Evaluation Of Distribution Channel In The Logistics Management Of Petroleum Products
(A Case Study Of Oando Plc Enugu)
In the logistics management of petroleum products, the distribution channel plays a critical role in ensuring the efficient and timely delivery of these essential commodities to end-users. The distribution channel encompasses a network of entities and activities involved in the movement of petroleum products from refineries to consumers. This network typically includes suppliers, distributors, wholesalers, retailers, and transportation providers such as pipelines, tankers, trucks, and railroads. Each component of the distribution channel contributes to the seamless flow of petroleum products, from procurement and storage to transportation and delivery. Suppliers procure petroleum products from refineries or other sources and store them in strategic locations to meet demand fluctuations. Distributors then acquire these products and transport them to regional warehouses or directly to wholesalers and retailers. Wholesalers and retailers, in turn, distribute the products to end-users, including commercial, industrial, and residential customers. Effective coordination and collaboration among these stakeholders are essential to optimize inventory management, minimize transportation costs, ensure product quality and safety, and meet regulatory requirements. Moreover, technological advancements, such as real-time tracking systems and data analytics, enhance visibility and transparency across the distribution channel, enabling better decision-making and responsiveness to market dynamics. By streamlining operations and leveraging synergies among various participants, the distribution channel in petroleum logistics facilitates the reliable supply of energy resources to support economic activities and societal needs.
This research was motivated to appraise the evaluation of distribution channel in the logistics management of petroleum product using Oando plc as the case study. There was a problem of the tendency of distribution of those petroleum products to the Northern & Southern which effect to a scarcity of the product in other areas of the country. On the contrary to the problems of this research work, an objective came to be as to ascertain whether there is an effective and efficient distribution of petroleum products, all round the country.
In the process of solving and pursuance on the problems and the objectives, both primary and secondary data were sourced. The targeted respondents were mainly the managers, staffs and customers were statistically determined for the purpose of both questionnaires administration and personal interview. In organizing and presentation of data collected, tables and percentages were used and various hypothesis were tested using chi-square. The tests of the hypothesis made the researcher to concluded that Oando plc cannot improve on the distribution channel in the logistics management of petroleum product in our country, as the critical value was greater than the expected value on both tests.
5-99 > 1.2481 & 1.8838 < 5.99
The study reviews some finds which made the researcher to recommended that government should set some security agencies that can militate against perpetrator that vandalize the pipeline and other unscrupulous person (s) that engaged in similar act he believes if carefully implemented will go a long way to shortening the various problems.
Title page
Certificate
Dedication
Acknowledgement
Abstract
Table of contents
CHAPTER ONE
INTRODUCTION
1.1 Background of the study
1.2 Statements of the problem
1.3 Objectives of the study
1.4 Significance of the study
1.5 Research questions
1.6 Formulation of hypothesis
1.7 Scope and limitation of the study
1.8 Definition of basic terms
CHAPTER TWO
LITERATURE REVIEW
2.1 Definition of channel system
2.2 Management of logistics/channel system
2.3 Conflict in channel management
2.4 Co-operation by channel participants
2.5 Channels of distribution in petroleum products
2.6 Factors affecting petroleum products
2.7 Managing marketing channels of petroleum products
2.8 The benefits of using efficient channel
System as a Means of Distributing Petroleum Products
References
CHAPTER THREE
RESEARCH DESIGN AND METHODOLOGY
3.1 Research design
3.2 Area of study
3.3 Population of the study and sample size
3.4 Instrument used
3.5 Validity of the instrument
3.6 Reliability of the instrument
3.7 Method of data collection
3.8 Method of data analysis
CHAPTER FOUR
PRESENTATION, ANALYSIS AND INTERPRETATION OF DATA.
4.1 Summary of the results and findings
4.2 Testing of hypothesis
CHAPTER FIVE
DISCUSSION, CONCLUSION AND RECOMMENDATION
5.1 Discussion of the result
5.2 Conclusion
5.3 Recommendation, suggestion for further research bibliography
Appendices
INTRODUCTION:
This chapter consists of details of the topic under research. Here the background of the study statement of the problem, objectives and significance of the study will be revealed along with research question so as to enable the researcher know what the research work is all about.
1.1 BACKGROUND OF THE STUDY
As a result of petroleum products being the major exporting product among others, of our country. Our country solely depends on it as the highest percentage revenue on the overall percentage of the total exportation products or items.
In the 1979s after the civil war, Nigerians have Agricultural products as the dependent product in both domestic and international uses. But today due to greater lucrative of this product all over the world, abandoned the former for the latter.
As the uses is universal, the extractive regions which are at South east and South west encountered a difficult impact to be supplied or distribute to various areas of other regions of the country, due to mainly mismanagement and other opposing factors. The transportation of this extracting products from the originated area to the refinery was a great problem in the country, because of its form bulky and channel of distribution.
The government then employed foreign bodies to refine this product in order to reach to the hook and of the country. The refinery built and managed by government admitted a foreign firm to have a part in the refinery for the bases of their services as regards to importation. Still not adequate as the dealers divert this product to their own perspective regions where they expect to dispose it in a high value.
At times, this petroleum products i.e. fuel, kerosene, diesel, bitumen to mention but few do change totally the generic colour used to it to another unpredicted colour thereby caused a harm to human body. These dealers were formerly the staffs of one firm and another for years, left their various perspective offices for the marketing of these products thereby formed one organization and another to impose the prices on this products.
The region that is basically not interested in the use of this product by their majority because of their belief or customs has low cost and optimal quantities than other regions.
From the facts, it becomes clear that if the left cream of the nation is to be feasible accordingly, a great percentage or rate of the standard of living would have been a something if smile to the populace.
HISTORY AND BUSINESS OF THE COMPANY (OANDO)
The company commenced business operations as a petroleum marketing company in Nigeria in 1956 under the name of “ESSO West Africa Incorporated” a subsidiary of Exxon Corporation of the United States of America. In 1969, the company was incorporated as ESSO Standard Nigeria Limited, and in 1976, the Nigerian Government acquired all of ESSO’ s shareholding interest, thereby fully indigemising the company whose name was subsequently changed to Unipetrol Nigeria Limited. It became a public limited liability company in 1991, when the federal government divested 60% of its shareholding to the general public, and was quoted on the Nigerian Stock Exchange in February 1992. In 2000, the Federal Government divested its remaining 40% shareholding in the company, 30% of which was acquired by ocean and oil investment limited whilst the balance of 10% was taking by the Nigerian Public.
In 2002, the company acquired Agip Petroli International BV’s 60% shareholding in Agip Nigeria Plc (Agip) and subsequently merged with Agip to become the second largest player in the downstream petroleum marketing industry. In December 2003, the company announced the launch of “Oando PLC” its new corporate identity to signify the creation of a proudly West Africa brand. The new corporate identify and branding exercise portrays the values and brand essence of the company service excellence, performance – driven, dynamic and progressive, consistent quality experience and proudly West African.
1.2 STATEMENT OF THE PROBLEM
Petroleum products have a numerous problems on logistics management on its distribution, it is the only and major exporting product of our country, which is disposed in a high rate to another country thereby expect the citizening to do the same the tendency of distribution channel to the Northern and Southern regions of the country is much more sufficient than other regions, which causes scarcity of the product in these areas. Some quantities of these products are being diversified to other different stations for a tremendous income, impact on hoarding which reveals the control is not effective.
Many of the distribution channels are being vandalized by unscrupulous individuals in the area which stagnantly affects its distribution and transportation. Moreover, there is weights and measures on the quantities of this petroleum products making the dealers to have different prices of disposing this product in their various areas. Finally, the Boards that deals on the marketing of this petroleum products (NUPENG, PENGASIN, etc) do impose some requisitions from the federal government which may not come forth, affect its distributions.
1.3 OBJECTIVES OF THE STUDY
The objectives of this study are;
1. To ascertain whether there is an effective and efficient distribution of petroleum products, all round the country.
2. To determine if sufficient production of petroleum products are sold at a cheaper rate and curls the trend of scarcity on the country as the sixth oil producing ration of the world, and the first in Africa.
3. To find out whether the various refineries of the country are put in shape thereby limiting the services of other countries in refining our own petroleum products in terms of trade.
4. To ascertain whether what we produce is satisfying the citizen
5. To identify a post – mortem to the present situation, and that of the future, and many years to come..
6. To determine how the supervision of distribution of petroleum product is done to curls fore outbreak, and the cost of resuscitating the damages.
7. Moreover, to identify the availability of petroleum product to minimize traffic hold – ups, queuing for a long time, unavailable means of transportation, wastage of hire in transporting one self, and its high cost.
1.3 SIGNIFICANCE OF THE STUDY
It requires a little reasoning to discover that this research will be of immense benefits to the public government, Oando and its numerous branches, and as well other petroleum dealers. It will enable them to discover the disequilibrium on the effective. Logistics management on various petroleum dealers in the country and outside. It will enable them also to monitor the petroleum marketers on their channel of distribution in order to reach the purposely masses.
The Niger – Delta populace will benefit through the establishment of various facilities in their area. The public will discover the information of the petroleum dealers as regards to the rate of its consumption and the standard of living in the country. Furthermore, this research will be immense benefits to Oando on improving their management functions or activities in all ramifications. It will also help in the offer for future benefits.
Finally, many forming will benefit for easy mobility of their business activities and operation especially on those that have petroleum dump in their environment (UNEC, IMT etc).
1.5 RESEARCH QUESTIONS
1. Do the faults in our refineries affect the distribution of petroleum products?
2. Can the attitudes of these petroleum Boards circument the government intervention on the problems?
3. What can be the effect of mismanagement on the logistics distribution of petroleum product in our country?
4. Can it affect Oando on their struggling to be the petroleum leaver in the country and Africa?
5. Can the discriminations in the political affairs of our country affects Oando in their business activities?
6. Can we boast of sixty percentage (60%) satisfaction of these petroleum products by the average populace?
7. Can we ensure a constant petroleum products in all regions of our country i.e. Improve in scarcities?
8. Do you think that Bakassi – penusula area will be benefited from this distribution of petroleum products?
9. What measure can we take against the perpetrators that engaged in black marketing, thus making a high percentage gain?
10. What can we do to have a stable price of petroleum products in our country?
1.6 HYPOTHESIS FORMULATION
Hypothesis as we all know is an intelligent guess, a tentative statement, and a conjectural statement of the relationship between two or more variable. Therefore, the hypothesis of this study was stated like these;
Ho: Oando Plc cannot improve on the distribution channel in the logistics management of petroleum product in our country. Null Hypothesis.
H1: Oando Plc can improve on the distribution channel in the logistics management of petroleum product in our country. Alternative Hypothesis.
Ho: The Boards of Petroleum dealers cannot stabilize the price, and rate of petroleum products in Nigeria. Null Hypothesis.
H1: The Boards of Petroleum dealers can stabilize the price, and rate of petroleum products in Nigeria. Alternative Hypothesis.
1.7 SCOPE AND LIMITATIONS OF THE STUDY
The scope of the study is limited to the Oando stations in Enugu Metropolis. It is a way extended to other petroleum stations in other various areas, and regions of this country. It is only based on finding out accurately the significance and impact that logistics management has created in distribution channel of petroleum products. The area covered in the cause of this research work ere mostly within Enugu Metropolis. In the cause of trying to cover these areas as for the project work, there are some problems that stunk the effectiveness of the work.
1. A lot of line was spent in carrying out the research of this work, which made the period allocated to this project to be very short, meanwhile affects the most information needed to meet.
2. There was no much money to carryout effective research work by the researcher thereby set back his determined plan for the execution of necessary information on the project.
3. Those, in which the questionnaires were distributed to, could not respond effectively because of their consistent being on duties.
1.7 DEFINITION OF BASIC TERMS
LOGISTICS: Supply, Distribution, and Replacement of materials.
MANAGEMENT: The process of applying managerial functions for effective operation.
POST-MORTEM: Review of the past occurrences or events.
CIRCUMVENT: present a plan from being carried out.
BITUMEN: Black, sticky substance (from petroleum) used for making road e.t.c.
LUCRATURE: profitable; bring in money.
Evaluation Of Distribution Channel In The Logistics Management Of Petroleum Products:
Evaluating the distribution channel in the logistics management of petroleum products is crucial for optimizing the supply chain, ensuring product availability, minimizing costs, and maintaining operational efficiency. The distribution of petroleum products involves various stages, including transportation, storage, and delivery. Here’s a framework for evaluating the distribution channel in the logistics management of petroleum products:
1. Distribution Network Design:
- Assess the geographical coverage of distribution centers, terminals, and depots. Are they strategically located to efficiently serve target markets?
- Evaluate the number of intermediaries involved (e.g., wholesalers, retailers) and the structure of the distribution network.
2. Transportation:
- Evaluate the modes of transportation used (pipelines, trucks, ships, etc.) for different distances and regions.
- Analyze the transportation routes for efficiency and cost-effectiveness. Consider factors such as distance, road conditions, traffic, and regulatory compliance.
- Review the scheduling and routing processes to minimize delivery time and optimize resource utilization.
3. Inventory Management:
- Examine inventory levels at different stages of the distribution channel. Strive to strike a balance between minimizing inventory costs and ensuring product availability.
- Implement inventory forecasting techniques to predict demand accurately and avoid stockouts or overstock situations.
4. Storage and Warehousing:
- Evaluate the capacity and efficiency of storage facilities (terminals, depots, tanks) in different locations.
- Consider safety and environmental compliance regulations for the storage of petroleum products.
- Assess the effectiveness of inventory management within storage facilities to prevent quality degradation and losses due to evaporation or leakage.
5. Order Fulfillment:
- Analyze the order processing and fulfillment procedures. Are orders being processed accurately and promptly?
- Evaluate the communication and coordination between different stages of the distribution channel to ensure timely and accurate deliveries.
6. Technology and Information Systems:
- Assess the utilization of technology for real-time tracking of shipments, inventory management, and order processing.
- Review the effectiveness of data sharing and communication systems between various entities in the distribution channel.
7. Regulatory Compliance and Safety:
- Ensure compliance with safety regulations for the transportation, storage, and distribution of petroleum products.
- Evaluate the measures in place to prevent accidents, leaks, and environmental hazards.
8. Cost Analysis:
- Conduct a cost-benefit analysis of the distribution channel. Consider transportation costs, inventory carrying costs, warehousing expenses, and any other related costs.
- Identify areas where cost reductions or operational improvements can be made.
9. Customer Satisfaction:
- Gather feedback from customers regarding the reliability, timeliness, and quality of product delivery.
- Analyze customer complaints and satisfaction levels to identify areas for improvement.
10. Sustainability and Environmental Impact:
- Evaluate the distribution channel’s environmental impact, including carbon emissions, waste generation, and adherence to sustainability standards.
11. Risk Management:
- Identify potential risks such as supply disruptions, regulatory changes, geopolitical issues, and market fluctuations.
- Develop contingency plans to mitigate these risks and ensure business continuity.
In summary, evaluating the distribution channel in the logistics management of petroleum products requires a comprehensive analysis of various aspects ranging from network design to customer satisfaction. The goal is to optimize the distribution process for efficiency, cost-effectiveness, compliance, and customer-centricity while minimizing risks and environmental impact.