THE IMPACT OF PURCHASING PROCEDURES IN A MANUFACTURING COMPANY

1.0 Introduction

Procedures has been identified as one of the most powerful tools and a panacea to many of the worlds greatest problems. Procedures is a goal oriented and its goals determine its nature and form.

Studies have shown that one of the major problems militating against the profitabilities of human endeavour in general and organization in particular is lack of adequate procedure.

It is in the light of these, that this procedures work is geared towards the assessment of purchasing procedures and how it affects the profitability of a manufacturing companyusing Nigeria bottling compaby as a case study.

1.1 Background of the Study

As seen from the introduction, procedures affects all spheres of man's activities. The companies are not therefore left out, especially is regards materials sources of supply and other important and related issues about purchasing, hence, purchasing procedures.

The first world countries have embraced procedures that they have made remarkable and outstanding success and progress in the technological advancement of the world. This study seeks to encourage third world countries especially universities and polytechnics procedures institutions and the like not to overlook the importance of procedures.

Moreso, companies are advised to pay good attention to the contribution of purchasing procedures for their increased profitability. They are encouraged to know that purchasing procedures is a tool that can assist them in their daily purchasing decisions. As an aid to enhance purchasing activities, companies are against this background, expected to embraced purchasing procedures and provide the finance necessary to carry out this procedures for better performance of the purchasing functions, which in turn contributed to the overall organizational profitability.

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1.1.1 Brief History of the Company

The name of the company is Rokana Industries Plc Nekede and it as incorporated on September 1978 as a private limites liability company.

The nature of the business is manufacturing and it was founded by Engr. Charles Ugwu, a British trained industrialist/Engineer in 1978.

The managing-Director is Chief Ekemma Geophry now while Engineer Charles Ugwu is the Chief Executive of the company.

The factory is divided into three basic areas namely: Administration, Marketing/sales and promotion. It has a branch in Lagos as their registered street off 52 Along Futo – Poly Road, nekede, Imo and 89 Ogundana street Allen Avenue Ikeja Lagos. Over 80% of the raw materials for the production of the product are imported.

They also have sales outlets in Abuja, Aba, Imo, Kaduna, and Lagos. The company is hundred percent Nigerian owned while Union Bank Nigeria Plc own 40% shares of the company product produce.

Rokana currently maintains four existing manufacturing units.

1. The Cosmetic Units: This unit undertakes the production of the tooth paste, baby-care cosmetics, skin lotions, cream and oiltment.
2. The Plastic Units: This unit produces tooth brush, dental stick, plastic folders, plagues for the Areosol production.
3. Aerosol Unit: This unit produces insecticide air fresheners, perfumes, furniture polish, deodrant etc.
4. The LPG Unit: This unit refills domestic cooking gas cylinder, provides unstauncheal gas,as propellant to the aerosol production line.

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1.2 Statement of the Problems

The essence of purchasing procedures in any organization is to identify thos salient activities as regards materials, sources of supply and other important and related issues about purchasing.

In view of this fact, it is imperative to take insight into the purchasing procedures activities of an organization, using Rokana industry Nekede as a case in point in the light of its procedures efforts and how the impacts has contributed to the profitability of the organization.

Closely related to this are the needs for price in the purchasing of materials for production, lack of inadequate raw materials as it affects production etc.

In undertaking this study, the procedures er intends to investigate to what extend, procedures es on price and lack of adequate raw materials have affected the profitability of Rokana industry Nekede.

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1.3 Objectives of the Study

As earlier stated, purchasing by its nature is a basic and integral part of business management. In addition, the basic goal of any business organization is to produce goods and services which can be marketed at a profit. However, this goal is achieved by blending appropriately the five M's of management viz machine, manpower, materials, money and management of all the five, materials have seen as the life blood of industries and as such need not be treated carelessly.

Purchasing procedures is therefore undertaking to solve problems such as sudden shortages or an unacceptable price increase, or in response to other exceptioned situation such as a change in the law governing such as a change in the rate of exchange.

From the foregoing the objective of the study are:

1. To ascertain the important areas of purchasing procedures
2. To investigate into important areas of purchasing procedures
3. To examine the reasons for purchasing procedures
4. To x – ray the relationship between purchasing procedures in a manufacturing company
5. To find out the relationship between purchasing, purchasing procedures and company's profitability.

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1.13 The Significance of the Study

This study or procedures work is very important to a number of persons. To me as the procedures er carrying out this procedures is an adventure. in the course of the writing, it is a way of developing my talent and creative gift of writing as a student. Again, it is a requirement for the award of the Higher National Diploma (HND) in Purchasing and Supply chain management.

In addition, this study will serve as a data bank for reference point for other procedures er. Furthermore, the department of purchasing in every industry will appreciate the content of this procedures work as it assist. There is their constant procedures for materials, products or seminars, purchasing personnel, suppliers on commodities on purchasing procedures.

In addition, this procedures will profit a number of students in the purchasing and other department of any higher institution by providing the necessary information for writing on similar or related topic. It will therefore provide a yards tick topic or standard for such student when they shall make reference to this materials.

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1.14 Procedure Questions

• Does the organization attach importance to purchasing procedures?
• If purchasing is given a top management, approval is purchasing procedures of important concern to management?
• How has purchasing procedures contributed to be company's overall profitability?
• What are the greas that purchasing procedures is carried out in your industry?
• What impact have purchasing procedures been playing in your industry?

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1.15 Hypothesis Formulation

The following hypothesis have been put forward in order to carry out to validate the essence of this procedures work.

Hypothesis I

Ho: Purchasing procedures does not contribute to the company's profitability

Hi: Purchasing procedures contribute to the company's profitability

Hypothesis Ii

Ho: The impact of purchasing procedures does not affect the entire industry

Hi: The impact of purchasing procedures affects the entire industry

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1.16 Scope of the Study

Purchasing procedures is an important and vast area of study, moreso, it is carried out by a lot of manufacturing firms in order to increase their profitability. This being the case, this procedures on purchased materials, products or service purchasing personnel, on suppliers on commodities and on methods purchase that is purchasing procedure or system.

Furthermore, this work will concentrate more on profit making organization preciusely manufacturing industries with particular reference to Rokana industry (Rokana industry, Nekede Imo State.)

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1.17 Limitation of the Study

In carrying out this procedures work, a lot of things interested me for example, the joy of ending my first degree with writing of my project. However, I was constrained with time because we were given a short period to write and defend our project immediately after our exams. I was therefore hurrying to meet up with the date given to use and there was also no time to visit other libraries for vital information.

In addition, there was also the problem of finance to move around in order to visit the industry used as a case study. There was also problem of insufficient procedures materials on the topic, these problems were however adjusted to by the procedures er in order to ensure that this procedures work is a success.

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1.18 Definition of Terms

It is also important to define some unfamiliar terms to that other procedures ers can find their meanings easily in case they want to make use of this work.

Purchasing:

Is defined as planned buying. It is a function in the organization that fulfills organizational needs through acquisition of the right materials, supplies, plants, tools, machineries and services that will enable the organization to attain its targeted goals.

Procedures:

This is a sustained inquiry into problems and seeking out ways to solve it. According to Anyanwu (2006) procedures is the systematic and objective search for and analysis of data with a view to generate information necessary for the solution to problems.

Purchasing Procedures Er:

According to Uzor (2003) purchasing procedures is defined as the systematic collection, classification and analysis of data as the basis for better purchasing decision. It is therefore a formalized means of obtaining information to be used in making decision. It is concerned with collecting and analyzing information concerning the supplies environment as a basis for planning of strategies for the future.

Suppliers:

These are the people who supply materials, parts, goods or services to the buying organization.

Organization:

This is a firm that may be either profit or non – profit oriented that exists for the sake of producing goods and services at the profit or rendering services

Hypothesis:

A statement of put position which can be investigated to either be true or false.

Profitability:

This is the end target of ever profit oriented firm increasing their capital base in the form of additional revenue which can be ploughed back into the business as retains earnings.