THE APPRAISAL OF PURCHASING AND SUPPLY MANAGEMENT TECHNIQUE IN AN ORGANIZATION
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Abstract
In view of the rising demand for effective control over spends on goods, services, contracts, and acquisition processes, originations need to adopt strategic purchasing practices. This study explores purchasing and supply management technique in Lagos television stores. The study is based on a literature review and a questionnaire survey among senior management employees from various financial and media services firms in Nigeria. The respondents were randomly sampled from Television stations, investment firms, mortgage firms and pension management companies in Nigeria. The findings show that practices relating to marketing, financial and customer management are given higher priority than purchasing and supply management activities. The research reveals that purchasing and supply activities in the Nigerian financial services industry are not strategic but mostly transactional. While there are well-known purchasing departments in the firms industry, purchasing related tasks are currently handled but non-procurement professionals. Furthermore, the level of supplier development practices in the financial service industry is developing but not advanced
TABLE OF CONTENT
Title page
Approval page
Dedication
Acknowledgment
Abstract
Table of content
CHAPETR ONE
1.0 INTRODUCTION
1.1 Background of the study
1.2 Statement of problem
1.3 Objective of the study
1.4 Research Hypotheses
1.5 Significance of the study
1.6 Scope and limitation of the study
1.7 Definition of terms
1.8 Organization of the study
CHAPETR TWO
2.0 LITERATURE REVIEW
CHAPETR THREE
3.0 Research methodology
3.1 sources of data collection
3.3 Population of the study
3.4 Sampling and sampling distribution
3.5 Validation of research instrument
3.6 Method of data analysis
CHAPTER FOUR
DATA PRESENTATION AND ANALYSIS AND INTERPRETATION
4.1 Introductions
4.2 Data analysis
CHAPTER FIVE
5.1 Introduction
5.2 Summary
5.3 Conclusion
5.4 Recommendation
Appendix
CHAPTER ONE
INTRODUCTION
- Background of the study
Over the past four decades, purchasing has evolved from a clerical function in the 1960s, through being an operational activity in the 1980s to the strategic nature in the 1990s (Gelderman and Van Weele, 2005; Spekman et al, 1994; Kraljic, 1993). While several organisations have transformed their purchasing capabilities into competitive advantage, others are still lagging behind. Today, proactive firms are expected to control their purchasing operations in an effort to build competitive advantage (Carr and Smeltzer, 1997). In spite of the fact that purchasing has gained recognition amongst companies in the developed countries; the reverse is the case however in the developing countries (Msimangira, 2003). Specifically, African scholars have focused more on investigating public procurement reforms while little efforts have been made in the private sector (Abeillé, 2003; Hunja, 2003; McCrudden, 2004). In view of the current global financial meltdown, It is imperative for private organisations in Africa to adopt more strategic approaches to purchasing in order to facilitate commercial gains. The aim of this study is to explore purchasing and supply practices in the Nigerian corporate organisations while focusing on the financial services industry. Nigeria is one of the few African countries currently enjoying a democratic political and economic system. It has a prosperous economy and happens to be the most populous country in Africa with a population of over 140 million people. Although purchasing function exists in most Nigerian firms, little is known, however, about their operational perspectives. There are a number of reasons why the Nigerian financial services industry is a good case to investigate purchasing practices. Firstly, it is incontestable that the financial system is the engine of growth in any economy. Secondly, financial services firms have been acknowledged as one of the most capitalised in the Nigerian stock exchange market (Okigbo, 1991). Thirdly, research into purchasing and supply management practices in Nigeria is limited. As such, the result of this exploratory study will aid a better understanding of purchasing and supply management practises in the Nigerian financial services industry’s
Purchasing and supply management (PSM) activities can have a significant influence on overall corporate performance. Significant advances in IT have supported PSM in conducting both strategic and tactical supply chain activities. Information technology requires significant financial investment and extended effort to ensure confidentiality and compatibility of systems. This is compounded as we move from electronic data interchange (EDI) to the Internet and enterprise resource planning (ERP) applications [56]. Many PSM activities require frequent, real-time communication flows with suppliers to bridge organizational boundaries. The purpose of this study is to determine which, if any, PSM activities significantly influence the extent of PSM’s actual use of information technology (IT). Using transaction cost theory, the research hypothesizes that the PSM activities of supplier alliances, market monitoring, and cost management are associated with greater usage of IT. The IT tools studied in this research are the following: 1) electronic data interchange (EDI);
2) enterprise resource planning (ERP) systems;
3) the use of the Internet for research;
4) online auctions and Internet purchases;
5) intranets;
6) extranets.
Empirical results based on survey data indicate that the activities of supplier alliances and cost analysis significantly influence the extent of PSM’s actual usage of IT. The following section begins with the overall theoretical underpinnings of PSM’s usage of IT from a TCA perspective. The three purchasing activities hypothesized to influence PSM’s involvement in IT are then discussed. Next, the six information technologies studied in this research are presented. Implications for practice are discussed throughout the final sections of the manuscript. The aim of any purchasing operation is to make the future happier. But this was not well recognized by most firms initially so job that should be handled by experts in the field of purchasing were given to less qualified personnel’s and in most case this shorten the life of most business. Planning is the management function of setting target or objective to be achieved and detailing out ways by which the target will be achieved. Planning is sometime greater than first thinking ahead. In manufacturing organization (Anammco) purchasing planning and control show who is to do the job (qualified purchasing personnel’s) how the qualified purchasing personnel’s will carry out the job and when the job will be done. Purchasing planning and control share with the others activities of the purchasing mix the distinction in commerce of being a dynamic element in operation of business. The effective of purchasing planning and control in a manufacturing organization enable the organization to absorb possible shock emitting from purchasing environmental change.
The subject matter is chosen by the researcher to explain the foregoing Anamco marketing planning and control in other to know its effectiveness.
According to Adirika (2003, P.11) in this lecture note, “purchasing planning is an exercise of analysis for and to increase the effectiveness of purchasing. Or drawing from the past to decide in the present what to do in further in other to achieve the purchasing objective enterprise efficient effective. Purchasing planning does not depends on only theory or book knowledge. In other to plan effectively we need to understand and know about our own environment (Macro – and Mirco environment) where the purchasing plan will operate. For purchasing planning and control to be effective the qualified purchasing personnel that carried out the purchasing and control may consider some element or feature such as time.
Purchasing planning and control will be effective if the plan has a stated time, for completion, the estimate of time may be varied depending on the product or firm. For purchasing planning and control to be effective the money for material needed for the effective planning must be available and human resources. The qualified purchasing personnel’s would have a group of consumers or target markets in mind and then position the organization’s or company’s product on this target market or segment.
Purchasing control played a vital role in a manufacturing organization. If all purchasing programme or plan along with other sub function are ideal and well harnessed but lack control it will be likened to driving a well structured comfortable vehicle without a steering on a very busy road.
Control is the vital follow – up process which is complementary to planning while purchasing planning is deciding in advance what needs to be done, how and when it should be done. As clearly recognized decade ago in an undertaking control consist on verifying whether everything occurs in conformity with the plan adopted, the instruction issued and principle established. It has for object to point out weakness and error in order to rectify them and present recurrence. Purchasing control as concerned with establishing and maintaining appropriate procedure and apparatus for monitoring and measuring the implementation of purchasing plan and strategies set out to active purchasing objective and taking necessary corrective action
- STATEMENT OF THE PROBLEM
Purchasing is one of the key functional areas in an organization. It is a major cost center through which all materials are been channeled into the company. It is the organizational center that handles the buying of all materials, exchange of materials with financial resources for further processing. This process generates additional revenue to the company without compromising the values and integrity of the company before its customers. Procurement process has several definitions which are based on the act of buying goods and services and its preparation and processing based on demand. Turner (2011) described procurement as a system or process that supports organization’s total needs for the supply of goods, services and processes that is required to achieve the goals and task established by the organization. it is in view of the above that the researcher intend to the purchasing and supply management technique adopted by organization
- OBJECTIVE OF THE STUDY
The primary objective of this study is to appraise the purchasing and supply management technique in an organization. to aid the completion of the study, the researcher intends to achieve the following specific objective;
- To ascertain the effect of purchasing and supply management technique on organizations efficiency
- To examine the role of purchasing and supply management on organizational productivity
- To examine the relationship between effective purchasing and supply management and organization profitability
- To examine the impact of purchasing and supply management on organizations productivity
- RESEARCH HYPOTHESES
The following research hypotheses were formulated by the researcher to aid the completion of the study;
H0: purchasing and supply management technique does not have any significant effect on organizations efficiency
H1: purchasing and supply management technique have a significant effect on organizations efficiency
H0: there is no significant relationship between effective purchasing and supply management and organization profitability
H2: there is a significant relationship between effective purchasing and supply management and organization profitability
- SIGNIFICANCE OF THE STUDY
The significance of the study is to draw the attention of other researchers in the field of business especially purchasing to be interested in the conduct of more indept research in the area of the Purchasing planning and control effectively. The idea will act as a framework i.e to put the plan together to direct market managers on how to put the plan together so to make it effective in formulating good Purchasing planning and control over foreign investor in Nigeria. The study will also induce business managers, entrepreneurs, purchasing managers, and sales managers to take proper care to develop a purchasing pan and control that will be devoid of the problem identified by the research in the study. This write up is also expected to teach young learners to serve as history for them during their own time of learning. Based on the findings, the researcher will work within his scope to provide some solution to the research problems and reduce unavoidable ones.
- SCOPE AND LIMITATION OF THE STUDY
The scope of the study covers the appraisal of purchasing and supply management technique in an organization, in the cause of the study, there were some factors which limited the scope of the study;
- a) AVAILABILITY OF RESEARCH MATERIAL: The research material available to the researcher is insufficient, thereby limiting the study
- b) TIME: The time frame allocated to the study does not enhance wider coverage as the researcher has to combine other academic activities and examinations with the study.
- c) FINANCE: Limited Access to the needed finances to broaden the scope of the study was a major constrain as the finances at the disposal of the researcher was very limited.
1.7 OPERATIONAL DEFINITION OF TERMS
Planning: the process of making plans for something
Control: the power to influence or direct people’s behavior or the course of events.
Manufacture: make (something) on a large scale using machinery.
Strategy: Is the pattern of major objective purpose of goal and essential
Policies and plan for achieving that goal stated.
Effectiveness: To be able to bring about the result intended.
Manufacturing Organization: Those companies that produced good
either consumer goods or industrial goods for consumption or for further product.
Qualified Purchasing Personnel’s: They are those purchasing that are
Competent in carrying out purchasing activities in an organization.
Goal / objectives: What the company intends to achieve.
Potential Customers: Those people that may be the company’s products
Market: Is the set of all actual and potential buyers of the company
Product
Market Opportunity: Is an area of buyer need in which a company can
perform profitably.
Purchasing Mix: Is the set of purchasing tools that the firm uses to pursue its purchasing objective in the target market.
1.8 ORGANIZATION OF THE STUDY
This research work is organized in five chapters, for easy understanding, as follows
Chapter one is concern with the introduction, which consist of the (overview, of the study), historical background, statement of problem, objectives of the study, research hypotheses, significance of the study, scope and limitation of the study, definition of terms and historical background of the study. Chapter two highlights the theoretical framework on which the study is based, thus the review of related literature. Chapter three deals on the research design and methodology adopted in the study. Chapter four concentrate on the data collection and analysis and presentation of finding. Chapter five gives summary, conclusion, and recommendations made of the study.
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