Professional Sourcing For Materials A Key To Successful Purchasing Practice

Project and Seminar Material for Purchasing and Supply PS

Professional Sourcing For Materials A Key To Successful Purchasing Practice


Chapter One


1.0 Introduction

The selection of a vendor is the most crucial concern in the buying process and an acid test of good purchasing. The process includes the continuing surveillance of the relationship between the supplier and the buyer to maintain mutually satisfactory condition of co-operation and interest. Uzor 2004.

In selecting sources of supply, purchasing makes decisions that influence not only a firm’s economic success, but also the livelihood of the suppliers and the efficiency of the entire economy.

Sourcing is an important aspect of buying and buyers job would be effectively done when he deals with reliable supplier or suppliers. The first stage in sourcing is often conditioned by the experiences of the buyers with various suppliers. The primary responsibility of the buyer is to seek and maintain suitable source of supply in order to ensure he obtains the right quality of materials and at the right price.

The purchasing department of any organization should allocate enough time and effort in investigation and evaluating present and potential suppliers. They should embark on a continuous appraisal of the suitability and performance of the suppliers to ensure they always deliver sup0plierrs to ensure they always deliver suppliers according to specification. There exist numerous advantage in supporting suppliers known to the buyer, but commercial consideration like – right price, time, and delivery to the right place dictate that buyers should seek out as a matter of routing all available source of supply for the product range for which they are responsible.

Sourcing policies can and must vary. Business activity, market segment and size, geographical scale of the operation and scope of problem are factors to considered when sourcing. However, Sourcing involves a careful seeking and surveying of suppliers in terms of ensuring adherence to the buying company’s policy as regards the satisfaction of the objective of purchasing which is to purchase the right time, in the right quantity, form the right source, and at right price. In order to achieve the above objective, the buyerr must be erained in the technique and practice of purchasing sourcing should be the responsibility of the trained professional who strives to achieve better business terms for his organization.

This project therefore, attempt to examine how effective and efficient sourcing for materials and service can contribute immensely to the achievement which will ultimately contribute to the profitability of the buying organization thereby reducing waste cost and osslence.


1.1 Background Of The Study

A brief history of star paper mil limited it was founded by one industrialist chief Nnanna Kalu can ex – officer of the federal republic. The company set – up in the production of exercise book envelops, writing pads typing sheets that is to as production of stationeries.

By 1984 as the company was progressing another production line was opened and the factory also produces napkin issues ie the serviette. They product about three categories of the double wrapper, the blue wrapper and the red wrapper. Their vary as the analysis is based on the input of production progresses.

The structure is managed by the board of directors and the managing director through whom the staff are reached. The decision made by the board are channeled through the and of administration in the person of the human resources managers who is also the head of the department. The company operate a with sets of managers. The human resources manager. The chief accountant both at Aba and Owerri – Nta pules other clues of engineers and technical support team.

The purchasing unit is under the production department. The various units of the company have their own purchasing officers for transport, purchasing officer for production etc all report to the hear of unit overall boss. Many of their raw materials are sourced locally though selected number of contractors.

Another source of raw materials is the wages gathered from waste products from the production of tissue papers. They buy their raw material in bulk which is stored in the house to avoid operational risk an gor continuous production to satisfy their numerous customers.


1.2 Statement Of Problem

Problems are encountered in deciding where one can find the best information on suitable potential suppliers, how do we assess a supplier long – term stability and how buyers can cope with the hazards of purchase decision.
These problems can however be solved by employing trained and professionally qualified buyers to handle the important task of sourcing. Untrained and unqualified persons should not be allowed to encroach into the profession.

The problem of this study was therefore to generate empirical data capable of addressing inefficiencies, in competencies non standardization and other deficiencies associated to purchasing function, mainly in the area of sourcing and source accreditation.


1.3 Purpose Of The Study

It should be noted that sourcing being an important and integral part of purchasing and supply function should always be implemented while bearing in mind that if we do not source efficiently for suppliers of the lowest price in the right time quality of materials at the right time, in the quantity an from source, it will affect should be complete avoidance of award of contracts untrustworthy and incompetence people who would divert funds to their private purses. An example of this was the problem encountered in most organization were public officers were public officers who had managed to be placed in a position of trust, diverted millions of naira into their pockets.

There were so many cases of misappropriation of funds for essential commodities especially into their pockets. When they actual decided to buy commodities, it was done with much inexperience and carelessness.
Source for materials and service should be left in the hands of professionals who would procure materials in accuracy with the ethics and practice of the professional.

  1. To stress the importance of permitting only qualified and inform personnel to be involved in performing the function.
  2. To stress the importance of permitting only qualified and inform personnel to be involved in performing the function.
  3. To indicate the relivance of the sourcing function in purchasing there by revealing what is required and the quality of personnel who should be involved.

1.4 Significance Of The Study

  1. This study will expose to researcher on the need for effective and efficient sourcing which is a vital key to achieving success – purchasing function. It will help or assist the buyer in obtaining the right quality of materials at the right time in the right quality at the right price and from the right source.
  2. Without this study it will difficult to examine how effective and efficient sourcing of material and service and contribute to the achievement of a more successful purchasing function which will ultimately contribute to the profit ability of the buying organization thereby reducing waste, cost and obsolesce.

1.5 Scope Of The Study

This work covers the methods employed by many organization in seeking, surveying and evaluating performance of suppliers in Nigeria, it is due to the wide and area of population, the researcher limited the study mainly to star paper mill Aba other organization covered are airline Nigerian limited, Aba AKARAKA industries limited mbaise, and Dunhill industry limited mbaise, for easy of comparison and collection


1.6 Research Questions

  1. Is efficient purchasing an important feature in contributing to your organization profitability?
  2. What method do you employ in obtaining your component
  3. Are your purchasing officers professionally qualified ie academically or did they acquire their experiences on the job practice
  4. Is purchasing in charge of order placing and execution
  5. Does cordial relationship exist between the purchasing department and other departments in the organization in terms of materials requirement

1.7 Hypothesis

Considering the objectives, limitations of this study and the problems, the null and working hypothesis has been set by the researcher to verify the accuracy of the data collection during the course of the research work.

In carrying ou the research, the research eer to verify the accuracy of the data collection during the course of the research work.

In carrying out a the research, the researcher will use both Null (Ho) and alternative (Ha) hypothesis to find out whether the effective and efficient sourcing a key to achieving successful purchasing function has an effect on the organization

  1. HA; efficient purchasing contribution to the organization in profitability.
    Ho; efficient purchasing does not contribute to the organization profitability.
  2. HA; cordial relationship exist between purchasing department and other department in organization in terms of materials requirements.
    Ho cordial relationship does not exist between the purchasing department and other department in the organization in terms of materials requirement

1.8 Limitations Of The Study

The researcher was constrained largely by the amount of available data it was difficult to locate relevant materials to take this work so that researcher had to run round other many libraries to make profit. Finally there was difficulty in convincing respondents to accept to all the questionnaires but later they complied then financial and time constraints which the researcher later overcomes


1.9 Definition Of Terms

The following terms as used in the context of this project are hereby defined for better understanding of this research.

Purchasing;

Define as the function of management responsible for obtaining by purchase. Lease or other material supplies and services required by an undertaking for use in production (ie creating utility) uzor 2004.

Sourcing;

Means finding suppliers who are willing and able to provider consist ently quality, service (ie delivery and price) (UZOR 2004)

Right Quality;

This represent the degree or grade of excellence which is appropriate for a particular purpose (O.k oyeoku and R.E.j.nwanneka 2001)

Right Quantity;

This is refer to as the overall quantities used in a given period or the availability of the items in relation to the needs.

Right Time;

This is the time covering when an order is placed to obtain requirements at the most economic cost or the time at which the ordered requirements are to be delivered.

Expedition;

This means to speed up delivery of foods purchased (according to BEN O NEKE) (COLLINS).

Specification;

The description of any objective material or process in sufficient detail of enables its manufacturer and further identical reproduction.

Lead – Time;

This is the time lay between when order is placed and when the supplier makes the actual delivery of the ordered item.


Professional Sourcing For Materials A Key To Successful Purchasing Practice


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