Negotiation Skills As A Tool For Enhancing Timely Delivery Of Material (A Case Study Of Nocaco)

Project and Seminar Material for Purchasing and Supply PS

Negotiation Skills As A Tool For Enhancing Timely Delivery Of Material (A Case Study Of Nocaco)


Abstract


This project was carried out on negotiation skills as a tool for enhancing timely delivery of material in Nocaco, Kaduna. In purchasing and delivery, negotiation is vital because without it, it cannot function effectively. An organization enter into negotiation to get a fair and reasonable price in its buying activities. The study examined the impact of effective negotiation in realization of procurement goals in Nocaco. The research was conducted through the use of self-administered questionnaire to obtain primary data. The study had sample size of 206. Purposive sampling technique was used to select respondents that are involved in procurement for the areaof the Study. Descriptive analysis and linear regression analysis were used in analyzing the obtained data. The results indicated that effective negotiation is a strong procurement strategy in Nocaco and has a significant impact in realization of procurement goals. The study concluded that Nocaco timely delivery goals are realizable with effective negotiation strategy.


Chapter One


Introduction

1.1 Background of the Study

Negotiation is one of the important as well as the most interesting and challenging as part of supply management. In industry and at most level of government, the term “Negotiation” frequently, causes misunderstandings confused with “Haggling” and price chiseling”. In government negotiation is frequently per solved to be a nefarious means of avoiding competitive bidding and of awarding large contracts surreptitiously to forward suppliers.

Webster’s dictionary define negotiation broadly as “Conferring, discussing or bargaining to reach agreement in business transaction” Herb Cohen describes negotiation as a persuasive process in which people ultimately attempt to reach a joint decision on matters of common concern in situation in which there is initial disagreement. Thus a negotiation always requires both shared interest and issues of conflict. Obviously without commonality, there is no reason to achieve resolutions. To be fully effective in purchasing, negotiation must be utilized in its broadest context as a part of a decision making process. In this context, negotiation is a process of planning, reviewing and analyzing used by a buyer and a seller to reach acceptable agreement or compromises include all aspect of the business agreement not just price.

Negotiation differs from a ball game or a war. In these activities only one side can win, the other side must lose. In most successful business negotiation both sides win something popular usage calls this approach “win-win negotiation” the “winnings” however are seldom equally divided invariably, one side wins more than the other. This is as it should be in business. Superior business skills merit superior rewards. Increasingly, negotiations are conducted by cross. Functional teams, these teams must be well coordinated in order to function as an integrated entity.

The important of negotiation of purchasing is the it is a method used especially where the time of purchasing of materials is too short, the money value involved is too low, the number of bidders is inadequate, they are not willing to compete, specification are not clear but vague, the supplier is a monopolist, where all these situation exist or prevail, the buyer has no alternative than to negotiate, hence negotiation is practical technique arriving at a price to pay for goods and services.

According to Chipiro (2009) the purchasing and supply activity of organisations is one which spans both internal service and business-to-business services. This is an important activity found in all organisations, public, private, governmental and charities and can be responsible for a large amount of spending. Such spending on, for example, materials components, facilities, subcontract capacity, IT equipment and supplies, consumables, stationery, travel and insurance can constitute a significant amount of money. Most organisations spend at least one-third of their turnover/income on the purchase of goods and services (Zenz and Thompson, 1994 and Killen and Kamauff, 1995).

To develop an effective purchasing strategy or sourcing strategy, first it is necessary to sit down to assess the details that you have to work with. These details will include the business’ or project’s objectives, the available and existing resources and supplies, the budget and the timeline. Through the assessment of these elements, the team would be able to start planning for an effective purchasing strategy that would be as custom-made as possible for the company; the key here is to make sure that every detail of the plan would contribute towards attaining the company’s established objectives and objectives. A good question to ask would be, “Why are we purchasing this equipment?” The answer must be in accordance with the company’s objectives.

Another key item that would be planned for during this brainstorming stage would be the choices of either making or creating the materials (or doing purchasing outsourcing) with the costs and sustainability being the major determining factor, and whether the existing company resources would be able to support the decision over a long period of time.

The representation of the strategic purchasing can be described in terms of its environment and structure, and what activities take place in the supply link. General performance indicators of the supply link in terms of time, quality, flexibility and cost are used to measure efficiency and effectiveness. The efficiency in the supply link explains how well the resources are utilized. Since resources are scarce, it is in everyone‘s interest in the organization to maximize the utilization of the resources. The effectiveness of the supply link explains how well the objectives are achieved (Arun and Linet 2005).

Therefore, the aim of this research was to examine Negotiation Skills as a Tool for Enhancing Timely Delivery of Material in Nocaco, Kaduna.


1.2 Statement of the Problems

The economic situation of the country is currently undergoing transformation, especially with the introduction of new policy in procurement activities and operation in each and every ministries and private organization.

With the implementation of this policy, each and every government ministries and private organization must have a procurement section or department which will have the responsibility of negotiation and awarding the contract on behalf of the organisation. By so doing, the organization must recruit a very good personnel with relevant skills and experience so as to help the organization to minimize the cost, get value of every naira spent and enhancing delivery time of materials for the organization.

Negotiation is a critical task, most organizations are facing time delivery problem as a result of long process of negotiation and long time of the arrival of material order.


1.3 Purpose of the Study

This project is required as a pre-requisite for the award of Higher National Diploma (HND) in purchasing and supply department of Kaduna Polytechnic. And also the researcher is intended to achieve the following objectives:-

  1. To identify various negotiation skills in an organization and their contribution in enhancing timely delivery of materials.
  2. To identify the resources required to support negotiation planning and execution.
  3. To highlight on the benefits of a good negotiation skills to the organization.
  4. To make relevant recommendation on how NOCACO can improve negotiation skills.

1.4 Research Question

The following questions will be asked in order to achieve stated objectives:

  1. To what extent does a negotiation skill enhance timely delivery of materials?
  2. What resources are required to support negotiation planning and execution in your organization?
  3. What are the benefits of good negotiation skills on materials order?
  4. How can you improve negotiation skills to enhance timely delivery of materials?

1.5 Significance of the Study

This research study is required as a partial fulfillment of the award of Higher National Diploma (HND) in purchasing and supply department, college of Business and Management Studies, Kaduna Polytechnic.

However, the study is beneficial to the researcher in broadening his knowledge on the subject matter which is negotiation skills. The study will benefit the students of Kaduna Polytechnic to serve as a secondary source of data to any course and topic related to this study. The study will also benefit the organizations, especially NOCACO as the case study.


1.6 Scope of the Study

The research work discourse the negotiation skills as tool for enhancing timely delivery of material in NOCACO, Kaduna. The research makes use of some selected departments in the organization which includes management, accounting, production, marketing and procurement. This research is limited to the above mentioned departments only in the organization. This is because of the stipulated time by the purchasing and supply department to summit the project.


1.7 Historical Background of Nocaco

NOCACA (Northern Cables Processing and manufacturing CO) was incorporated in June, 1978 production started in July 1980, with the aim of supplying vehicles plants with locally made cables harmess and to satisfy the Nigerian market with all kinds of electric cables and wires. Due to it’s technical nature the company equity shares are distributed, 40% to Nigeria shareholders and 60% to the foreign partner contained in the schedule III of the enterprise promotion degree. The Board of Directors has Mallam D.H. ABDU as the Chairman while Mr. E.H SCHNARE is the Managing Director. Starting with the strength of 26 in 1980, the company now employs over 240 staff. Today NOCACO is recognized as NO. 1 cable manufacturer in the northern part of the country producing in accordance with National and International; Standard and specify customer’s requirement.

The product ranges of NOCACO are approximately 300 different types of cable which include the ordinary wiring cable, conduct cable, insulated aluminum services cable. Aluminun over head lines both bare and steel, cords and drop and wire for telecommunication purpose.

In the area of quality NOCACO places a high premium on the quality of its producte as the design and produces high quality product in line with internal and international standard i.e. Nigeria Industries Standard (NIS) British Standard (BS) and German Industrial Standard (VDE). And to specific customers requirement. NOCACO carried out rigorous quality control test on its products at every stage of the production process rather than at the final inspection so that its high standard are maintained throughout of the full length of the conductor cable.

However, as prove of high quality NOCACO is an ACIS gold award winner on PVC insulated (non-anoured) single and multi core cable and aluminum overhead line. The Capacity of NOCACO to produce very high quality cables that meets national and international standard at cost that represent value at all times his culminated in ability to be the first cable manufacturers in the northern part to design install and implement quality system which has been certified according to the requirement of international organization standardization otherwise known as 180 9001 2000 this is a quality system which aims at achieving total quality management (TQM) in the areas of production, installation servicing.

Finally, NOCACO has been the first cable manufacturer in the north which is centered in the heart of northern state of Nigeria, Kaduna


1.8 Definition of Terms:

Negotiation:

This is defined as a process of formal communication, either face to face or via electronic means, where two or more people come together to seek mutual agreement about an issue or issues.

Purchasing:

This term is used here as the process of buying in the markets. But in a broader sense, it is a professional term used when buying goods and services by industries, commerce and corporation by a professional buyer.

Buyer:

This is a person who buys goods at a particular price without the technicalities involved being taking into consideration. He is no regarded as a purchaser in a real sense.

Specification:

This is a detail description of how is should be design or made, this include the analysis of performance of the item need any other relevant characteristics.

Delivery:

Is the responding to customers needs by delivering products or making available services where they are needed and when they are need.

Price:

Is the exchange value for goods and services

Value:

How much something is worth in money or other grounds for which it can be exchange.

Bargaining:

This is a discussion between two parties in order to achieve a compromise. Which will lead an agreement to buy, sale or exchange.

Persuasion:

This is a situation where one party knows best and therefore impulse his will on the other party.

Capital Equipment:

Is a fixed assets of a business not intended to resale which will be use in the production or running of the business.

Lead-time:

This is a time interval between placing the order and the time of its arrival.

Skills:

Skills is an ability and capacity acquired through deliberate, systematic and sustained effort to smoothly and adaptively carryout complex activities to job functions involving ideas or job functions.

Tool:

Can be defined as any item that can be used to achieve a certain goal, especially if the item is not consumed in the process. Informally tool can also be describe as a procedure or process with a specific purpose.

Enhancing:

Enhancing can be defined as to intensity or increase quality, value, power etc to improve augment.

Material:

Material can be defined as the matter from which something can be made. Material can include, but is not limited to raw and processed material, component, parts assemblies, and sub-assemblies.

Timely:

Timely can be defined as appropriate at the right time, convenient, judicious, opportune, prompt, propitious, punctual, seasonable, suitable well timed.


Chapter Five


Summary, Conclusion and Recommendation

5.1 Summary of the Findings

The findings indicate that effective negotiation is a significant purchasing strategy in the Organization with an overall mean score of 3.88 which means that more respondents agreed with the questionnaires statement.
The findings reveal that there is a positive relationship between effective negotiation and realization of timely delivery of materials whose beta coefficient is 0.802. The results also indicate that effective negotiation had a statistically significant impact in realization of timely delivery of materials as it had a probability of 0.000 which is lower than the probability conventional of 0.05.


5.2 Conclusion

The study concluded that preparation prior to negotiation impact positively on the outcome, pre-knowledge of suppliers costs, delivery and delivery time makes negotiation effective. Suppliers should be categorized based on their capacity for effective negotiation. Both parties must win in negotiation and negotiation works better when focus is on agreement rather than differences and team based approach to negotiation is better than individual approach. Effective negotiation has an impact in realization of timely delivery of materials. From the results it is evident to conclude that the timely delivery of materials are realizable with the effective negotiation strategy.


5.3 Recommendations

The study recommends that Organization timely delivery of materials could be realized using purchasing strategies such effective negotiation. Companies had tried to make savings from staff reductions or internal re-organisation. Now they are increasingly turning to purchasing and strategic sourcing as a means for cost reduction. When they do, they find that by analysing and rationalising their external spending, they can make considerable savings and consequently achieve their timely delivery of materials. The Organization management should sensitize the Organization community on the various purchasing strategies and timely delivery of materials of the Organization as stated in the Organization tender board (Oguntola, 2017).

The Organization should maintain continuous improvement on effective negotiation to allow for good structure for purchasing management. This structure will reduce wastage. Monczka et al. (2004) noted that Negotiation is an ultimate value to implement the purchasing strategies that an organization developed. Negotiation will be used as a path to bridge the gaps between purchaser and supplier (Oguntola, 2017).

Finally, the study recommends that Organization should organize regular training and seminar on timely delivery of materials and purchasing strategies for all staff involved in purchasing in the Organization both at the departmental or committee level. Staff training is another key strategy in realization of organizational timely delivery of materials (Oguntola, 2017).


5.4 Areas of Further Research

The gap created by this study that other researches or academic students can address includes impacts of other purchasing strategies, not examined in this research, in realization of organizational objective in a Nigeria private

Organization, this study concentrated on effective negotiation.

Further research could also be carried out on impact of purchasing strategies in realization of organizational objectives in a public Organization or a non-academic organization.

Other further research could also be on comparative studies of purchasing strategies in private Companies in Southwest Nigeria.


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