The Impact Of Purchasing Procedures In A Manufacturing Company (A Case Study Of Rokana Industry, Nekede)

Project and Seminar Material for Purchasing and Supply (PS)

The Impact Of Purchasing Procedures In A Manufacturing Company (A Case Study Of Rokana Industry, Nekede)


This is a procedures study on the Assessment of Purchasing procedures in a manufacturing company. This procedures project is written to analysis critically the strategies involved in the assessment of purchasing procedures how it will profit the organization and the basic need to adopt the purchasing procedures for the profitability of it.

It will help to gather useful information about the product which is to be purchased and to ensure the quality and the quantity and at a good price. It is also intended to make useful suggestions and recommendation that will help in purchasing materials for the organization.

The language used is simple enough to be understood by the headers. This procedures project has been specially and carefully prepared in five chapters and the materials, which has been collected personally by full observation and study.

Chapter one of the project is focus on the background of the study, brief history of the company, statement of the problems, objective of the study, significance of the study, scope of the study, limitation of the study.

Chapter two deals on procedures review the related literature.

Chapter three is based on the presentation of data analysis chapter four, it centers on testing of hypothesis, while chapter five is all about the summary, conclusion and recommendation also with bibliography.

Table Of Contents

Preliminary Page(s)

  • Title page
  • Approval page
  • Certification
  • Dedication
  • Acknowledgement
  • Abstract
  • Table of Contents

Chapter One

1.0 Introduction

  • 1.1 Background Of The Study
  • 1.2 Statement Of The Problems
  • 1.3 Objectives Of The Study
  • 1.4 The Significance Of The Study
  • 1.5 Research Question
  • 1.6 Hypothesis Formulation (For HND Only)
  • 1.7 Scope Of The Study
  • 1.8 Limitation Of The Study
  • 1.9 Definition Of Terms

Chapter Two

2.0 Literature Review

  • 2.1 Introduction
  • 2.2 Procedures As A Veritable Tool For Problem Solving
  • 2.2.1 The Procedures Process
  • 2.3 General Overview Of The Purchasing Function
  • 2.3.1 Purchasing And Purchasing Procedures
  • 2.4 Why Purchasing Procedures Is Becoming Important
  • 2.5 Importance Of Purchasing Procedures
  • 2.6 Organisation Of Purchasing Procedures
  • 2.7 Area Of Purchasing Procedures
  • 2.8 Relationship Between Purchasing Procedures And Company’S Profitability
  • 2.9 The Assessment Of Purchasing Procedures In The Profitability On A Manufacturing Company
  • 2.10 Summary Of Related Literature

Chapter Three

3.0 Research Methodology

  • 3.1 Introduction
  • 3.2 The Procedures Design
  • 3.3 The Questionnaires Design
  • 3.4 Sampling And Selection Of Respondents
  • 3.5 Other Techniques Used
  • 3.5.1 The Survey Technique
  • 3.5.2 The Observation Techniques
  • 3.6 Data Sources
  • 3.6.1 Secondary Data
  • 3.7 Primary Data
  • 3.8 Data Analysis Method
  • 3.9 Description Of Data Analysis Tool For Test Of Hypothesis
  • 3.10 Percentages
  • 3.11 Decision Criteria In Either Accepting Or Rejecting A Hypothesis

Chapter Four

4.0 Data Presentation And Analysis

  • 4.1 Introduction
  • 4.2 Analysis Presentation And Interpretation Of Data
  • 4.3 Analysis / Test Of Hypothesis (For Hnd Only) Nd Move To Discussion Of Finding
  • 4.4 Discussion On Major Findings

Chapter Five

5.0 Summary, Conclusion And Recommendation

  • 5.1 Introduction
  • 5.2 Summary
  • 5.2 Conclusion
  • 5.3 Recommendation
  • Bibliography
  • Appendix

Chapter One

1.0 Introduction

Procedures has been identified as one of the most powerful tools and a panacea to many of the worlds greatest problems. Procedures is a goal oriented and its goals determine its nature and form.

Studies have shown that one of the major problems militating against the profitabilities of human endeavour in general and organization in particular is lack of adequate procedures .

It is in the light of these, that this procedures work is geared towards the assessment of purchasing procedures and how it affects the profitability of a manufacturing companyusing Nigeria bottling compaby as a case study.

1.10 Background Of The Study

As seen from the introduction, procedures affects all spheres of man’s activities. The companies are not therefore left out, especially is regards materials sources of supply and other important and related issues about purchasing, hence, purchasing procedures .

The first world countries have embraced procedures that they have made remarkable and outstanding success and progress in the technological advancement of the world. This study seeks to encourage third world countries especially universities and polytechnics procedures institutions and the like not to overlook the importance of procedures .

Moreso, companies are advised to pay good attention to the contribution of purchasing procedures for their increased profitability. They are encouraged to know that purchasing procedures is a tool that can assist them in their daily purchasing decisions. As an aid to enhance purchasing activities, companies are against this background, expected to embraced purchasing procedures and provide the finance necessary to carry out this procedures for better performance of the purchasing functions, which in turn contributed to the overall organizational profitability.

1.1.1 Brief History Of The Company

The name of the company is Rokana Industries Plc Nekede and it as incorporated on September 1978 as a private limites 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 Along Futo – Poly Road, nekede, Imo and 89 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, Aba, Imo, 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.

  1. The Cosmetic Units: This unit undertakes the production of the tooth paste, baby-care cosmetics, skin lotions, cream and oiltment.
  2. The Plastic Units: This unit produces tooth brush, dental stick, plastic folders, plagues for the Areosol production.
  3. Aerosol Unit: This unit produces insecticide air fresheners, perfumes, furniture polish, deodrant etc.
  4. The LPG Unit: This unit refills domestic cooking gas cylinder, provides unstauncheal gas,as propellant to the aerosol production line.

1.2 Statement Of The Problems

The essence of purchasing procedures in any organization is to identify thos salient activities as regards materials, sources of supply and other important and related issues about purchasing.

In view of this fact, it is imperative to take insight into the purchasing procedures activities of an organization, using Rokana industry Nekede as a case in point in the light of its procedures efforts and how the impacts has contributed to the profitability of the organization.

Closely related to this are the needs for price in the purchasing of materials for production, lack of inadequate raw materials as it affects production etc.

In undertaking this study, the procedures er intends to investigate to what extend, procedures es on price and lack of adequate raw materials have affected the profitability of Rokana industry Nekede.

1.3 Objectives Of The Study

As earlier stated, purchasing by its nature is a basic and integral part of business management. In addition, the basic goal of any business organization is to produce goods and services which can be marketed at a profit. However, this goal is achieved by blending appropriately the five M’s of management viz machine, manpower, materials, money and management of all the five, materials have seen as the life blood of industries and as such need not be treated carelessly.

Purchasing procedures is therefore undertaking to solve problems such as sudden shortages or an unacceptable price increase, or in response to other exceptioned situation such as a change in the law governing such as a change in the rate of exchange.

From the foregoing the objective of the study are: –

  1. To ascertain the important areas of purchasing procedures
  2. To investigate into important areas of purchasing procedures
  3. To examine the reasons for purchasing procedures
  4. To x – ray the relationship between purchasing procedures in a manufacturing company
  5. To find out the relationship between purchasing, purchasing procedures and company’s profitability.

1.4 The Significance Of The Study

This study or procedures work is very important to a number of persons. To me as the procedures er carrying out this procedures is an adventure. In the course of the writing, it is a way of developing my talent and creative gift of writing as a student. Again, it is a requirement for the award of the Higher National Diploma (HND) in Purchasing and Supply chain management.

In addition, this study will serve as a data bank for reference point for other procedures er. Furthermore, the department of purchasing in every industry will appreciate the content of this procedures work as it assist. There is their constant procedures for materials, products or seminars, purchasing personnel, suppliers on commodities on purchasing procedures.

In addition, this procedures will profit a number of students in the purchasing and other department of any higher institution by providing the necessary information for writing on similar or related topic. It will therefore provide a yards tick topic or standard for such student when they shall make reference to this materials.

1.5 Procedures Question

  1. Does the organization attach importance to purchasing procedures ?
  2. If purchasing is given a top management, approval is purchasing procedures of important concern to management?
  3. How has purchasing procedures contributed to be company’s overall profitability?
  4. What are the greas that purchasing procedures is carried out in your industry?
  5. What impact have purchasing procedures been playing in your industry?

1.6 Hypothesis Formulation

The following hypothesis have been put forward in order to carry out to validate the essence of this procedures work.

Hypothesis I
  • Ho: Purchasing procedures does not contribute to the company’s profitability
  • Hi: Purchasing procedures contribute to the company’s profitability
Hypothesis Ii
  • Ho: The impact of purchasing procedures does not affect the entire industry
  • Hi: The impact of purchasing procedures affects the entire industry

1.7 Scope Of The Study

Purchasing procedures is an important and vast area of study, moreso, it is carried out by a lot of manufacturing firms in order to increase their profitability. This being the case, this procedures on purchased materials, products or service purchasing personnel, on suppliers on commodities and on methods purchase that is purchasing procedure or system.

Furthermore, this work will concentrate more on profit making organization preciusely manufacturing industries with particular reference to Rokana industry (Rokana industry, Nekede Imo State.)

1.8 Limitation Of The Study

In carrying out this procedures work, a lot of things interested me for example, the joy of ending my first degree with writing of my project. However, I was constrained with time because we were given a short period to write and defend our project immediately after our exams. I was therefore hurrying to meet up with the date given to use and there was also no time to visit other libraries for vital information.

In addition, there was also the problem of finance to move around in order to visit the industry used as a case study. There was also problem of insufficient procedures materials on the topic, these problems were however adjusted to by the procedures er in order to ensure that this procedures work is a success.

1.9 Definition Of Terms

It is also important to define some unfamiliar terms to that other procedures ers can find their meanings easily in case they want to make use of this work.


Is defined as planned buying. It is a function in the organization that fulfills organizational needs through acquisition of the right materials, supplies, plants, tools, machineries and services that will enable the organization to attain its targeted goals.


This is a sustained inquiry into problems and seeking out ways to solve it. According to Anyanwu (2006) procedures is the systematic and objective search for and analysis of data with a view to generate information necessary for the solution to problems.

Purchasing Procedures Er

According to Uzor (2003) purchasing procedures is defined as the systematic collection, classification and analysis of data as the basis for better purchasing decision. It is therefore a formalized means of obtaining information to be used in making decision. It is concerned with collecting and analyzing information concerning the supplies environment as a basis for planning of strategies for the future.


These are the people who supply materials, parts, goods or services to the buying organization.


This is a firm that may be either profit or non – profit oriented that exists for the sake of producing goods and services at the profit or rendering services


A statement of put position which can be investigated to either be true or false.


This is the end target of ever profit oriented firm increasing their capital base in the form of additional revenue which can be ploughed back into the business as retains earnings.

Chapter Five

Summary, Conclusion And Recommendation

5.1 Introduction

This chapter summarizes the procedures work and also makes the necessary recommendations that will aid the beneficiaries of this procedures work especially Rokana industry Plc. This case study in making sound purchasing decision

5.2 Summary

In summary, the procedures has succeed to cover areas like introduction of the procedures topic, the background of this procedures work statements of this procedures problems, what the procedures work set to achieve, who benefits from the procedures work, the procedures question, the hypothesis, the areas of coverage of the work, the areas of coverage of this work, the constraints faced in the course of this procedures work and in definition of the relevant terms.

From what I wrote, in chapter two, we can see that purchasing procedures is important and relevant to company profitability. By carrying out purchasing procedures on purchased materials. Sample information can be provided on the features of the product care of, definitely, profit is saved. In addition, it is also pertinent that the purchasing department should take up their assessment in purchasing procedures in order to boost their status otherwise this assessment will be assumed by other department.

In this chapter three, the procedures discussed how the data was collected which include the questionnaires and observation method. Also, method of data collection was also X – rayed by the procedures er as well as data analysis method how to test the hypothesis which will be presented in the hypothesis which will be presented in the subsequent chapter (chapter four).

In this chapter, it sets out to analyze and presents the data obtained in chapter three and goes chead to test the hypothesis stated in chapter one to arrive at either accepting or rejecting each hypothesis. It also, discusses on major findings of the data analysis.

In this summary, it comprises all the chapter done in this procedures work on the background of the study, statement of the problems, objective and significance of the study, procedures question and testing of hypothesis, scope and limitation of the study. In chapter two, the procedures er reviewed the related literature and discussed briefly historical background of the case study. In the third chapter, the procedures er carried out a procedures work or procedures methodology and in chapter four, the procedures presented the analysis of data of the study.

5.3 Conclusion

The important of purchasing procedures cannot be over – emphasized . as stated earlier, the procedures helps in resolved problems. It is a problem oriented ventures, so as purchasing procedures . The problems of materials shortages, substandard materials, lack of reliable, inefficient purchasing problems have necessitated purchasing procedures . After an extension work on this topic, the assessment of purchasing procedures in a manufacturing company (a case study of Rokana industry Plc, the procedures er therefore have drawn the following conclusion.

  1. The information provided by purchasing procedures assists purchasing managers, purchasing/ procedures analysis and purchasing department as a whole, in making sound purchasing decisions.
  2. Furthermore, because such decision are done in environment filled with uncertainties for example inflation which is a consistent rise in the price level of goods services including raw materials. It is therefore be houses in purchasing personnel to combat and tackle the uncertainties inherent in purchasing activities. By reducing these uncertainties to profitabilities, sound purchasing these uncertainties to profitabilities sound purchasing decision. Therefore be made.
  3. The benefits of purchasing procedures justifies the involvement because it affects the entire industry positively.
  4. The purchasing department has a lot assessment to play in purchasing procedures . If this assessment is over looked, it will be assumed by other departments and purchasing will only be regarded as a routine function.

5.5 Recommendation

From the foregoing, the procedures er decided to make the necessary recommendations: –

  1. That the purchasing functions, be separated from other department, like marketing, production, accounts etc in industries who merge the purchasing function under these departments. This will enable purchasing to assume its proper assessment of making materials from the right source in the right quality and quantity and at the right price using purchasing principles concepts and techniques.
  2. That purchasing procedures should be given top management and support.
  3. If purchasing procedures should be given top management priority, fund should also be made available for such procedures to be carried out.
  4. That procedures education and training be given to procurement staff or purchasing department and procedures analysts on how to carryout the purchasing procedures .
  5. There should be good inter – department liaison and relationship between the purchasing department and other department. This ensures a good communication flow among the departments because purchasing department may, for example need information from the production department in order to carry out purchasing procedures .
  6. That the assessment of purchasing procedures in contribution of the company profitability should be used to boost the status of the purchasing department.
  7. That purchasing procedures be cushioned in the company’s policies so that sound purchasing decision can be made.
  8. That purchasing procedures be carried out by competent personnel who are professionals and knowledgeable in the work.
  9. That purchasing procedures be extended in areas like purchasing techniques, purchasing ethics and purchasing methods.
  10. That the organization for purchasing procedures be made then function of experts who are versatile and knowledgeable in the work.

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