CONTRIBUTION OF PURCHASING IN ACHIEVING ORGANISATIONAL OBJECTIVES
ABSTRACT
The issue of little or no recognition of the need for purchasing department in industries and firms has been affecting efficient and effective buying and mismanagement of industry’s fund (cash). This work “The contribution of purchasing in achieving organizational objectives” is designed to lay down the need for effective and efficient purchasing department in today’s industries in other to enhance their profit.This research work has five chapters, one deals with the introductory aspects, giving a general overview of the topic and the background “The contribution of purchasing in achieving organizational objectives, incorporated there-in are sub-headings as statement of problems, scope of the study etc. The review of literature as it relates to the contribution of purchasing in achieving organizational objectives is in chapter two. The method used in carrying out the analyzed together with finding from interviews and observations are in chapter three, while chapter four present the presentation of the findings and analysis of the data and chapter five deals with recommendation, summary and conclusion.
CHAPTER ONE
1.0 INTRODUCTION
1.1 GENERAL OVERVIEW
The evaluation of mass production, which so much relies upon a continuous flow of right materials has brought an impact and the need to improve purchasing management. Furthermore, the effects of shortages after production, high prices of commodities and allied improvisation has caused the problem of materials and services to intrude into many organizations, be it large or small, public or private. “When purchased items (materials and supplies) account a high proportion of the organsiations expenditure, when prices are always fluctuating widely, when numerous diverse items are constantly needed and when the quality of materials or services appreciably influences the cost of manufacturing the final product or rendering the services, then the contribution of purchasing in achieving organizational objectives becomes important or rather particularly very important and thus demands close attention.
The contribution of purchasing in achieving organizational objectives is therefore achieved when the buyer or purchase purchases the required quality and quantity of raw materials, supplies, parts, tooling and equipments at the right time and at the lowest possible price, conversely, it must also be borne in mind that buying at the lowest price may become uneconomical that not achieving organizational objectives, if the required quantity of material is not delivered and received at when needed, if the quality required does not meet up to the quality delivered. The success and future continuity of an organization to a large extent depends on the activities of its purchasing unit.
However, effective and efficient performance of purchasing function is important for the smooth operating of any organization in achieving its objectives. Furthermore, for achieving to contribute to achievement of organizational objectives, it must liase with other departments such as production, finance, marketing etc. The term purchasing has different meaning to different people. To a layman understanding, it simply mean buying of items in the market either local or international.
According to ONWUKA K. OYEOKU in his text principles of purchasing and supply management define “purchasing as a process represents a system in which organizations define and list their needs and services. The activity is accomplished through identifying and comparing the supplies as well as suppliers that are available to the; the process of negotiating with those sources available to them with the sole intention of arriving at an agreed term of trading, and to enable them limit cost and improve on their profit”. From the fore going, it becomes clear that purchasing function in its broader definition involves the procurement of materials and received into the store. It involves requirement determination functional co-ordination with finance, engineering (specification), production and quality control departments. It also involves the procurement decision either to make or buy, standards and value engineering/analysis and procurement process, source selection, soliciting bids negotiation and expediting, critically analyze the above, purchasing is to a large extent contributing in achievement of organizational objectives.
HISTORY OF ROKANA INDUSTRIES PLC
Rokana industries plc was incorporated on the 11th September 1978 as a private limited company. The company maintained its head office at No Ajayi Street, off 52 Allen Avenue, Ikeja – Lagos; while its factory is located at plot 5 Mission Road Umu – Nekede, Owerri. It also maintain sales office and depots in Kano and Aba. The general policy of the company is determined by the board of directors of which Engineer, Charls C. Ugwu is the chairman and managing director. Eng. Ugwu holds a master degree in Business Circle as the man with entrepreneurial projections.BThe four (4) existing manufacturing units at the factory are as follows:
- The plastic removers: Plastic folders, card holders and some plastic components for the aerosol production line.
- The aerosol unit is responsible for the production of insectiate air fresher peremes, furniture polish, deodorants etc.
- The LPG (Liquidified Petrolum Gas) unit refills domestic cooking gas cylinder for its various customers, it also provide unstenched gas as propellent to aerosol production line.
- The cosmetic unit has a modern facilities for the production of tooth pastes baby care cosmetic, hair shampoo, stan cottons cream and ointments.
THE PRODUCTS INCLUDE
- Joyday toothbrush
- Sparkle toothpaste
- Rokana dry air fresher
- Number 1 insecticide
- Natusan baby oil, lotton and ointments
- Rokana dental stick/plague remover.
1.2 STATEMENT OF PROBLEM
The basic problem of concern with this research is on the need for efficient and effective purchasing function in achieving organizational objectives with particular reference of Rokana company business conditions, during the recent past have placed much stain on the need for purchasing functions and roles. Critically, materials shortages, worldwide inflation and arbitrary actions of governments and to a large extend affect the goals of organization. In Nigeria today many organization are yet to embrace the importance of efficient and effective purchasing practice, to this effect organizational targets are been punctured indirectly. Many corporate organizations have been made painfully aware of the short comings of the operations of their firms materials management functions. Indeed, it is among the best of the specialized business functions to be centralized and given the responsibilities to the right individuals or team, who are knowledgeable and could adopt the various techniques of performing the functions, with this regards, the procurement responsibility should be rested on the purchasing department who can procure efficiently and effectively. More also, this department have to be made up of individuals who are knowledgeable in their responsibilities and capable of applying the techniques not illiterates or novice who cannot apply the techniques.
Investigations by the researcher into Rokana industry reveal most problems in their offices such as “who is to buy”. The net effect of this is the actualization of the role of purchasing in an organization. In order to appreciate purchasing contribution in achieving organizational objectives, there is need to analyze the various activities carried out by the purchasing department and to what extent it can help or had helped in achieving organizational objectives. This study therefore is concern with the role of purchasing contributions in achieving organizational objectives, then we ask if; - purchasing has contributed in achieving organizational objectives or - Purchasing does not contribute to achieving organizational objectives.
1.3 OBJECTIVES OF THE STUDY
The general objective of purchasing in achieving organizational objectives is concern with the task of obtaining the right quality goods and services in the right quality and at the right price and time form the right supplier and delivered at the right place. In today’s highly sophisticated and competitive markets, the environment is no more static but very dynamic. Obviously therefore, purchasing objectives will require to be constantly updated and revised so as to meet the ever changing conditions. In the public sector, everybody want to buy resulting to what the researcher called “buying syndrome”. The involvement of purchasing professions in procurement and other purchasing functions save the government and organization from the inconveniences they will suffer from the hand of “quakes” buyers as well as lose of excess money.
Similarly, the purchasing and supply profession is not a dumping ground. Its functions should not be practices by men of fields whose sole purpose is to direct the company’s money into their private purses; unprofessional and unethical purchasing practices.
People who think purchasing is buying “meat” and “fish” in the open market should be corrected. It is clear that nobody or bodies can survive without wise purchasing. The purchasing man is a coat conscious man. He is quality conscious and conscious of delivery in time to meet demand. He think ahead of time and also has the duty to help the public sector-triumph in its efforts to meet aspiration of the organization.
Realizing the role and contribution of purchasing in the organization activities, the researcher is dismayed at the need for efficient purchasing and as such has this project aimed at:
- Identify the need for efficient purchasing in an organization
- Find out the purpose for scramble of purchases.
- Find out the absence of responsibility and authority for purchasing.
Find out the cadre and quality of staff responsible for purchase of goods and services within organization.
- find out to what extent purchasing has contributed in achieving organizational objective.
1.4 SIGNIFICANCE OF THE STUDY
It is the mind of the researcher that this research work and it’s recommendation will be useful to many people or rather interested people. - The project will serve as a reference point to other students especially purchasing and supply students. - The study of the contribution of purchasing in achieving organizational objective will invariably contribute effectively to the success of most organization and institution. - The research of this study encourages the purchasing personnel’s on their functions acknowledging their vital roles and contributions in achieving organizational objectives.
- It helps organizations to ascertain the need for effective and efficient purchasing department. - It encourages organizations to assign procurement and other purchasing functions to only purchasing department in order to achieve its objective. - Good knowledge abut the supply market enables an organization to acquire its materials inputs for manufacturing effectively and doing so will contribute to the productivity and profitability of an organization.- It is a reference point to other researchers. To future researcher it help by guiding towards a successful accomplishment of their own studies also impacting a wild knowledge of the course.
1.5 RESEARCH QUESTIONS
In the process of the research, the researcher used the following questions to carry out her research work to enable reader flow along with the writer or researcher.
- Should purchasing department be established and given a rightful place in various organizations?
- Do your purchasing department achieve efficient buying in the organization?
- Do you have purchasing department manager who help in achieving organizational objective?
- How does purchasing department help your organization in achieving their objective?
- Do you organization practice effective and efficient purchasing functions?
1.6 RESEARCH HYPOTHESIS
The researcher stands to clearly prove the objective matter of discussion, which will serve as a stepping stone for potential researchers, planners, as regards to what is obtainable in the Nigeria context. As result of this, there is need to make some hypothesis from which conclusion will be drawn.
These include the following:
Ho: Purchasing has not help organizations in achieving its objectives.
Hi: Purchasing has help organizations in achieving its objectives.
Ho: There is no relationship between adequate purchasing contributions in achieving organizational objectives
Hi: There is relationship between adequate purchasing contributions in achieving organizational objectives
1.7 SCOPE OF THE STUDY
The study of purchasing is very vast and the function is very important in an organization. As a result of this, work of this research will be narrowed down on how purchasing is done, who and what department (s) is/are responsible for purchasing and above all the extent to which this have been contributing to the achievement of organizational objective(s). A case study of Rokana industry. This is to understand the efficient and effectiveness of purchasing function in an organization.
1.8 LIMITATION OF THE STUDY
As a result of vastness of purchasing functions the research choose to cover only the contribution of purchasing in achieving organizational objectives with particular reference to Rokana industry owerri Imo State. This research work could have gone beyond this if not for some limitations faced by the researcher; such as: - Financial constraint - Time needed to run out for adequate information and data collection is not enough. - The attitude of most purchasing personnel’s while being interviewed. - Respondent not to regard questionnaire as important, as well as some questionnaire not returned.
1.9 DEFINITION OF TERMS
It is important to define some of the terms used in this research, to enable the reader understand more.
1. Organization: An organization is a combination of people or individual efforts working together in pursuit of a certain common purpose known as organizational objectives or goal.
2. Organizational objective: This is a realistic aim or goals which an industry try to achieve.
3. Purchasing department: This is a function in an industry responsible for procurement of items in an industry.
4. Procurement: It is a process of obtaining supplies of items in an organization or government sector, it is carried out by purchasing personnel called the procurement officers.
5. Sourcing: This is an identification or development of suitable source of supply.
6. Sample: A set of items from a population chosen for measurement when conduction survey involving population.
