THE ROLE OF PURCHASING RESEARCH IN A MANUFACTURING COMPANY

1.0 Introduction

1.1 Background of Study

Research has been identified as one of the most powerful tools and a panacea to many of the world's greatest problems. Research is a goal oriented and its goal determines its nature and form. Studies have shown that one of the major problems limiting against the profitability of human endeavor in general and organization in particular is lack of adequate research. It is the light of these, which this research works, is geared towards the assessment of purchasing procedures and how it affects the profitability of a manufacturing company using Nigeria Bottling Company as a case study.

Research affects all spheres of man activities. The companies are not therefore left out, especially is regards material sources of supply and other important and related issues about purchasing, hence purchasing procedures. The first world countries have embraced research 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 polytechnic procedures institutions and the like not to overlook the importance of research.

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

Rokana Industry Plc Nekede is incorporated on September 1978 as a private limited 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 Ekemma Geoffrey 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 of 52 Along Futo-Poly road, Nekede, Imo state 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 Plc own 40% shares of the company products produce.

Rokana Currently Maintains Four Existing Manufacturing Units.

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1. The Cosmetic Units:

This unit undertakes the production of the tooth-paste, baby-care cosmetics, skin lotions, creams and ointment.

2. The Plastic Unit:

This unit produces tooth-brush, dental stick, plastic folders, plagues for Aerosol production.

3. Aerosol Unit:

This unit produces insecticides, air fresheners, perfumes, furniture polish, deodorant etc.

4. LPG Unit:

This unit refills domestic cooking gas cylinder, provides unstaunched gas as propellant to aerosol production line.

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1.2 Statement of the Problems

The essence of the purchasing research in any organization is to identify those silent activities as regards materials sources of supply and other imported and related issues about purchasing. In view of this fact, it is imperative to take insight into the purchasing research activities of an organization using Kotana Industry Nekede as a case study in point in the light of its research efforts and how the impacts have 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 research intends to investigate to what extent procedures 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 as a profit.

However, this goal is achieved by blending, appropriately the five M's of management viz Machine, Man power, Materials, Money and Management. Of all the five, materials have seen as the life blood of industries and as such need not to 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 exceptional situation such as change in the rate of exchange.

From the foregoing, the objectives of the study are:

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

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1.4 Research Question

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

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1.5 Significance of the Study

This study or research work is important to a number of persons. To me as a researcher carrying out this research is an adventure.

In the course of this 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 National Diploma (ND) in purchasing and supply chain management. In addition, this study will serve as a data bank for reference point for other researcher. Furthermore, the department of purchasing in every industry will appreciate the content of this procedures work as it assists.

There is their constant material, products or seminars, purchasing personnel, suppliers on commodities on purchasing research. In addition, this research unit profits 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 yardstick topic or standard for such student when they shall make reference to this material.

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1.6 Scope of the Study

Purchasing research is an important and vast area of study; more so, it is carried out by a lot of manufacturing firms in order to increase their profitability. This being the case, this research on purchased materials, products or services, purchasing personnel, or suppliers on commodities and on methods purchases that is purchasing research or system.

Furthermore, this work will concentrate more on the profit making organization precisely manufacturing industries with particular reference to Rokana Industry (Rokana Industry Nekede Imo state).

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1.7 Limitations of Study

In carrying out this research 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 out 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 the problem of insufficient procedures materials on the topic; these problems were however adjusted to by the procedure in order to ensure that this research work is a success.

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1.8 Definition of Terms

It is also important to define some unfamiliar terms that other researcher can find their meaning 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.

Research:

This is a careful study of a subject especially in order to discover new facts or information about it. It is also the systematic investigation into and study of materials and sources in order to establish facts and reach new conclusions.

Purchasing Research:

Is the systematic design, collection, analysis and reporting of data and findings relevant to a specific purchasing situation facing the company.

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 tendering services.

Profitability:

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