IMPACT OF MATERIAL SOURCING IN ENHANCING THE ORGANIZATIONAL PROFITABILITY

IMPACT OF MATERIAL SOURCING IN ENHANCING THE ORGANIZATIONAL PROFITABILITY

CHAPTER ONE: Introduction

1.1     Background of the Study

Material Sourcing is a set of tangible physical attributes assembly in an identifiable form. That is given the rapid changes in taste, technology and competition, organization will not rely solely on its existing supplier but look forward to get better sources of materials.

An organization can use three ways to minimize cost of sourcing materials, by interviewing her customers, by negotiation with the suppliers, by sourcing for better materials, we mean original material that can go into production and come out with quality product; and in the study, we will be concentrating on material sourcing as a way of increasing an organization’s profitability.

As a matter of fact, sourcing for the right material is like human being whose life span has to be treated to keep it working in order to add value, profit to the organization in the view that organization will not die subsequently. The death of organization lays on the fact that proper material are not acquired.

In the light of the above, it is necessary for organization will adopt the system of sourcing for materials to develop and grow their profitability, to achieve this successfully, sourcing strategies are required to be adopted, these are right material, right price, right negotiation, right place, right qualities, right quantities, right sources, right time etc.

In a nutshell, the study will dwell mainly on the impact of material sourcing to maximize organization profitability.

1.2     Statement of the Problem

Most organization especially production oriented organization like Nigeria Breweries spent about 60% to 70% of its annual expenditure on the acquisition of raw materials. Some of the major problems confronting any manufacturing industries are: high cost of materials will affect profit margin of the organization and also incompetence of supplies, if the suppliers are not competent in making right qualities supply will become problem to organization in profitability area.

High cost involved in sourcing suppliers whole material needed for organization. Improper sourcing policy, sourcing for organizational profitability need to be proper that right material will be supplied.

IMPACT OF MATERIAL SOURCING IN ENHANCING THE ORGANIZATIONAL PROFITABILITY