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

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


Abstract


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


Preliminary Page(s)

  • Title page
  • Approval page
  • Dedication
  • Acknowledgement
  • Abstract
  • 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
  • Bibliography
  • Appendix

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:

  1. Product or services
  2. Exchange process
  3. Set of activities
  4. 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.


Chapter Five


Summary Of Findings Conclusion And Recommendation

5.1 Summary Of Findings:

Based on the information gathered from both the customers and staff / management of the firm, the following findings were therefore made.

From the study, the researcher found out that most of the customers choose this cleaning firm because of quick and efficient services rather than friendliness of the staff and nearness to home. And her customers are mostly made of male and also, that most people who visit the firm are mostly businessmen and also most of their customers are youth and married men.

It was also found out that most of the customers send their services need through direct visit to the factory rather than through collecting centers and van patrolling the streets. This is due to inability of this firm to provide enough collecting centers and vans to most part of the town. This therefore shows that this firm don’t have good distribution network.

The researcher also found firm offer large waiting hall and comfortable seats but less of parking space and lavatory for customers. It shows that they don’t have amenities for customers.

Again, it was discovered that most people who visit these firm for services need do so because of the moderate price offer by the firm.

This study also revealed that this firm do not have purchasing department and they believe that they don’t see need for purchasing in their firm. This has given rise for professional purchasing people to work in this firm. The investigation also revealed that this firm maintain a bit cordial relationship with its customers. It was found that in as much as individuals make up the bulk customers there is a special type of customers that make up the firm.

Finally, it was found that through the study there is a growing interest in this firm and in future if purchasing will have its place in the service industries and in this firm in particular.


5.2 Recommendation

The researcher made the following recommendation based on the findings highlighted below:

Service provider particularly the authentic rokana industry should emphasis more on market oriented and they should have the contribution of purchasing in their service firms, because of the under utilization or application of purchasing functions in our firms is not encouraging and it calls for a revised attitude in order to achieve a greater and operational economy. The view point that purchasing methodology which has proven effectively with products is not appreciable to the field of services is an insistent falacy.

It should be understood that services can be effectively and ethically marketed in the conventional sense through proper use of purchasing tested methods.

In this sense, service firms should examine changes which have affected the nature of their services during the years with an eye towards identifying opportunities which may be exploited through the use of purchasing methodologies that may have been rejected or in their performance.

There should be an understanding that service just like product needs purchasing principles and practices to effectively satisfy the needs of the customers and subsequently bringing in increased yield for the form of profit.

There is also need for device firms to restructure their distribution network to be able to bring their service close to customers. This will come in form of enough collecting center where necessary, mobile patrol van around the town and streets and also making the consumers knowledgeable of this distribution points.

There is need for this firm to introduce more promotional tools from the study there was less use of advertising and other promotion in hope to attract more customers attention to their firm.

Finally, the firm should strongly improve in applying purchasing concept and innovation of services.

From the few hints given above, they should not fall to build a healthy and competitive firm and adequate service to meet the need of all their customers and also try to introduce after service by using their customer time to time to endure customer loyalty.


5.3 Conclusion

Based on the findings of this study, the researcher concluded that there had not been the proper understanding and application of purchasing functions in our service firms in general and dry cleaning firms in particular. Purchasing functions are practiced but most scanty and unorthodox way. The recognized that purchasing activities are the tools towards greater economy is elusive.

This can be seen from the fact that:

  1. There has not been a proper distribution system network where customers are properly reached for their service needs.
  2. Customers needs are not satisfied.
  3. This firm do practice market concept intend of being market oriented or customer oriented.
  4. Most interior parts of the town have the opportunity of bringing in their needs unless they come directly to the factory for such needs.
  5. Although most service firm advertise the services but it was found out that it was not done on a more frequent basis in this service firm.
  6. Advertising is done in a most scanty basis. There is no much use of other promotional tools by the firm, which therefore make this firm do not tap the promotional resources at their disposal.
  7. In general, there is an established, fact that there is a greater future for purchasing in our service forms. This can be seen on the greater and more establishments of service firms in our economy.
  8. This will therefore result in a state of high competition within the service industries which will meant that whosever does not use the available and necessary purchasing functions will not operate effectively in the market.
  9. Finally, it should be noticed that at the present purchasing functions are simply being utilized in our service industry. Thee has been myopic understanding and scanty implementation of purchasing functions and the use of purchasing resources in our firms. We therefore hold that most service firm in general and authentic rokana industry in ABA is not market oriented and this is the major reason why it had not been faring very well.

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


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