An Assessment Of The Contribution Of Purchasing To Profitability In An Organization (A Case Study Of Rokana Industry Owerri)

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Project and Seminar Material for Purchasing and Supply PS

Project and Seminar Material for Purchasing and Supply PS


The major issue in this research work is to assess contribution of purchasing to profitability of an organization. Purchasing is very vital in every organization especially in the service industry. The Rokana industry Owerri is expected to be purchasing oriented especially in current times when competition is very intensive. This project looked at the contribution of purchasing to profitability of an organization with emphasis on the purchasing activities of Rokana industry in Owerri. The study evaluated how the firm marketed its services to its customers and of customers are satisfied with services been rendered by the firm.The study also tried to ascertain whether the staff of the firm and their customers have cordial relationship.

These issues were addressed through theoretical and empirical approach with the help of the secondary and primary data collection method. In the secondary data collection methods relative literature were reviewed to as certain what various authors have to say on the topic. There primary data were collected through questionnaire administered on the customers complemented by providers view point drawn from Rokana industry Owerri as the case study.

The population of study comprised of the staff and customers of Rokana industry .The method of sampling adopted is the simple random sampling technique. A simple size of 150 respondents was in organizing the collected data, frequency distribution and tables were used while chi – square x2 was adopted to analyze and test hypothesis. This method were able to revealed that authentic laundry were in line with the purchasing concept practice, customers complaints are given prompt attention and good quality services are rendered to them also.

There firm do not have parking space for customers.It is recommended that Rokana industry should continue with it good quality service.To inculcate more of the purchasing concept practice.There firm should make available and enough parking space for their customers. Customers satisfaction should be continue to be their watchword. The firm should continuously monitoring the effectiveness and efficient of their firm services through purchasing research.

Table Of Contents

Title page
Approval page
List of table

Chapter One

1.0 Introduction
1.1 Background of the study
1.2 Statement of the problem
1.3 Objectives of study
1.4 Hypothesis formulation
1.5 Scope of the study
1.6 Take T. CIII
1.7 Significance of the study
1.8 Definition of terms.

Chapter Two

2.0 Literature Review
2.1 An overview of purchasing
2.2 The purchasing concept
2.3 The purchasing mix
2.4 An overview of service
2.5 An overview of the service industry
2.6 The contribution of purchasing to profitability in an organization.
2.7 The contribution of purchasing in the rokana industry in ABA.

Chapter Three

3.0 Research Methodology
3.1 Sources of data
3.2 Population of the study
3.3 Sample size determination
3.4 Sampling size determination
3.5 Treatment of data
3.6 Questionnaire distribution and collection
3.7 Research instrument used.

Chapter Four

4.0 Presentation Analysis And Interpretation
4.1 Data
4.2 Presentation and analysis of data
4.3 Interpretation of data

Chapter Five

5.0 Summary, Recommendations And Conclusion
5.1 Summary
5.2 Recommendations
5.3 Conclusions

Chapter One

1.0 Introduction

The people understanding of purchasing has in most times been restricted to purchasing of tangible products. Taking purchasing to only applying to distributive trade and those activities that are involved in the purchasing and distribution of manufactured goods. However, broader strategic and conceptual philosophy recognizes and sees purchasing to also applying to services firms like Rokana industry, laundry and drying, hospitals, banking, insurance, education, legal services, entertainment, transportation etc.

Due to changes and more sphistication in the life of individuals, there has been a greater change in the demand and needs of man. The urge for acquisition of tangible products has not been dominating in the satisfaction of human wants or needs. There has a greater de3mand for services which helps to sustain the life of man, the need for legal services, need for entertainment, need for medical care, transportation service etc.

This has also given rise to the establishment of many firms to take care pf these needs.

Also there has been a great been for companies to introduce not just purchasing functions in their activities but also there is need for a strategic purchasing operations to their activities so as to be able to satisfy the needs of the consumers and that of the company profit.

For the greater satisfaction of human needs and maximum profit for service industries, there is need for these companies to understand that their survival is based o effective and efficient satisfaction of their consumers. Their needs and wants, attitudes and life style must be well understood so as to bring about a better operation in their work.

1.1 Background Of The Study

Service companies should also understand their “Services account for close to on behalf of the consumer expenditure” and that also even firms themselves spend most of their working capital on services for sustenance repair and maintenance of legal, insurance, banking, credit service etc. this therefore means that service companies would recognize the essence of purchasing to be able to satisfy there services need of both firms and individuals.
There is need at this stage to explain what purchasing in services industries.

Purchasing has been defined as meaning “The set of activities that facilitate exchange transactions involving economic goods and services”.

The services must therefore conform with their requisition. It must also be worth the value they paid for it. In the course of the transaction, the customer gets the best deal that is supposed. The opportunity of their firms to make profit will depend on the customers services and patronage the get. In as much as there is emphasis on profit for companies survival, this cannot be done outside the customer backing patronage. The essence of purchasing here therefore come in purchasing emphasis should therefore not be neglected. Service industries must therefore recognize the idea.

But due to the nature of services the only thing that should be understood is that although purchasing is everything where the application to services industry will take a different farm only that the aim still remains the same, the customer satisfaction profit motive and proper co – ordination of the purchasing related activities.

Service industry is simply firms who do not engage in production, exchange or purchasing of tangible items rather they engage in creating satisfaction through offer of non – tangible things.

Transference is done without necessarily involving any tangible items. What is mostly emphasized here is the satisfaction gotten in exchange of value from the customer. It might involve a direct treatment on the customer education, medical services or it might involve many product usage rokana industry , banking etc.

Purchasing emphasis is greatly needed here to be able to satisfy the needs of the customers due to this sophistication in human life and subsequent establishment of service firm, there has also been greater increase in competition in the market place. Service firm need a proper interpretation of purchasing functions in other to be able to survive in the industry.

A proper check of competition will automatically not neglect the emphasis and recognition of purchasing functions and activities to check this competition. Firms cannot afford to see them selves operate at below expectation due to the non – applicability of purchasing in their firms activities.

Most of these firms have practiced purchasing without knowing what they are doing promotion, pricing etc, or even without calling it that. The emphasis should be that these firms should understand that there is a great need for them to identify and bring in purchasing to their activities in a more sophistical and outward ways.

Since service industry whether engaging in consumer services, industrial services or professional services depends on customers for survival and there is effective and better understanding of customer needs through purchasing “Purchasing is the management process responsible for identifying, anticipating and satisfying customers requirements profitable.

Also according to Philip Kotler in his books purchasing management, analysis, planning and control, he defined purchasing “as a social process by which individual and groups obtain what they need and want though creating and exchanging products and services and value with others” from all the above definitions, we can see that the core purchasing and his functions rests on customers satisfaction.

The satisfaction of the customer / customers is regard as supreme. It can also be seen that there is a great emphasis on:

  • Product or services
  • Exchange process
  • Set of activities
  • Profit motives.

The essence of satisfying consumers or customers will rest on providing them with either their service or products needs. Management of these firms should therefore not just know what customers are very important in their operation but also should see purchasing as one of the most important management function needed for their survival and profitability.

The study should therefore concentrate on the assessment contribution of purchasing to profitability in an organization but with a particular emphasis on the Rokana industry in Owerri .

Rokana Industry Plc

The name of the company is Rokana Industries Plc Owerri and it as incorporated on September 1978 as a private limited liability company.

The nature of the business is manufacturing and it was founded by Engr. Charles Ugwu, a British trained industrialist/Engineer in 1978.

The managing-Director is Chief Ekemma Geophry now while Engineer Charles Ugwu is the Chief Executive of the company.

The factory is divided into three basic areas namely:Administration, Marketing/sales and promotion. It has a branch in Lagos as their registered street off 52 Ogundana street Allen Avenue Ikeja Lagos. Over 80% of the raw materials for the production of the product are imported.

They also have sales outlets in Abuja, Kaduna, and Lagos. The company is hundred percent Nigerian owned while Union Bank Nigeria Plc own 40% shares of the company product produce.

Rokana currently maintains four existing manufacturing units.

The Cosmetic Units:

This unit undertakes the production of the tooth paste, baby-care cosmetics, skin lotions, cream and oiltment.

The Plastic Units:

This unit produces tooth brush, dental stick, plastic folders, plagues for the Areosol production.

Aerosol Unit:

This unit produces insecticide air fresheners, perfumes, furniture polish, deodrant etc.

The LPG Unit:

This unit refills domestic cooking gas cylinder, provides unstauncheal gas,as propellant to the aerosol production line.

1.2 Statement Of Problem

Greater sophistication in human life has brought about divergence in his needs and wants. Also this has brought increase in the services needs of man within the environment. Increase in his service needs has also brought about more establishment of service firms within the society.

These firms needs to satisfy the needs of the needs of the consumers in order to sustain increase competition within the industry for the effective satisfaction of human needs and sub-sequent survival of these firms, there is need for proper integration of purchasing functions in all their activities.

This study is therefore intended to look into the contribution of purchasing to profitability in an organization.. In doing this, it is hoped that the extent of purchasing methodology application in our service firms could be assessed.
Need in their purchasing activities is hope to be established and also the notion trade should reassessed and corrected.

This research is going to examine and assess the contribution of purchasing to profitability in Rokana industry in Owerri.

Need in their purchasing activities is hope to be established and also motion that purchasing activities only applies to distributive trade, should reassessed and corrected.

1.3 Objectives Of The Study

The restricted understanding of purchasing and its applications has been myopic. The idea that purchasing is concerned only with purchasing of tangible goods that is erroneous. And the fact that most people have not been able to understand the importance of purchasing to services industry, need to be corrected and explained.
The objectives of this research work include;

  1. To assess the contribution of purchasing in our service industries, the need to evaluate purchasing functions and its proper application to service industry for a better and greater growth
  2. To correct the impression that purchasing as a management function is not needed in the service industry.
  3. To bring to light benefit of application of purchasing functions to service industry.
  4. There is also the need to find the problems which service industries meets in purchasing of their services.
  5. To bring to the knowledge of management the difference in the purchasing of product to that of services.

Since this project is going to involve systematic and comprehensive study in the area of purchasing of services, it is hoped that it will help bring to light the fact that purchasing is not only a function of manufacturing industries.

1.4 Hypothesis Formulation

The following hypothesis formulated are:

  1. Ho1: The customers are not satisfied with the services of rokana industry in owerri.
    Ho2: The customers are satisfied with the services of rokana industry in owerri.
  2. Hi1: The standard and quality of service rendered by rokana industry in owerri are not satisfactory to their customers.
    Hi2: The standard and quality of service rendered by rokana industry in owerri are satisfactory to their customers.
  3. H31: The staff and the customers of rokana industry in owerri do not maintain cordial relationship with their customers.
    H32: The staff and the customers of rokana industry in owerri do maintain cordial relationship with their customers.

1.5 Scope Of The Study:

  1. This research work covered rokana industry s in Owerri.
  2. This research work covered mainly the rokana industry s in ABA metropolis.
  3. It is also covered rokana industry s in ABA metropolis.

1.6 The Significance Of The Study:

The essence of this research work should not be seen as merely for the sole purpose of the requirement for the award of certificate in purchasing .

The study is beneficial and important in the context of the problem under study. The benefits of this research can simply be stated as follows.

This research will be beneficial to the management of the service firms by providing information towards a better application of purchasing function in their firms.

It will help in the identification and service of customers and subsequently bringing in a greater profit margin for the firm.

It is hoped it will be beneficial to new comers into the service firms serving as a reference guide for better setting of purchasing functions in the firms.

The better understanding of purchasing in service firms will bring about better allocation of resources to the different functions of purchasing activities.

This will help to dictate where resources should be better allocated and monitored.

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