtful participation.

Instructions: -

The researcher uses this questionnaire for the genuine information is highly decisive to the

success of this study. Therefore,

Not need of writing your name.

Indicate your answer with a check mark (X) on the appropriate cell

With great excuse, possibly return back to timely.

For any challenges, explanation and suggestion please do not hesitate contact the researcher
through the following addresses:

Roba Usmael

Phone: +2519 16685451

Email: [email protected]

PART I. Background Information

1. Gender:

(A) Mal (B) Female

2. In which age group do you fall?

(A) Under 25 B 25-35 C 36-45 46-55 E 55 or older

88
3. What is your highest education level

(A) Certificate (B) Diploma or equivalent (C) Bachelor's Degree

(E) Master's Degree other (please specify): ____________________

4. Years of experience in AMG Steel factory.

(A) 1-3 years (B) 4-6 years (C) 7-10 years (D) More than 10 years

5. In which department are you currently working? ___________________

6. What is your current position in the department?

(A) Entry-level / junior staff (B) Mid-level / Senior staff

(C) Managerial / Supervisor (D) Executive / Director

Part II: - Impacts of Materials Management Functions on the Firm’s Performance

The following questions focus on how your organization applies materials management
practices to achieve its performance objectives. The primary aim of this section is to evaluate the
impact of procurement management, inventory management, storage (warehousing)
management, and the effectiveness of interdepartmental collaboration. Please indicate your level
of agreement with the statements below regarding your organization's materials management
practices, using a scale from strongly disagree to strongly agree. Mark your response with an
“X” in the appropriate box.

1: Strongly Disagree, 2: Disagree, 3: Neutral, 4: Agree and 5: Strongly Agree

Agreement Scales

Variables Items 1 2 3 4 5

Organizational OP1 Materials management

functions have a minimal
Performance
influence on organizational
(OP)
performance and

89
 competitiveness.

OP2 Effective materials

procurement management
significantly supports and
maintains an organization's
performance.

OP3 Organizational performance is

affected highly by materials
inventory control systems.

OP4 The organizational performance

can be enhanced less by
materials storage
(warehousing) system.

OP5 Interdepartmental collaboration

can have a substantial impact
on organizational performance.

PM The purchasing management

1 practices of the firm often
influence its overall
organizational performance in
terms of profit generation.

PM2 Procurement (purchasing)

procedures highly affect

90
Procurement organizational performance.

Management PM3 The procurement system of the

(PM) steel industry is managed by
trained and skillful personnel.

PM4 Effective procurement of materials

enhances the steel industry’s
productivity.

PM5 The purchasing department

conducted a check and balance to
compare the planned quantities and
quality of materials with what was
actually purchased.

Inventory IM1 Inventory management practices

Management help the industry achieve its

(IM) targeted objectives.

IM2 Knowing stock at hand and

expected stock enhances firm’s
growth.

IM3 The firm has computerized all

inventory management systems.

IM4 The firm paid maximum attention

to those inventories whose value is
highest.

IM5 Growth of a firm is measured

based on the level of stock it has.

Storage SM1 The storage (warehouse)

management has a significant role

91
Management in achieving firm’s objective.
(SM)
SM2 The firm pays great attention to the
storage management in order to
handle items properly.

SM3 Storage of materials ensures

continuity of production and
productivity.

SM4 Most of the time, in your firm’s

warehouse, items are placed in the
correct location.

SM5 We are successful in minimizing

total product damage in the
warehouse.

SM6 The design of the store is easy to

access items, free from damage of
items and suitable to load and
upload.

SM7 Most of the time your firm’s store

personnel utilizes a warehouse
spaces properly at the time of
receiving.

Interdepartmenta IDC1 Coordination among all

l departments within the firm is

Collaboration crucial for the performance of the

steel industry.
(IDC)
IDC2 The entire firm’s departments
perform their duties collaboratively

92
 in order to achieve its objectives.

IDC3 The top management focuses

particularly to the inter-
departmental coordination of the
firm’s departments.

IDC4 There is a use of open and positive

communication between all the
firm’s departments.

IDC5 The human resource management

practices of the firm promote
effective interdepartmental
coordination.

Part III: - Please Write Your Answer Briefly and Clearly for Open Questions

26. What are the main challenges your organization currently faces in its materials management
practices___________________________________________________

________________________________________________________________________

27. If you have any additional comments or suggestions regarding the company's warehouse
practices, please feel free to share your thought___________________________________

__________________________________________________________________________

93