RELEVANCE OF INSURANCE POLICY IN DISTRIBUTION AND TRANSPORTATION

Abstract

This study was on relevance of insurance policy in distribution and transportation. Three objectives were raised which included:  To ascertain the effect of insurance in the operation of the organization, to find out the type of contracts or goods insured by the Nigeria Bottling Company, Owerri, to find out the extent to which the Nigeria Bottling Company insures its distribution and transportation, to ascertain the extent of losses, if any, the Nigeria Bottling Company Owerri incurs through damages, losses, thefts etc and to ascertain how best to reduce high losses through good documentations. A total of 77 responses were received and validated from the enrolled participants where all respondents were drawn from Nigeria bottling company. Hypothesis was tested using Chi-Square statistical tool (SPSS).

Chapter one

Introduction

1.1 Background of the study

In any organization or industry involved in distribution and transportation, insurance policy is very inevitable as it protects the organization from uncertain occurrence in the course of distribution and transportation.
The relevance of insurance policy in distribution and transportation will no far fetch help an organization involved in the need to minimize and eliminate risk that are certainly involved in distribution and transportation.
For the fact that the natural instinct to survive is embedded in man, he reacts to avert such dangers threatening the successful movement of goods, this is applied to organizations involved or that are into distribution and transportation. This calls for an insurance policy. In addition, when goods are carried from one place to another, they are exposed to risk such as cargo loss, damages, delay etc.

According to Nweke (2000: 307), he sees insurance as a device aimed at reducing the extent of its damages and providing the affecting persons with compensation. The insured is indemnified when put in the position he was before the occurrence of the risk.

Insurance policy, as it relates to distribution and transportation, the specified extend must have some element of uncertainty about it. The uncertainty may be either as in the case of life insurance in the fact that the happening of the event depends upon accidental causes. An insurance may be further defined as a contract where by or person called the “INSURER” agrees in consideration of money paid to him (Premium) by another person called “INSURED” to pay certain sum of money or its equivalent on the happening of a specific event.
Distribution and transportation is faced with legion of risk that require proper management if it is to be successful.

BRIEF HISTORY/ BACKGROUND OF THE STUDY
The Nigerian Bottling Company (NBC) was incorporated in November 1951, as a subsidiary of the A.G. Leventis group with the franchise to bottle coca – cola products in Nigeria with their headquarter at Ikeja Lagos state.
The Owerri plant which the researcher’s focal point was established in the year 1982 and is located along the Owerri – Onitsha road, off control post round about. They produce series of soft drink ranging from coca-cola, sprite, fanta orange, fanta tonic, club –soda, krest-bitter – lemon, five – alive, Eva water etc

The company does not have a centralized purchasing department but operate a decentralized system of purchasing. The company sales coverage in Imo state comprises Owerri, Orlu, Okigwe, Mgbidi, Mbaise, etc. the products are distributed through the types of distributorship system. These groups called first class, while the second group is appointed by the branch plant manager as second class distributors. Under normal conditions, the plant produce an average of about thirty thousand (30,000) centres of minerals per day and its operations are based on two shifts.

1.2 STATEMENT OF PROBLEM

Obviously, there are certain problems faced by the Nigeria Bottling Company, Owerri Plant which the researcher must highlight some in order to make her research work a complete one.

However, this research work is on the “Relevance of insurance policy in distribution and Transportation” using Nigeria Bottling Company Owerri plant as the case study. Some of the problems are stated as follow;
1. Though the company engages in insurance policy, there is strictly a time limit that is given to those in distribution and transportation which the insurance policy will over and thereafter, will not be involved any longer.
2. There is no purchasing department in the Nigeria Bottling Company, Owerri plant; rather, purchasing is being handled by the quality Assurance department.
3. Although the company practice insurance policy, but there is no appropriate department that should handle policy. In other words, it is being handled by the personnel officer.

4. There is problem in distribution and transportation during rainy season which leads to incapable of meeting up with the actual target.

1.3 OBJECTIVE OF THE STUDY

 
The general objective of this study is to make an indebt investigation in the following areas;

1. To ascertain the effect of insurance in the operation of the organization.
2. To find out the type of contracts or goods insured by the Nigeria Bottling Company, Owerri.
3. To find out the extent to which the Nigeria Bottling Company insures its distribution and transportation
4. To ascertain the extent of losses, if any, the Nigeria Bottling Company Owerri incurs through damages, losses, thefts etc.
5. To ascertain how best to reduce high losses through good documentations.

1.4 SIGNIFICANCE OF THE STUDY

The need for this study cannot be over emphasized. Little or no attention has been given to the relevance of insurance policy in distribution and transportation in our industries today. However, this study would be a source of great importance to any company undergoing insurance function and distribution and transportation. It will also reveal to companies that are not practicing insurance the need to do so especially those companies that are into distribution and transportation. The work when completed would serve as reference materials to other scholars in the field of study. To the researcher, this work is a requirement for the Award of Higher Diploma in purchasing and supply and without this research; this certificate will not be awarded to her. Also, it will serve as an empowerment for the acquaintance of skills and knowledge for future research works.

1.6 STATEMENT OF HYPOTHESIS

These hypothesis are viewed and designed towards the attainment of the organizational goal through investigation on the problems associated with it.
H0: The Nigeria Bottling Company cannot do without insurance policy in distribution and transportation.

H1: The Nigeria Bottling Company can do without insurance policy in distribution and transportation.

Ho: The distribution system of the Nigeria Bottling Company Owerri cannot be effective without insurance policy that covers risks in transport and distribution
Ho: The distribution system of the Nigeria Bottling Company Owerri can be effective without insurance policy that covers risks in transport and distribution.

1.7 SCOPE OF THE STUDY

For proper appreciation of the relevance of insurance policy in distribution and transportation, this research would have covered all firms involved in distribution and transportation. This is not possible due to the fact that the researcher is a student and may not have the much needed resources to carryout such all complex research. To this effect, the researcher decided to concentrate on the relevance of insurance policy in distribution and transportation in Nigeria Bottling Company Owerri. With the believe that whatever the situation is in Nigeria Bottling Company will be used to generalized the situation in all the firms that engage in distribution and transportation.
In this regard, the researcher will interact with the purchasing unit, distribution and transportation unit, personnel unit, and administrative unit.

1.8 LIMITATION OF THE STUDY

In the cause of carrying out this research work, the researcher noticed some limiting factors which constraints and elaborate work on the activates of Nigeria Bottling Company, Owerri, with respect to distribution and transportation.
Some of the limiting factors are;Time Finance and Inadequate information
Time: It took the researcher so much time in sourcing for books to which references were made as well as time in visiting the firm under study.
Finance: This is yet another limiting factor to this research because the researcher as a student who is dependent is not financially strong to meet all financial requirement that is required in gathering information for this research work, such as photocopying of materials, transportation to Nigeria Bottling Company, Owerri, where she needed to get most of the necessary information for the success of this research work.

Inadequate information: Most of the information needed for this research work was not made available to the researcher as the company under study considers them as secretes to business operations.

1.9 OPERATIONAL DEFINITION OF TERMS.
a. insurance: This is a contract where by a person called the “insurer” agrees in consideration of money paid to him called “Premium” by another person called the “insured” to indemnify the later against loss resulting to him on the happening of uncertain events.

1. Policy: A policy is a predetermined guide established to provide direction in decision making.
2. Insurance company:- An insurance company is a company where individuals or organization goes and insure their business or other things against uncertain occurrence.
3. Risk: Risk is defined as the probability of an unfortunate occurrence.
   e. Insurer: this is a person or company to which the insured insures himself or his business

Insured: This is the person insuring himself or his business.
g. Purchasing: This is a process where by an organization defines that need for goods and services, identify and compare the supplies and suppliers available to them; negotiate with source of supply or in some other way arrive at agreed terms of trading, make contracts and place orders; and finally receive, accept and pay for the goods and services supplied.
h. Distribution and transportation: This is the movement of raw materials, semi process and finished goods either through private or public carriers which commences with the purchase of raw material and ends with the delivery of the products to ultimate consumers or users. It is also the way of sharing those raw materials or goods over a particular area or among a group of people.

Franchise: This a formal permission given by a company to another company or somebody who wants to sell its goods or services in a particular area.

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