Purchasing Procedure In A Manufacturing Company (A Case Study Of Rokana Industry Nekede, Owerri)

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Purchasing Procedure In A Manufacturing Company (A Case Study Of Rokana Industry Nekede, Owerri)


Abstract


This study examined Purchasing Procedure in a Manufacturing company. The case study for this work is Rokana Industries Plc Nekede, Owerri many firms today are having difficulties in the acquisition of quality’s materials that would meet organizational requirement.

This work was intended to help this organization understand the importance of purchasing by using or adhering to the purchasing procedures outlined here.

The chapter one of this work discusses about the historical background of the firm, brief introduction of the purchasing function, problems envisaged and likely solutions proffered in terms of objectives.

Chapter two is a synthesis of related literature on purchasing procedures.

Chapter three is all about data presentation and analysis of data collection through questionnaires distributed, the analysis was based on the responses from summarized the entire work, made recommendation and concluded the work.


Table Of Contents


Preliminary Page(s)

  • Title
  • Approval
  • Dedication
  • Acknowledgement
  • Table of Content

Chapter one

1.0 Introduction

  • 1.1 General Overview of the Study
  • 1.2 Statement of Problems
  • 1.3 Objectives of the Study
  • 1.4 Scope of the Study
  • 1.5 Research Question
  • 1.6 Significance of the Study
  • 1.7 Limitation of the Study
  • 1.8 Definition of the Terms

Chapter Two

2.0 Literature Review

  • 2.1 Introduction
  • 2.2 Review of Purchasing Activities
  • 2.3 Organization of the Purchasing Function
  • 2.4 Purchasing Policies
  • 2.5 Documents used in the Purchasing department
  • 2.6 Classes of Material Purchase in the Organization
  • 2.7 Origin of Needs Transmission and Authority for Material Purchase within the Organization
  • 2.8 Negotiation of Purchase Order Terms and Approval
  • 2.9 Profit Potential of the Purchasing

Chapter Three

3.0 Research Methodology

  • 3.1 Introduction
  • 3.2 Presentation and Analysis of Data
  • 3.3 Data Presentation

Chapter Four

4.0 Summary Conclusion and Recommendation

  • 4.1 Summary
  • 4.2 Conclusion
  • 4.3 Recommendations
  • Bibliography

Chapter One


1.0 Introduction

1.1 General Overview Of The Study

In some organization the Procedure to Purchase a particular item is based on the value and importance of the item. The purchasing department of any organization buys the flowing categories of organization materials capital equipment, raw materials, components indirect material (supplies) and industrial services.

The process involved in the procedure for the purchase of capital items is more complex than that of raw materials and operating supplies this is as result of huge sum of money tied to these equipment though much emphasis would be laid on the other chapters procurement of organizational material which is the responsibility of organization to which it exist under performs also the following function.

  1. Coordination with the user department to identify purchase needs.
  2. Discussion with sales representatives.
  3. Negotiation with potential suppliers.
  4. Issuance of purchase order.
  5. Conducting market survey to identify potential suppliers and products.
  6. Selection of purchase suppliers etc and others.

These among others include the functions performed by the purchasing department although many are ignorant of the course as a professional carrier which originates back to the early 1900s.

Brief History Of Rokana Industries

Rokana Industries plc was incorporated in September 1978 as a private limited liability company with the objectives of manufacturing materials, house hold products and key personal hygiene products for the health care market.

The company with the objectives maintains its head office at 4 Ayayi street, off 52 Allen Avenue, next door to Lagos Hilton hotel, Ikeja, Lagos while its factory is located at the vast acre of land at Nuked at plot 5 mission road Umualum Nekede out skirt of Owerri, Imo State the industry has four separate existing manufacturing plants completed with quality control facilities the factory accommodates the company’s raw materials and finished products warehouses utility service and plants humidified petroleum gas tank farm and factory administration offices.

The industry is responsible for the manufacturing of the following products Jordan tooth brush Rokana dry air-freshner number insecticide sparkle furniture and dry skin lotion Rokana Dental stick and plague remove sparkle took paste etc.

The company endeavors to maintain high competitive remuneration packages for its staff as evidence by the low incidence of industrial strike, low rate of staff turnover and high degree of loyalty and dedication within the organization. The company provides effective training scheme for its staff and there is a good relationship among workers and the company sponsors many social charitable and developmental programmers in all parts of the country.


1.2 Statement Of Problems

In today’s business environment, it is very amazing that everybody wants to be involved in the buying activities. It is also a thing of fact that any shout coming in the of inferior products, machine idle hour and other act that will of jeopardize the success of the firm and will be attributed to the purchasing ministering against the success of the purchasing procedure in the industry.

  1. No formal list specifying the appropriate procedures for the purchasing of materials in order to reduce the time spent during the process of procurement and to avoid writing requisition that would lead to irresponsible purchase request.
  2. Those who are responsible for the authorization procedure are not conscious of the quality rather they want to offer a supplier with the lowest price.
  3. Staffs that do not have knowledge about purchasing are involved in the approval stage of material purchase.

1.3 Objectives Of The Study

General the purchasing department is known to be established for the procurement of goods and services of the right quality in the right time and at the right price. But for the purpose of this research the objectives which the researcher has in mind includes the following.

  1. The purchasing department being the head in the approval process so that effective buying is enhanced should carry out purchasing of material.
  2. Quality should be first criteria when it comes to approval of material to be purchased and appropriate procedure should be followed to avoid buying from the wrong source.
  3. Those responsible for handing the purchase procedures should be reduced to avoid more compactions and time.

1.3 Scope Of The Study

The topic of this study is purchasing procedure in a manufacturing company, a case study of Rokana Industries Plc, Nekede Owerri. This study of Rokana Industries Plc, Nekede Owerri, and this study includes purchasing procedures for the purchase of material for organizations but for the sake of time, it is restricted to Rokana Industries Plc, Nekede Owerri. The result obtained will be used to generalize for other industries in the same industry.


1.4 Research Question

The researchers formulated the following questions to help guild the objective that will help in the execution of this work.

  1. Is there a laid down procedure for the acquisition of materials?
  2. Are there materials used in the organization that beyond the control of the purchasing department?
  3. Is there a quality control department in the organization that checks the quality of products supplied?
  4. Who approves the local purchase order for the organization?
  5. Who is responsible for purchase producers in the organization?

1.5 Significance Of The Study

The significance of this study does not lie on the premise that on previous study has been carried out on the purchasing procedures as practiced by Rokana Industries Plc and other companies, but that the researcher to ensure that the research is of immense help to the researching student corporate bonier during the course of staff training and to the Nigeria economy as a whole.


1.6 Limitation Of The Study

The successful completion of his work posed some limitation in the following areas.

Location And Access To The Firm:

Location the firm was not all that difficult because the firm was close to the area of research, but the access to the firm was a big challenge to the access on various occasions to go inside the firms premises for proper researching.

Finance And Time:

Finance was the major determinant of the success of this work because without it, it would not have been possible for visiting the firm during the period of the research work the economy of the nation was bad the time was another determinant as several postponement was made just to ensure that things are in their place.


1.7 Definition Of The Terms

Procurement:

This is an interment purchasing activities where goods information and price are go them through the use of interment system.

Sourcing:

This is the process of identifying suitable sources of supply it is the method of searching the market place for potential suppliers who can meet the needs of the organization.

Negotiation:

This is process of planning reviewing and analyzing by a buyer and seller to reach an acceptable agreement.

Specification:

This is a process of planning and detailed description of what is wanted. It is the process of describing an item or object to enable its manufacture and further identical reproduction.


Chapter Four


4.0 Summary Conclusion And Recommendation

This chapter is intended to give an overview of the entire research work make conclusion recommendation and also postulates ideas for studies by positive prospective researcher.


4.1 Summary

Purchasing procedure in a manufacturing company was examined in this work, while it is evident to say the importance of good purchasing lies in the fact that material item constitutes over 50% of the total product cost, therefore care must be taken to ensure that well outlined purchase procedure are adhered to in the previous chapter, efforts were to review a mass of literature relating to the subject matter. Data gathered was also presented and analyzed. In this chapter, the researchers will put to light the main finding of this researcher work. A conclusion will be drawn to round off the entire work whether the subject matter is open for interested researcher and possible recommendation proffered.


4.2 Conclusion

The researcher carefully examined the purchasing procedure in a manufacturing company has been practiced in Rokana Industries Plc Nekede Owerri and observed from the test of hypothesis that the likelihood for fraud and mismanagement is reduced when materials go though outlined purchase procedure to ensure that value for money spent is gotten for every naira spent in the organization.


4.3 Recommendations

In making this recommendation, the researcher is guided by the response gotten from the questionnaires distributed and personal observation made. The following recommendation is as follows.

  1. That the firm should formulate a purchasing policy to guide the activities of staff to ensure they conform to the laid down purchase procedures during the course of purchasing and to ensure that disciplinary measures are taken.
  2. That the firm should use negotiation as a tool for price because it proves to be the best method of obtaining a fair and reasonable price.
  3. The firm should not only rely on oversea sourcing they should also use indigenous suppliers provided they can meet up to quality requirements.
  4. That all organization buying policy should be tailored to the.
  5. The organization should make a list of those responsible for purchasing approval.

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