The Role And Contribution Of Purchasing And Supply In The Profitability Of An Organization (A Case Study Of Nigeria Bottling Company Plc, Owerri.)

Project and Seminar Material for Purchasing and Supply (PS)

The Role And Contribution Of Purchasing And Supply In The Profitability Of An Organization (A Case Study Of Nigeria Bottling Company Plc, Owerri.)


For my organization continuous existence and complete favourably with it’s counter parts in the same industry its workers must be given sufficient training technically and otherwise to be able manipulates the machinery and policies at their disposal. One major reason for the tremendous emphasis place on, the role of contribution to the purchasing and supply management profitability of the organization from current realization that human resources available to any organization constitutates its life and therefore the need for development in order to attain efficient performance standards its is of primary important, to management of any kind of organization or industrial the management of human resources, of which training is the core is particularly important activities in companies.

There are so far two major reasons, first, companies in Nigeria is a labour intensive industrial the use of advance technology like the computer has not even changed it characteristic of industrial in the development economy such us Britain and Japour were great strides have been taken in the employment of Advance. Technology to improve company management. for instance, the role of purchasing agencies and institutions such as centre for management development, Nigerian institute for management in industrial training for development of 70s in this country.

Table Of Content

Preliminary Page(s)

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

Chapter One

1.0 Introduction

  • 1.1 Background of study
  • 1.2 Statement of problem
  • 1.3 Objective of the study
  • 1.4 Research Questions
  • 1.5 Scope of study
  • 1.6 Significance of the study
  • 1.7 Limitation of the study
  • 1.8 Definition of terms

Chapter Two

2.0 Literature Review

  • 2.1 Roles of purchasing
  • 2.2 Purchasing function
  • 2.3 Importance of purchasing
  • 2.4 profitability contribution of purchasing
  • 2.5 The need for purchasing
  • 2.6 The effects of purchasing function
  • 2.7 The place of purchasing in an organization
  • 2.8 Duties and responsibilities of purchasing
  • 2.9 Ethics in purchasing
  • 2.10 Purchasing objective
  • 2.11 Management reason for the study
  • 2.12 Summary of related literatures

Chapter Three

3.0 Research Design and Methodology

  • 3.1 Research design
  • 3.2 Sources / methods of data collection
  • 3.3 Population and sample size
  • 3.4 Sample techniques
  • 3.5 Validity and Reliability of Measuring Instrument
  • 3.6 Method of Data Analysis

Chapter Four

4.0 Presentation and Analysis of Data

  • 4.1 Presentation of Data
  • 4.2 Analysis of Data

Chapter Five

5.0 Summary, Conclusion and Recommendations

  • 5.1 Summary of findings
  • 5.2 Conclusion
  • 5.3 Recommendations
  • References
  • Appendix

Chapter One

1.0 Introduction

In the recent part, emphases was only on the balance sheet report without cognizance of other factors that made up the inflow and outflow of resource that sustain the mechanism of a given firm. with recent emphases on cost control in the face of the rising cost of input resources and subsequent spill over of high cost of purchasing and supply management in a manufacturing company.

After the civil war, the attendant from in production resulting from the growth of private sector enterprises from Europe and America began to awaken other management inputs for eventual profit. The reason is based on the sophisticated resources part in by these multinationals into the mechanism of our business sector.

It is imperative to note that the concept of purchasing has been broadened since the turn of the country, to include all those business activities relevant to the securing of materials suppliers and equipment as well as service needed by business and industries.

As at date, the cost of materials and supplies for industrial and non-industrial purposes accounts for a large proportion of the cost of these manufacturing company. In most of them, this represents over 65% of their total expenditure (Oyeoku O.K. 1993). Therefore, purchasing is referred to as department which is concerned with the process of defining the manufacturing company’s needs selecting suppliers, agreeing terms placing orders receiving goods and function which is oriented to purchasing complete supply function which is user within the manufacturing company (R.E.J. Nwanneka).

English Oxford Advanced Learners Dictionary of current English, third edition, simply defined the world purchasing as just buying. We will however, take purchasing mission to be selection of materials or services agreement of prices and acquisition items. A well organized purchasing is one of the criteria for a company to minimize cost at the same time increases profit. The impact of purchasing and supply management towards ensuring repaid growth in a manufacturing company’s cannot be over emphasized.

It has been sampled and proved that, a layman in the field of purchasing easily views purchasing function as obtaining requisitions negotiating and placing order without the knowledge that purchasing goes beyond this areas of activities.

For a company to succeed or to achieve its desired objectives, it means that those required manning the materials section of the manufacturing company should be highly trained and knowledge in the field of purchasing. And other materials related functions, in order to harness effectives and efficient profitability to their manufacturing company. In view of numerous challenges of the profession requires a caber of persons that can exercise prudence and sound judgment for any naira spent at ay given point in time, in order to minimize cost and increase profit.

Sincerely speaking, these cannot be achieved of the buyer is not a professional buyer that should adhere, strictly to the ethics of the purchasing profession and techniques of purchasing practice. Quite unlike untrained buyer, a trance and professional purchasing executives is aware that he is bound by the ethics of the purchasing profession.

Therefore, his first and primary obligation is integrity in spending his company’s fund, showing professional competence in representing his manufacturing company outside etc. it is in line with this that the researcher tends to study the roles and cusing Nigeria Breweries company plc.

1.1 Background Of The Study

Nigeria Bottling Company Plc,

Nigeria bottling company plc was originated as a soda function beverage in 1886 selling for five least. Early growth was impressive, but it was only when a strong bottling system that coca-cola become the world-famous brand it is today.

1884 – A modest start for a bold idea. Since the emergence of this organization, it has snifter to the market and consumers different types of soda fountain beverages.

The number of soda fountain beverages sent to our market by this bottling company plc, in doubt has made tremendous impact on the reduction of the micro economic variables problems in this country through generating to our economy, creation of job opportunities etc the management of Nigeria bottling company plc is a public liability company.

1.2 Statement Of Problem

Business conditions during the recent past placed much strain and pressure on the purchasing management function and roles. Critical materials shortages, worldwide inflation and arbitrary action of government seriously interfered with the orderly operation of business.

Materialism is the source of out present day Nigeria society and people who are responsible for purchasing function in Nigeria bottling company plc Aba, and other good (public) companies however, purchasing management and its allied subject are the newest course read full-time in some higher institution of higher learning, and more than seventy percent of firms in Nigeria are yet to embrace this in its most meaningful and realistic dimensions.

Much corporate management has been made painfully aware of the shortcomings of the operation of their firms’ materials management function. Indeed, it is among the best of the specialized business functions, to be centralized and given the responsibility and authority for making profit progress in this area of business management is thus just beginning. The development of purchasing role and function in the (public sector) Nigeria bottling company plc Aba has been badly affected by the “buying syndrome”.

1.3 Objective Of The Study

This study is carried out with the following objective

  1. To examine the various, role of contribution of purchasing and supply on the profitability of an organization available and evaluate their application.
  2. To make critical study of problem in the services offered by the firm and suggest solutions to these problem.
  3. To formulate the role of purchasing strategies that would be.

1.4 Research Questions

  1. Does purchasing have any role to play in the manufacturing company?
  2. Is purchasing contributing to the profit in the manufacturing company.
  3. Is purchasing recognized in this manufacturing company?
  4. Is the purchasing manager solely responsible for buying materials and other items for your manufacturing company?
  5. Is the purchasing manage professional qualified in such areas the purchasing and supply management or is he/ she just qualified through job experience.

1.5 Significance Of The Study

This study intends to the beneficial to three main categories of people that is. To the manufacturing company, the student and researcher.

To The Manufacturing Company

The findings of this study will acquaint it and shall also discover through this study a competent and well trained professional who can effectively manage and handle the taste of buying or purchasing in the most economic manner hereby increasing the profitability and growth of the manufacturing company and reducing waste.

To The Student

The findings of this study will enable the student to appreciate the course the more, it will also make them to be more economical, wherever they are to purchase materials, they must purchase materials in high quality, but at a lowest cost.

To The Researcher

The findings of this study will help the researcher the more, the advantages, impact of purchasing and supply management in a manufacturing company. To know or to indentify problems area in purchasing and supply function and develop strategies to solve item. The data gotten can be used for reference purposes.

1.6 Scope Of The Study

  1. The study is the role and contributions of purchasing and supply in the profitability of a manufacturing company .
  2. The study was limited to the Nigerian Bottling Company due to time and other resources constraints the staffers to the company whose works relate to this topic were interviewed.

1.7 Limitation Of The Study

The researcher in the course of carrying out his research work has contended some factors that limited in one way or the other against the zeal posed, they include the following.


The research being a full time student at the time of making this research found it difficult to make ends needs with the little savings he made while working.


The researcher being a student and has a lot of academic work to pursue and some other things, has time constraint, instead of examine all the variables in purchasing n most of the notable industries, limits his study to only Nigeria Brewery plc.

Non- Response:

Most people interviewed were ignorant of what is called research, so they failed to give elaborate information about their manufacturing company despite the fact that the researcher told them that all information given would be confidential. Again, I found it very difficult to find good books relating to purchasing in the Federal Polytechnic Library, so I had to run round to many places for data collection of this

1.7 Limitation Of The Study

In carried this research, the research was cooperated with a number of limitations. Due to finance and time constraints, the research was unable to examine all the variable in purchasing in all the leading. Public and private companies, limitation his study to a few public enterprise themselves incomplete.

1.8 Definition Of Terms


Is the process involving planning, and strategy designed to obtain value for money spent.


This focuses on the knowledge of selling and buying the person that supplies goods to the buyer is the vendor.


Negotiation is a conference between one party or person with another party or person with a view to arriving at a consensus.

Material Handling:

This is the process by which materials are being moved, handed and stored with in and around an establishment with the use of hand or mechanical equipment.


An organization is a group of people who from a business with the aim of making profit or achieving an objective.

Store House:

A storehouse is a building designing to keep materials until when there are needed by the uses


Is a person who keep or operation the systematic procedure of recording transaction in the storehouse so that materials held in store will be safeguarded.


Storekeeping is a systematic procedure of recording transaction in the store, so that at any given time, the stock record we show the actual stock position of each material held within the store organization.

Chapter Five

Summary, Conclusion And Recommendation

This chapter has described by most research as the most intellectually demanding part. In view of the great challenges posed by this section of the research, the research has in consequence exercised a considerate care in drawing his recommendation and summarizing the project as follows.

5.1 Summary

The research has carefully and systematically studied and analyzed the numerous variable standing a impediments in the public and private sectors and particular in Nigerian bottling company PLC Aba.

As stated in chapter one, the main objective, of this study is to identify these variable with a view to making useful suggestion. On this strength, the research started this work by taking a general look at the nature of these variable highlighting the problems the prime or which is the purchasing function. It is the impediment to the realization of this public and private sectors that anybody can be a purchase irrespective of his area of specialization and that purchasing department is where money is spent and not made. The review of literature showed what deferent authority in purchasing had said about it is as well as the contribution of other authors, commentators and lectures. Attention is specifically given to the areas relevant to this study.

Investigation into this work were conducted by the used of questionnaires personal interview and to some extent desk research. This is what chapter three is all about, and the key idea raised is that adequate information is an important seep for a successful survey of this nature. The presentation in chapter four finding of the presentation and data analysis of the findings are based largely on the information supplied by those interviewed as well as on personal observation precisely it is an exposition of the Nigerian Bottling company PLC, Aba purchasing method. Finally, certain valid conclusion has been based on the research findings and useful recommendation made. It must be noted that business and puting into adequate use, the result of our various findings research recommendation should be put into practice so as not a make a mockery of our efforts.

5.2 Conclusion

Based on the researcher’s finding certain valid conclusion can be draw at this point, that there is purchasing department in Nigeria bottling company does not carry out the executive purchasing function supposed of a purchasing department.

However the reason for the existence of a ceremonial purchasing department is attributable to the non-challent attitude of the authority toward purchasing and lack of the appreciation of the immense role and contributions that efficient purchasing can make to profitability.

Also it is researcher’s opinion that the purchasing function business function and as such it is not accorded the kind of recognition that it desired in the Nigerian bottling company PLC Aba.

Moreover there is no single trained, and professionally qualified purchasing (person in Nigerian bottling company PLC Aba. The procurement and production service committee (PPC) and the AGM Technical and procurement services) handled the overall decision to buy, and are the chief purchasers for the company.

Conclusion is hereby drawn that acquisition of materials and equipment in many public and private organization and in the Nigerian bottling company PLC Aba, particularly, account for more than 50% {fifty percent} of the total expenditure of the company. That the current purchasers in the Nigerian bottling company PLC Aba, are not professionally equipment and as much cannot counted with the complexities, technicalities, and challenges of modern business.

Finally it is hereby concluded that when people put a brake on improvement in purchasing they put a break on profitability. Also that the research undertake by the researcher has helped him a great deal in getting exposed to real practical experience in field research and in up dating the data and information bothering on.

5.3 Recommendation

After critically surveying the activities, problems and shortcomings of purchasing in Nigeria bottling company PLC, Aba, the research made the following recommendation aimed at awaking revamping, reversing and improving the efficiency of purchasing in Nigerian bottling company PLC Aba.

  1. The purchasing activities in the bottling company PLC Aba, be regarded as a major business function, and that a fully independent purchasing department be created to undertake all the purchasing function and activities in the organization.
  2. A trained and professionally qualified purchasing personnel should be employed to man the purchasing department. For a purchasing department to carry out its activities effectively, it must be equipped with purchasing specialists who act only have good judgments, but practical purchasing knowledge.
  3. Adequate responsibility and corresponding authority should be given to the purchasing department so established and only the appropriate skilled but professionally qualified, purchasing personnel.
  4. The purchasing executive should be made a member of the (PPC) production and procurement committee which will affort him the opportunity to participate in taking decision as to which is to be produced, the quality of raw materials to be used etc. By his knowledge and wealth of experience be will be in a better position to advice the committee on materials availability, substitute materials and lead times.
  5. The purchasing department should constantly engage in purchasing research. this is very important for any company that wishes to complexities of modern business practice
  6. Purchasing department should be given the right to challenge the specification and quality requirement on all requisition receive in the purchasing department.
  7. All requisition should be forwarded to the purchasing department from there it is for should go the procurement and production or items
  8. To meet the demand of modern business, the company should consider the possibility of acquiring an automatic data recording device such as the computer for processing and storing of the supply market information,
  9. Because of his training knowledge, experience and skill, the purchasing executive should head the company’s negotiation team in an contract negotiation.
  10. The company should take adequate care in selecting its suppliers performance rating and informal souring techniques should also be put into use or practice all times.
  11. To secure better price for items brought, the purchasing department should be encouraged to use other method of price determination such as for example, trade journals requesting bids and soliciting questions,
  12. Whereas there exists at times resource gap in the inflow of raw materials, the company is guild through the purchasing department to employ any of the following for distinctive methods of closing the material requirement gap. The methods are as stated bellow
    • The use of substitute or alternative material
    • The development of now sources of supply
    • The cutting down of the production target, and
    • The development of the existing sources of supply.

Finally the research is aware that all the recommendation and /or factors necessary to solve the problem of conscious neglect of purchasing in an industry have not been fully exhausted. Yet it is his candid opinion that if the few recommendation and observation discussion have are considered and put into effect, most, if not all problem of acquisition of materials, organization and methods of purchasing function or practice, in the Nigerian botting company plc Aba, will have been solved

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