The Use Of Non-Professional Buyers In The Procurement Of Goods And Services, Problems And Solution (A Case Study Of PZ Plc, Aba, Abia State)

Project and Seminar Material for Purchasing and Supply (PS)

The Use Of Non-Professional Buyers In The Procurement Of Goods And Services, Problems And Solution (A Case Study Of PZ Plc, Aba, Abia State)


Abstract


Over the years, the student/researcher has been reading about the “hijacking” of purchasing profession by non-professional executives. Also the delegation of the purchasing function to the background of a mere clerical function, despite the fact that this function/profession is in charge of spending up to 65% of an organization’s fund.

The researcher had also during her one year industrial attachment witnessed the way purchasing functions were mishandled by non-professionals who claimed to know the job (purchasing). The student has equally encountered some questions which says that if an illiterate woman in the village can buy her wants successfully in the market, why studying purchasing and supply?

However, all this combined to motivate the researcher to compact a research on this topic “The use of non-professional buyers in the procurement of goods and services –problems and solutions”. This work will cover all aspect of purchasing as it affects this establishment PZ Plc. With particular reference to the personnel’s handling the purchasing in particular and the organization in general.

It will also help to make some suggestions towards the solutions to the problems.

However, the research work will be treated in five chapters.

Chapter one will discuss the introduction of the subject matter, the statement of problems, purpose for the research, the research questions, hypothesis, the significance of the study. The research will go further to explain the scope at which the work will go.

The literature review in chapter two will look into the past work of other authors and related areas on the topic.

Chapter three will treat method and procedures used in collecting information on topic while

Chapter four would discuss on the presentation and analysis.

Finally, chapter five will give the summary, conclusion and the recommendation of the research based on the outcome of this research work.


Table Of Content


Preliminary Page(s)

  • Title page
  • Approval page
  • Dedication
  • Acknowledgement
  • Abstract
  • Table of content

Chapter one

1.0 Introduction

  • 1.1 General overview
  • 1.2 Historical background
  • 1.3 Statement of problems
  • 1.4 Problems of the study
  • 1.5 Research questions
  • 1.6 Test of hypothesis
  • 1.7 Significance of the study
  • 1.8 Scope and delimitation of the study
  • 1.9 Limitations of the study
  • 1.10 Definition of term/abbreviations.

Chapter two

2.0 Review of Related Literature

  • 2.1 General overview of buyers in industries
  • 2.1.1 The informed professionals
  • 2.1.2 The uninformed generals
  • 2.2 The position of a buyer in the organizational/structure
  • 2.3 Role of buyer in an organization
  • 2.3.1 Management responsibility
  • 2.3.2 Buying responsibility
  • 2.3.3 Expediting responsibility
  • 2.3.4 Clerical responsibility
  • 2.4 Buyers contribution to profitability
  • 2.5 determination of right quality
  • 2.6 Determination of right quality
  • 2.7 Determination of right time
  • 2.8 Determination of right source of supply
  • 2.9 Determination of right price
  • 2.10 Problems for not using professional buyers in the procurement of goods and services.
  • 2.11 Solutions to eliminate such problems.
  • Summary of literature review

Chapter three

3.0 Research Methodology

  • 3.1 Introduction
  • 3.2 Research design
  • 3.3 Area of study
  • 3.4 Population of the study
  • 3.5 Sampling techniques
  • 3.5.1 Systematic sampling
  • 3.5.2 Random samples
  • 3.5.3 Stratified sampling
  • 3.6 Source of data
  • 3.6.1 Primary data
  • 3.6.2 Secondary data
  • 3.7 Validation of the instrument
  • 3.7.1 Face validity
  • 3.7.2 content validity
  • 3.8 Instrument for data collection
  • 3.8.1 Observation
  • 3.8.2 Interview
  • 3.8.3 the survey
  • 3.9 Data of analysis

Chapter four

4.0 Presentation and Analysis of Data

  • 4.1 Introduction
  • 4.2 Presentation of data
  • 4.3 Analysis of data
  • 4.4 Test of hypothesis
  • 4.5 Interpretation of result

Chapter five

5.0 Summary, Conclusion and Recommendation

  • 5.1 Introduction
  • 5.2 Summary
  • 5.3 Conclusion
  • 5.4 Recommendation
  • References
  • Appendix

Chapter One


1.0 Introduction

1.1 General Overview

Any organization whether private or public needs efficient management for its survival and success. Therefore efficient management is quite necessary more especially as technology is changing, change in taste and population, inflation abound. All these factors are increasing geometrically as against scarce resources.

For efficient management requires the co-ordination of all the functional units of any organization towards the realization of its goals, hence purchasing and supply is inclusive.

However, for you to have an efficient purchasing is on its part achieved when the buyer purchases the required quality and quantity of raw materials, supplies part tooling, equipment etc, at the right time, from the right source, to the right place, and at the right price. This can be achieved when the right person who must have passed through some steps in obtaining the required professional. This qualification can either be HND, NIPSM, CIPSM etc.

With this background on the purchasing profession, the person will know the importance of this noble discipline, the dignity of efficient buying. The ethical conduct of his profession must be in his finger tips. He must have a name to protect knowing fully well that non-performance of his duty will weigh down on him and his noble profession in general. A profession must be conversant with the dynamism of events both in his field and in his related fields. He must know or must have had the type of training required to meet the growing demand of his discipline.

However, this research will attempt to look into the “use of non-professional buyers in the procurement of goods and services, the problems and solutions”. It will make a comparative study on Paterson Zochonis Industry Plc. (PZ). The topic is in keeping with the civil service reformation decree of 1988, which stipulates that everybody must practice what he read.


1.2 Historical Background

Brief history of Paterson Zochonis Industry Plc. Paterson Zochonis Industry Plc. (PZ) is a manufacturing company with three (3) factories in Nigeria one is located at Umungasi Aba North in Abia State while the other two are both in Lagos State at Illupeju and Ikorodu respectively.

Two friends namely Peter a British man and Zochonis a Greek man established this company in 1884, it was incorporated in Nigeria on the 4th day of December 1948 under the name P.B. Nicholas and Company Ltd. Its name was changed to Alagbon Industry Limited in 1953 and to associated industry limited in 1960.

The company later became a public company in 1972 and was granted a listing on the Nigeria Stock Exchange. The name was changed to Paterson Zochonis industry Limited on 24th day of November 1976 and in compliance with the companies and allied matters act of 1990. It adopted its present name as Paterson and Zochonis industry Plc. On 22nd November 1990. On 25th day of June 2001, Paterson Zochonis Industry Plc. Groove properties Limited Ekopak Nigeria Plc were emerged.

The principal activities of the group are to manufacture and sale of a wide range of consumer products and home appliances which are leading brand names throughout the country in cosmetics, refrigeration, detergent, soap, freezers, air conditioner, plastic container, and components.

The company is made up of five (5) departments’ namely administrative department, quality control department, production department which constitute production processing unit and finishing unit. Lastly is the engineering department which comprises of engineering processing unit, engineering services, factory electrical unit and engineering finishing unit.

PZ has grown both financially and in staff strengthen. It has assets of over ten billion (10 billion) as its running capital. This company creates employment opportunities to Nigerians.


1.3 Statement Of Problems

The basic and critical problems of research are seldom the problem that appears on the surface. It is therefore necessary to probe beneath the surface, in order to find out the nature and gravity of the problems. This is vital and must be done correctly to guide the researcher on what aspect to channel his research work. Any mistake at the first step will lead to committing first degree error, that is, selecting wrong problem will result to subsequent mistakes and errors.

Among the problems are:

  1. A lot of private and public establishment are yet to recognize the relevance of this noble profession.
  2. Lack of strict adherence to purchasing rules and ethics.
  3. The problems of conflicting interest of chief executive and other functional units to purchasing practice; hence, culminating into what is descried as “Purchasing syndrome”.
  4. Non-existence of independence purchasing department to undertake purchasing function.
  5. Lack of trained and professional qualified purchasing personnels.
  6. Lack of recognition of the importance of efficient purchasing practice to profitability.
    Efforts will be made to establish these problems with a view to finding solutions to them in our present economic environment.

1.4 Purpose Of The Study

Having clearly stated the problems, the purpose of writing this research cannot be over emphasized. Therefore the objective of this research is to find out:

  1. The reason for the neglect of purchasing function.
  2. The problem this causes to purchasing profession and the organization in general.
  3. Through the review of the contribution of different authors on the subject matter, it will expose people’s view about purchasing profession.
  4. Establish the need for an independent purchasing department that will be headed by a purchasing expert.
  5. Help the student get exposed to the practical experience for the purpose of solving future purchasing problems.

1.5 Research Question

The study will center its findings on the following questions:

  1. Who is a buyer?
  2. What is the contribution of a buyer to the profitability of an organization?
  3. Why the neglect of this profession, though is the greatest user to organization’s find?
  4. Why the use of non-professional buyer in the procurement of goods and services?

1.6 Test Of Hypothesis

A hypothesis is a prepositional statement assuming some link or relationship (casual or otherwise) between two variables. The variable of the hypothesis used in any work must of course derive from the research topic or problem. A hypothesis seeks to establish a fact about the assumed relationship, but this is not possible until the hypothesis is tested and found to be either valid or otherwise.

  • Ho: Most companies do not give their purchasing department the authority they needed to procure.
    HI: Most companies give their purchasing department the authority they needed.
  • Ho: Many companies do not use professional buyers in the procurement of goods and services.
    HI: Many companies make use of professional buyers in the procurement of goods and services.
  • Ho: Most organization do not staff their purchasing department with personnel who are trained in purchasing management.
    HI: Most organization staffs their purchasing department with personnel who are trained in purchasing and supply management.

1.7 Significance Of The Study

The importance of this study is given credence In Rockly’s word (1983) which states that “in a profession such as purchasing and stores management much of expertise, the professionalism and the benefit of the function live in the quality of men doing the job”.

However, it is essential for principles, their applications and techniques which are devised from them to be written down and made available for all to consult and study.

In a nutshell, this study will help to expose the student who is preparing to enter into the field, the challenges he is likely to face and what will be his contribution.

It will go a long way to correcting the impression people have about purchasing profession. It will equally help PZ Plc to utilize the services of purchasing professionals so as to benefit from their contributions to profitability.


1.8 Scope And Delimitations Of The Study

This research topic centers on the use of non-professional buyers in the procurement of goods and services on manufacturing companies in Nigeria. It is a comparative study and it is hoped that information would be obtained from PZ industry Plc in Aba Abia State. Based on the findings, it will be possible to generalize the findings to other similar industries.


1.9 Limitations Of The Study

In carrying out this study, the researcher encountered some constraints that made it impossible for her to cover such areas one may expect to lay emphasis on. This is so because the researcher had some constraints as:

  1. Financial constraints
  2. The research was limited to be completed within a stipulated time and as such, he could not have enough time to touch all the areas one may think necessary.
  3. The research was unable to examine all the variable of purchasing and supply in the manufacturing industries, this limiting the study only in PZ Plc Aba Abia state.
  4. The profession being a new discipline, the research had problem of obtaining adequate literature to make references.
  5. The research sometime is faced with non-cooperating attitude of some staff at the place she collected her data.
  6. There were problems of bureaucracy.

1.10 Definition Of Terms/Abbreviations

Profession

Profession is used in this study as an occupational group which can only be entered by those who have qualified by a training which includes a high education and a special test administered by members of that group.

Uniformed Buyers

Those who are buyer by virtue of opportunity.

Purchasing Ethics

A moral conduct guiding a purchasing profession in which all members must abide by.

Procurement

The act of buying goods and services necessary for continued working of an organization.

Sourcing

The process of searching for a reliable supplier that can meet the requirement of the buyer.

Expediting

This is the process of following up an order to ensure on time delivery.

NIPSM

Nigeria institute of purchasing and supply management.

Purchasing And Buying

purchasers and buyers are used interchangeably.

Data

A pull of information necessary to carryout a research.

Informed Professionals

Those classes of buyers who are trained in field of purchasing and supply management.

Right Quantity

The amount that will satisfy a need in the most efficient and economic manner.

Right Quality

The degree or grade of excellence which is appropriate for a particular purpose.

I.P.S

Institute of purchasing and supply

Hypothesis

A statement that need to be tested

Inspection

Making sure that items coming into stores are in good condition

Organisation

It is the combination of people or individual effort, working together in pursuit of certain common purpose called organizational goals.

Right Price

The amount of money for which a thing is offered sold or bought.

Right Time

The time when an order is placed to obtain requirement at the most economic cost which is consistent with the quality specified.

Specification

Description of any object, material or process in sufficient detail to enable its manufacture and further identical reproduction.

Purchasing

Buying materials from the market.

Specialization

To become an expert in a particular area of work, study or business.

Contribution

An action or a service that helps to cause or increase something.

Problem

A thing that is difficult to deal with or understand.

Solution

A way of solving a problem or dealing with a difficult situation.

HND:

Higher National Diploma.


Chapter Five


5.0 Summary, Conclusion And Recommendation

5.1 Introduction

This chapter contains the summary, conclusions drew out from the research work and recommendations were made in such a way that they would be adapted to the organization PZ Plc Aba Abia state in order to improve the use of professional buyers in the procurement of goods and service.


5.2 Summary

The researcher has carefully and systematically surveyed, studies and analyzed the numerous variables standing as impediments towards the attainment of efficiency in purchasing by the use of non-professional buyers in the procurement of goods and services as it affects PZ Plc in Aba, Abia state.

As was mentioned in chapter one, the main objective of this study is to identify these variables with the view of making useful suggestions.

On this note, the researcher started this work by taking a general look at the nature of these variables highlighting the problems of not recognizing the importance of purchasing function. It is this problem that prompted procurement of goods and services.

However, the researcher tried to correct the impression that anybody can become a buyer irrespective of that person’s area of specialization and that purchasing department is where money is spent and not made.

As in chapter two, the researcher made a review of the work of different authorities in purchasing as the contribution of other authors. Comments and lectures.

In chapter three, attention was given specifically to the areas relevant to this study. Investigations into this work were conducted by the use of questionnaire, personnel interview and observation. The key idea raised is that adequate information is an important step for a successful survey of this nature.

The presentation of the data, analysed of findings, in chapter four was based in the information derived from those interviewed, observed and from questionnaires administered to respondents. It is an exposition of the purchasing method in Pz Plc that was used as a case study.

Finally in Chapter five, certain valid conclusion have been drawn based on the research findings and useful recommendations were made

It must be noted that business and technological advancement may not be effectively achieved without putting into adequate use of the results of our findings. Research recommendations should be put with practise so as to not make mocking of our efforts.


5.3 Conclusion

Based on the researcher’s findings, certain valid conclusion was drawn. They are as follows: –

  1. The purchasing function is not regarded as a business function and as such is not accorded the authority it requires to provide materials in Pz Plc.
  2. There is no independent purchasing department in Pz Plc. Aba.
  3. That the reason for the non-existence of an independent purchasing department is attributed to the non-challant attitude of the authorization towards purchasing and lack of appreciating the immense contribution of purchasing to profitability.
  4. There is non-professional buyer in Pz Plc.
  5. That since those buyers in the named establishment (PZ PLC) are not qualified in purchasing, they cannot confer with the complexities technicalities and challenges of modern business.
  6. That the research undertaken by the student has helped him a great deal in getting exposed to real practical experience in the field of research and in updating the data and information bothering on the problems and solutions arising from the use of non-professional buyers in manufacturing industries.

5.4 Recommendation

Having started this work from chapter one to this stage, it is of the opinion of the researcher that the following recommendation was made which was aimed at awakening, reversing the thought of people about the purchasing profession in Pz Plc. The recommendations are as follows: –

  1. That purchasing activities should be regarded as a major business function and an independent purchasing department should be erected to undertake all those purchasing activities.
  2. However, Pz industry in Aba Abia State must understand that purchasing activities are perfectly executed under an environment that is free from undue interference.
  3. Pz Plc in Abia should use trained and qualifies purchasing professional with at least HND certificate plus the professional Diploma of CIPS London or NIPSM in Nigeria to head the affairs of the department.
  4. For purchasing to function effectively, purchasing activities must be manned by specialist who can apply the techniques required.
  5. Adequate responsibility and corresponding authority should be given to the purchasing department and the purchasing managers as well. Pz Plc in Aba should understand that responsibility to purchasing is accomplished by authority to purchase.
  6. That Pz Plc should make purchasing executive a member of management board. This will enable him to participate actively in taking decisions that affect the generality of purchasing and the organization. This will enable them to reap the efficient contribution of purchasing to profitability.
  7. That there should be strict adherence to purchasing rules and ethics. Pz Plc in Aba should understand that strict adherence to purchasing rules and ethics will only be accomplished by a qualified professional.
  8. Finally, it is of the opinion of the researcher that there is a general awareness created of purchasing profession both in government and private establishment by top management.

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