CHAPTER ONE
1.1   Background of  the Study
During the Second World War after the industrial revolution, industries sprang up in hundreds every day. As a result of the increase in industries, raw materials became scarce. This made production to be complex. Accounts needed to be prepared and customers needed to be attended to within a short period of time. Alternative sources were required and new product needed improvement and development. With this problem in mind, the material management concept was introduced with the view to solving them in a scientific manner to achieve optimal success and reduce production cost. By the 1950s and 1960s an uneven transition from the old concept of material management as clerical function to a newer function or concept of material management emerged which embraced inventory control, distribution and buying function. By late 1960s material management was recognized as an important function in an organization. Thus, the importance of material management lies in the fact that any significant contribution made by the materials manager in reducing material cost will go along way in reducing production cost and improving the profitability and the rate of return on investment. Today, materials are the livelihood of any industry, no industry can operate without them, they must be made available at the proper time, in proper quality, at the proper place and at the proper price.
Material handling is an integral aspect of material management that is concerned with the means by which materials move in the  materials are moved from one stage of processing to the other in such a way that processing, safe movement and use of space is enhanced. Hence, it is also an integral part of a production process which does not really contribute to the value of what is being processed, but an integral part of a production process which does not really contribute greatly to the processing cost. It is for this reason that this research work tends to take a clerical look at the significance of material handling and its impact on production cost.
1.2   Statement of Problems
As it has been stated earlier, the impact of material handling on the production cost of an organization with particular reference to the PHCN industry, forms the basis of the research. This is not only because materials cost forms the overall 65% of the cost of running any organization according to some research in material management, but also because materials must be moved from one processing stage to another. Thus, there is always the need to effectively manage materials in order to curtail the amount of waste and also enhance maximum service in such organizations. This particularly calls for effective materials handling and maintaining a standard in the cost of production.
Another problem is the employment of unqualified personnel to handle the store activities. This problem often results to poor material handling, deterioration, pilferage, theft and redundancy. Now that store operation is beginning to receive attention of those in authority, the necessity to actively coordinate these activities for better performance to create more impact and subsequently more recognition can not be over emphasized. Effective material handling and its prime function is a matter of ensuring that sufficient materials are retained in the store to meet all requirement without carrying unnecessary large stock or too little to ensure efficiency and profitability in PHCN.
The researcher also gathers that there has been negligence of the store department and sometime brought under unrelated department which result in poor performance. This scenario depicts the existence of material handling deficiencies in the area of planning, replenishment, recording and inventory control which effect profitability in the organization.