TENDERING AS AN EFFECTIVE TOOL FOR VENDOR SELECTION

1.0 Introduction

Tendering is widely discussed by the purchasing text books as an act by which submission of a quotation is made by a tender when so desired by a client, which may be an individual, a group of people, a company, government or any of it’s parastatals.

According to Oyeku and Nwanneka (2001) tendering which is a widely acclaimed from purchasing is monthly used in local, state and federal government purchasing. It represents one of the three methods through which buyers can determine the price to be paid for goods a and services he purchases.

Tendering also help the purchaser to obtain the best and supplier that can meet the requirement and it is usually required when the monetary value of the purpose purchases exceeds statutory naira limitation. Tendering is used sometimes in the private sector to obtain a fair and reasonable price especially in respect of contraction and service contract. Procedures associated with tendering are designed to protect the interest of both the tender and the purchaser and to reinforce concepts or openers and impactiality.

As a prelude to other parts of this study, this chapter will discuss the background upon which this study was initiated, the statement of problems that led to this study, the Aim and Objectives of the study. Others are Significance of the study, Scope of work, Research hypothesis and questions, Limitation of the study and Definition of technical terms.

1.1 Background of Study

This research work may not be complete if the company is not disclosed. Memories are an invaluable treasure. They are the building blocks of history and they constitute the crystal ball which illuminate our past, which light up our product and whose path the way forwarding the confused network which leads into the unseen future. When we look the right turn these cannot be future without a past and present. No wonder Kobi fola and module disclosed “at eighties” ministry of work and finance Imo state Owerri has joined the ranks of elders in the Nigeria business community.

1.2 Statement Of The Problem

Tendering is effective tool for vendor selection. It has contributed greatly to the organization profit, there are so many advantages of tendering but problems associated with it.

Tendering usually end with the lowest price tender getting the award of the purchasing firms gains a reputation for negotiating with the lowest tender after bids are opened. This will make future tenders not to offer their price initially believing that they do better in way subsequent negotiation. They will adopt a system of submitting offer low enough to allow them to be included in any negotiation. But initial offer will not be as low as when it is anticipated that the award will be made to the lowest tender without further negotiation.

Tendering tend to great pressure on suppliers to reduce their cost to be able to bid as low as but profitable price this cost pressure may result in sacrifices in product quality development efforts and other vital services.

The real use of tendering appears to be widely understood, this system of pricing is frequently abused by both government and private establishment. It is because tendering has been stressed as the method of pricing and allowing able constituents their qualification.

In reality, planning preliminaries correctly for tendering takes purchasing judgment of the highest planning specification proper selection to tight supplier collect quantities, precise delivery schedules, adequate time for placing bids and general economic analysis is done correctly, selecting the successful tender after the bids are evaluated are generally a routine matter, except in unusual circumstances the lowest tender should receive the order, purchasing judgment and analytical planning should normally be exercised before tendering are request not after the bids are in.

1.3 Objectives Of The Study

In most government and private organization there is wide misunderstanding of tendering as an effective tool for vendor selection.

The objective of the study include the following:

1. Find out the reason why there is misunderstanding of tendering.
2. Determine the need for proper tendering as a tool.
3. Find out criteria for obtaining tendering.
4. Through the review of the contribution of different authors on the subject, exposes people idea on the importance of vendor selection.
5. Determine weather or not there is need for an independent unit to be treated with trained and qualified professionals to handle vendor selection.

1.4 Significance Of The Study

In advanced countries of the world the significance value of understanding the various types of tendering as an a effective tool for vendor selection has been acknowledged for a long time.

In developing countries like Nigeria, tendering is not carried out properly, simply because it is not the best method for vendor selection. This does not mean that no previous study has been carried out on tendering as an effective tool for vendor selection to private establishment understand the criteria of selecting the best source.

1.5 Research Questions

One major aspect of a research of this nature is to prove the subject matter of the study. This is done to direct the readers, other researchers and plans so as to understand vividly what the research is all about.

It therefore formulates some research questions on which the conclusion would be based. The study sought answers to the following questions.

• What type of tendering does your organization adopt.?
• What qualifies a tender to be invited to bid?
• If opened what medium do you use to invite interested tenders?
• What is usually the basis of selecting a supplier?
• In the Nigerian context, what is usually the inhibitory function for achieving the goal of a good tendering price?
• What is usually the basis of selecting a supplier?
• Has there been instances where the lowest tender is not offered the job?

1.6 Research Hypothesis

In order to pursue the objective of this study, the following generalized statements have been designed to guide and aids in obtaining the result for the experiment to be conducted. For this work, the null hypothesis will be represented with H0 while the alternative hypothesis will be represented with hypothesis H1.

Hypothesis One

• H0: Tendering is effective tool for selection.
• H1: Tendering is not effective tool for vendor selection.

Hypothesis Two

• H0: There is no effective method the company adopt other than tendering.
• H1: There is another effective method the company adopt other tendering.

1.7 Scope Of The Study

The ministry of work and finance in Imo state Owerri was the choice of this work because of its significant contribution in the economic growth of Nigerian nation and the need to find out some of the secrets of its success. However, the researcher did not find it easy to collect all the required facts as some of the workers declined some questions put before them with the excuse that they were not authorized to deluge certain information.

Also, the identification members of the management who supposed to attend to me were not easily reached and efforts to be cost as a huge sum of money in terms of transportation and other products expenditure.

1.8 Limitations Of The Study

During the course of this study, there were some problems encountered which stood as limitations to the research work. Some of the limitations include:

1. Time Constraint:

   The time frame given to accomplish this project was very short due to school academic calendar and it was carried out under pressure which made the researcher not to implement some necessary features.

2. Establishment Policies:

   Establishment policies posed a serious limitation as most staffs are not ready to release information needed for this research work. There were lots of information needed from the staffs of this establishment to enhance the study which took them time to release or they did not release at all for security purposes, hence the scope was reduced.

3. Financial Constraint:

   Insufficient fund tends to impede the efficiency of the researcher in sourcing for the relevant materials, literature or information and in the process of data collection (internet, questionnaire and interview).

4. Initial Cooperation Delay from Respondents:

   A particular limitation of this work came as a result of the respondent refusal to offer their cooperation at the initial time they were contacted. This contributed in making the success of this research study difficult.

1.9 Definition Of The Terms

Purchasing:

According to Uzor (2004:4), purchasing is the function of management responsibility for obtaining by purchase lease or other legal means, equipment, materials & services required by an undertaken for use in production.

Tendering:

According to Uzor, is the act by which submission of a quotation is made by a tender when so desired by a client, which may be an individual, a group of people, a company, or any parastatals.

Quotation:

This is a document assured by a supplier in response to an enquiry offering goods and services for a given delivery or time, uzor (2004).

Right Supplier:

Is that supplier who supplies materials as and when required with respect to quality, quantity delivery, price e.t.c to the buyers plant.

Efficient Sourcing:

Is the identification and selection of suitable source of supply, systematic investigation and continuous relationship with no right of time and money.

Sourcing:

Is the process by which a buyer seeks, surveys and ultimately evaluate supplier in order to determine policies which relates to those who can ,most suitable meet the requirements of undertaken ”obuseh Raphaeln and Egbuta (2007:204).