Role Of Sourcing In The Achievement Of The Profit Objective Of Organization

Role Of Sourcing In The Achievement Of The Profit Objective Of Organization
Abstract
This project work is centered on role of souring in the achievement of profit objective of organization with a case study of Nigeria bottling company plc Kaduna. It begins with the first chapter which dealt with the background of the study, given a brief introduction about the subject matter under study. Statement of problem which is the reason why the research undertook the study to identify such problems and come up with recommendation which will be beneficial to the organization and the entire society.
Research question is drawn up which is in line with the objective of the research work to be opened up to get variables for questionnaires to be administered. Chapter two deals with the review of previous work carried by other authors on a similar topic. Chapter three deals with the research methodology with research design. The study have a sample size of 25 which is 12% of the population of 200 drawn from the material related unit and the sample size selected randomly and questionnaire were administered to them for their response.
The findings of the study shows that profit maximization can only be achieved where organizational is able to meet their customers demand satisfactory. Thus, it was concluded that sourcing in Nigeria bottling company plc is treated with very importance. Therefore recommendation was made that give appropriate attention to sourcing activities in the organization. This will ensure that the supplier provide standard material to the organization through adequate sourcing.
Chapter One
Introduction
1.1 Background of the Study
The most important thing in the hierarchy of all organizations objectives is profit maximization, and this can only be achieved where organization is able, to meet their customers demand satisfactorily as at when due and for this objective to be met there must be a right source of supply that is, if the correct source decision is made in a particular instance, then the buying company’s need would be met perfectly. In such circumstances it would received the required goods or services at all times. Sourcing thus involves much more than simply picking a supplier or contractor for each requirement in isolation. It involves continuing relationships, both with preferred sources which are actually supplying goods and services, and with potential sources which may have been passed over for the present but are still in the running. It involves decisions about how to do business on. For its proper performance sourcing requires supply market research.
This is a normal part of procurement and supply work, undertaken informally by buyers when they talk to representatives, visit exhibitions read trade journals and investigate the market before placing orders. In addition, it is the primary responsibility of purchasing to find out suitable sources of supply and ensure that the right quality and quantity of material is obtained at the right prices, and also spending time and effort in investigating and evaluating prospective supplies and continuously appraising the performance of current suppliers. In such a manner that there will be regular inflow of materials supply to avoid stoppage in production and its attendant costs and for the organization to be able to maximize its customer requirement in order to achieve its profit objective.
1.2 Statement of the Problem
Apparently in many organizations, it is clear to observed the effect of poor sourcing procedure in the award of contracts to the supplier who are not financially and technical capable of meeting the demand or the need of organization. This is often base on irrational decisions of many purchaser, as such the organization always suffer set backs in achieving their profit objective.
Most other problems associated with sourcing ranges from high price of materials, late deliveries, supply of substandard products, mostly traced to inappropriate sourcing decisions.
1.3 Objective of the Study
The objective of this study is to assess role of sourcing in the achievement of the profit objective of organization of Nigeria bottling company Kaduna plant.
Specifically the study is set out to
- To identify the sourcing policy employed by the organization in the procurement of materials need.
- To identify criteria for source selection.
- To identify the criteria used by the organization in rating their suppliers
- To identify the type of buyer and suppliers relationship.
1.4 Significance of the Study
The research study focuses on role of sourcing in the achievement of the profit objective of organization of Nigeria bottling company PLC Kaduna, therefore the research study will be of benefit to the organization, the executives, the students and other researcher in this field also the research study will be of benefit to the entire Popolance
To the organizations the study will explain in detail what sourcing is all about, it important and benefit they stand to derive if, they give sourcing the necessary any attention required, and also why should be proactively a proactively in the organization thus the study will broaden their knowledge of understanding sourcing.
To the executives the research work will bring to their lime light the various sourcing methods available which they can use when sourcing for supplier in their organization, also the type of relationship needed to be used to foster good relationship with their supplier in order to guarantee timely delivery of material at the right time, price and at the right place.
To the student the study will serve as a study materials and a reference book as well thereby adding valve to the knowledge and to the researcher in this field the study can be use as a guide and a stepping stone for further research.
To the student the research study will help to broaden perspective in what sourcing is all about, is also a requirement for partial fulfillment for the award of higher national diploma in purchasing and supply department Kaduna polytechnic.
1.5 Scope of the Study
The study will be restricted to Nigeria bottling company Kaduna plant. The study will address the sourcing policies and procedures of the organization being studied. The work will also look at the nature of relationship existing between the organization and its suppliers as well as supplier rating or evaluation.
1.6 Research Questions
This study will attempt to provide answer to the research questions below.
- What are the sourcing policies employed by the organization for the procurement of their materials?
- What are the criteria used for source selection?
- What are the criteria used by the organization for rating their supplier?
- What type of relationship exist between the buying organization and their suppliers?
1.7 Definition of Terms
Sourcing:
As the process of identifying, selecting and developing suppliers is a key purchasing activity.
Out Sourcing:
May be defined as a management strategy by which major non-core functions are transferred to specialist efficient, external providers.
Partnering:
Is generic and refer to arrange of collaborative relationships.
Intra-Company Trading:
Applies to large enterprises and conglomerates where the possibility arises of buying certain materials from a member of the group.
Subcontracting:
Involves the total restructuring of an enterprises around core competences and outside relationship.
Tactical and Operational Sourcing:
Is concerned with low risk, non, critical items.
Reciprocity:
Often referred to as selling through the order book is a policy of giving preference to suppliers that are also customers of the buying organization.
Single Sourcing:
Describes a situation where the buyers places all order with one single supplier.
Dual or Multiple Sourcing:
Is a situation where the buyer shares the order among two or more supplier especially where the order is large.
Categorical Plan: the method relies heavily on the experiences and ability of the buyer and the personnel of other departments.
International Sourcing:
It means buying beyond national boarders of the buyer or importers country.
Chapter Five
Summary, Discussion, Conclusion and Recommendation
This chapter summarized the entire work to bring out the findings arrive at a conclusion and make a feasible recommendations to the organization. It is the summary of the research study and centered round the following matters.
5.1 Summary of Procedures
The title of this research work is role of souring in the achievement of the profit objective of organization. A case study of Nigeria bottling company plc, Kaduna.
The first chapter of the study deals with a brief introduction as related to the subject under study.
It identifies problems associated to the study which motivated the researcher to undertake the study to provide solution to the problem major objectives were also identified, questions are derived to help in the study of situation to come up with possible suggestion for the study and definition of terms used in the study are also given.
The second chapter dealt with the review of views and opinion of previous work of authors and scholars on the subject matter under discussion, sourcing concept is discussed, sources of supplier information is also considered, the sourcing policies and criteria for source selection is also put with consideration in this chapter etc.
Chapter three research methodology, focused on the area of study, research design, sample and sampling procedures, instrument used for collecting data, the administration of the instrument and the techniques for analyzing data was identified.
Also in the chapter four, the researcher issued out 25 questionnaire out of which 22 were filled and returned and this formed the basis for presentation and analyze was administered personally by the researcher to the respondents and this was done randomly among the sample size drawn from the organization of Nigeria bottling company plc Kaduna plant.
5.2 Discussion of Findings
This section, the researcher elaborately highlight major findings in accordance to research objectives and advancing possible interpretation and explanation of his findings, according to research questions.
The most important thing in the hierarchy of all organization, objectives is profit maximization and this can only be achieved where organization is able to meet their customers demand satisfactory as at when due, and for this objective to be achieved, there must be a right source of supply that is, if the correct source decision is made, the company need would be met perfectly.
However the researcher question 1 is asked to determine sourcing policy used by the organization and the respond of the respondent revealed that the organization adopted virtually all the sourcing policies identified except the use of retailer.
Supplier knowledge and skills, financial capability, technical capability and modern facilities, good reputation among others prompt the research to administer the research question 2 and the response of the respondent revealed that the organization used all the criteria identified for source selection.
The research question 3 is administered to determine the criteria for suppliers evaluation, and the respond of the respondent indicate that the organization adopted several methods of criteria for suppliers evaluation in exception of the subjective method and survey method.
Strategic alliance, collaborative relationship, transactional and adversarial all these issue prompt the researcher to administered research question 4 in the respondent and the response of the respondent indicate that the organization used only strategic alliance and collaborative relationship and the organization does not use transactional and adversarial in managing their supplier relationship.
5.3 Implication of Findings
In reference to the findings of these study the following implication can be if action is taken or not.
The finding revealed that sourcing is activity but the issue of poor sourcing procedure to the supplier who are not financially and technical capable of meeting the organization demand cannot be isolated from the organization sourcing activities.
Also high price of material and late deliveries is also encountered by the organization.
Therefore the issue of poor sourcing procedure in the award of contract to supplier need an urgent attention from the organization, so that contract will be awarded to supplier that are financially and technically capable in meeting the organization need.
Also the issue of higher price of commodity and late delivery must be seriously addressed in order to be able to purchase goods at a consideration price thereby lead to reduction of costs of goods produced and also for goods to be delivered when appropriate.
5.4 Conclusion
In view of the above findings, the following conclusions is arrived:
First, that the organization make use of different sourcing policies when sourcing for their need. That the organization considered various criteria for evaluation of their supplier performance.
Also that the organization used different criteria for source selection, moreover that the organization used strategic alliance and collaborative relationship in managing their buyer relationship that the organization does not use retailer as their sourcing policies and that the organization does not use subjective and survey method as criteria for suppliers evaluation.
5.5 Recommendations
In view of the above findings conclusion and implementation of the findings. Therefore it is recommended that management of Nigeria bottling company plc should:
- Give appropriate attention to sourcing activities in the organization.
- The organization should adopt a standard sourcing procedure by awarding contract to supplier who is financially and technically sound.
- Know the lead time of order placed with any supplier to avoid late delivery.
- Always engage in rigorous bargaining to arrive at favourable price
- Ensure that the supplier provide standard products to the organization through adequate sourcing.
5.6 Suggestion for Further Studies
On the process of the research study the researcher discovered some related area to the study, which is not discussed in the research work such area as make or buy decision as a method of sourcing policies.
Another vital area the research could suggestion for further study is reciprocal sourcing policy. Thus these area identified above are futile area which subsequent researcher can research on and come out with an important findings and recommendation that can enhance the organization activities when formulating sourcing policies.


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