NEED FOR SOURCING AND SUPPLIER DEVELOPMENT IN AN ORGANIZATION
ABSTRACT
Sourcing can be classified in many ways thus: single sourcing, multiple sourcing. Single sourcing involves having one supplier who will meet the buyer’s requirements by delivery schedule is made easier, quality control since there is only one supplier, personal relationship can be more easily established thus, making communication more effective. Another one is multiple sourcing which is seen as a situation in which the buyer may choose to buy from more than one source, it means several sources of supply. Hence there are many advantages of multiple sourcing like competitive pressure, it provides alternative sources in the event of supply stoppages. It enhances supplier’s appraisal. Direct access to comparable data from competitors greatly simplifies the task of suppliers monitoring and appraisal.
The project work has been divided into four chapters. Chapter one deals with the introduction of the approach. Chapter two is a review of related literature on searching out of supplier’s selection of supplier and selection of sourcing strategy. The next chapter three outlines the procedures and methods used in gathering data. While chapter four which is the last chapter deals with conclusion, summary and recommendation.
CHAPTER ONE
INTRODUCTION
1.0 BACKGROUND TO THE STUDY
The selection of a vender is the most crucial factor in the buying process, and is an acid test of good purchasing. The process includes the continuing surveillance of the relationship between the supplier and the buyer to maintain mutually satisfactory conditions of co-operative and interest. In selecting sources of supply, purchasing makes decision that influence not only firms economic success, but the livelihood of the suppliers and the efficiency of the entire economy. The supplying firm and ultimately the economic welfare of employees and their families. The vitality of the entire economy is involved because proper functioning of our free enterprise economy depends on sound product and choice of purchasing, by its naira votes (ie purchase) determines the economy’s production and its allocation of resources.
The efficiency of vender solution stimulates competition, which means that better products and services are developed for the economy. Sourcing which goes hand in hand with supplier evaluation is a process and procedure used by buyers or purchasing to seek, survey, evaluate and determine which supplier can best meet the requirements of their organizations, in terms of supply of goods and services. Sourcing is a vital aspect of buying and the buyers job would be effectively done when he deals with reliable supplier/suppliers. The first stage in sourcing is often conditioned by the experiences the buyer had with variables suppliers.
The primary responsibility of the buyer is to seek and maintain suitable sources of supply in order to ensure that he obtains the right quality of materials at the right price. The purchasing department of any organization should allocate enough time and effort in investigation and evaluating present and prospective suppliers. They should embark on a continuous appraisal of suitability and performance of the suppliers to ensure that they always deliver/supplies according to specification. There exist numerous advantages to be considered such as: Right price, right time, right quality and delivery to the right place that buyers should seek out as a matter of routine all available sources of supply for the product range for which they are responsible.
Business activity, market segment and size, geographical scale at the operation and scope of problem are factors to consider when sourcing. However, sourcing involves the careful seeking and surveying of suppliers in terms of ensuring adherence to the buying company’s policy as regards the satisfaction of the objectives of purchasing which include any other, than to purchase the right quality of materials at the right time, in the right quantity from the right source, and at the right price. In order to be able to achieve the above objective, the buyer must be trained in the techniques and practice of purchasing. Sourcing should be the responsibility of the trained professional who strives to achieve better business terms for his organization.
1.2 STATEMENT OF PROBLEM
There are many problems associated with purchasing as a profession especially on this research work. The need for sourcing and supplier development in an organization. This is directly concerned with sourcing in organizations and are in two dimensions. That is, public and private sectors of the economy and those related to the achievement of the supplier development. Firstly, with those of private and public sectors of the economy, one discovers with dismay that almost every worker in an organization is interested in buying and award of contracts. This trend has greatly increased Mis-management and squandering of prices of suppliers meant for production which have all contributed to the present high cost of living.
Concerning those related to supplier development, problems are encountered in deciding where one can find the best information on suitable and potential suppliers, and how do we assess a suppliers long-term stability, how can buyers cope with the hazards of purchasing from handling a tract record to help in his purchase decisions. These problems can however, be solved by employing trained and professionally qualified buyers to handle the important task of sourcing. Untrained and unqualified buyers should not be allowed to encroach into the profession.
Another problem is that of negligent of purchasing where purchasing as a profession has not been given its right place in organizations. In some organizations, it is as a routine, unimportant function while in others it is treated as an important management function which immensely contributes to profits. It should however be noted that in these days of high prices of material and shortages inflation and unstable supply in the market, it is not encouraging for any business organization to ignore t he purchasing and supply functions. The problem of lack of specialist in the field. This has resulted to incompetence and inefficiency in the performance of purchasing and supply function. It is imperative that qualified and experienced professionals are employed to handle the procurement of goods and services. They would employ sound judgment with their knowledge and experience to procure materials and services efficiently and effectively.
1.3 OBJECTIVE OF STUDY
It should be realized that since sourcing is a very important aspect of purchasing and supply, if it is not efficiently done, the purchasing objective of the lowest price in the right quality of materials, in the right quantity, at the right time and from the right sources, will not be achieved. We should stop the act of awarding contracts to those who are not trust worthy and incompetent people who divert funds to their own private purses. We should also check the solvency status of an organization. For instance, organizations which are at the point of bankrupting, which might not be in a position to finance their projects should not be awarded contracts. Also, before a contra can be awarded to people, they should make sure that they are professionals who would procure the materials in accordance with the ethics and practice of the profession. The objectives of the study could be summarized as follows:
1. To highlight the method of sourcing for raw materials adopted by organizations.
2. To analyze and identify the strategy behind the effectiveness of organizations in the sourcing of raw materials.
3. To derive from the above analysis the conclusive method this could be applied by organizations in Nigeria, which may not be doing well due to difficulties in procuring raw materials for their production.
4. To stress the importance of permitting only qualified and informed personnel to be involved in performing the function .
5. To examine such infrastructures needed for efficient raw materials purchased.
6. To make recommendations where necessary, thus, aimed at improving the raw materials purchase system of the industry.
7. To indicate the relevance of sourcing in purchasing and thereby, reveal what is required and the quality of personnel who should be involved.
1.4 RELEVANCES OF STUDY
This study will expose the researcher to the need for sourcing which is an important aspect of purchasing. Since sourcing is an important tool in reference materials for researchers on how to carry out sourcing for the organization. It will also help or assist the buyer in obtaining the “right quality, right quantity, from the right source, at the right price” This project, therefore attempts to examine how effective and efficient sourcing for materials and services can contribute to the success of supplier development in an organization which will ultimately contribute to the profitability of the buying organization thereby, reducing waste, cost and obsolescence.
1.5 RESEARCH QUESTIONS
1. Is sourcing necessary in an organization?
2. What benefit do organizations gain from sourcing?
3. Is sourcing a wise way of buying?
4. Can organization do without sourcing?
5. How do organizations source?
6. What do organizations consider when sourcing?
7. How do organizations identify potential suppliers
1.6 SCOPE OF STUDY
The scope of this work covers the methods employed by many organizations in seeking, surveying and evaluating performance of suppliers SEEKING, SURVEYING OF SUPPLIER Source selection starts with determining all potential suppliers and continues with the elimination on various grand until the number has been reduced to a workable few. The procedure essentially searchers all potential supplier and then sorts for those with whom to do business. The first step in source selection is to prepare an exhaustive list of prospective suppliers. The effort expanded depends on the importance of the business to be place against the cost of this step
Sources of information concerning supplier are as follows:
(1) Supplier purchasing information file
(2) Supplier catalogues
(3) Trade directories
(4) Trade journals
(5) Sales personal etc.
EVALUATING PERFORMANCE OF SUPPLIERS
There is need to embark an early performance of evaluation of suppliers. If this is carried out, less damage will be caused by poor quality goods delivered by suppliers. In the circumstance, such evaluation should not be restricted to the inspection of incoming goods alone. The proper way of ensuring good evaluation is by: a) Having a permanent own inspector working at the suppliers premises. b) Conducting a regular review meeting at which the buyer and personnel from the supplier company examined all aspects of maintaining quality. c) Involving individual buyers to be solely responsible for the quality of materials supplied. d) Maintaining recording of cost, losses and possible problems caused by the detective supplied for which the supplier has agreed to be responsible .
1.7 LIMITATION OF STUDY
A lot of limitations were encountered on the process of writing this project. The limitations includes the following: a) Data Availability: There wasn’t enough data that will aid me in the completion of this work here in school. In the school library, I was unable to get sufficient text books, these made me to visit some of the nearly campuses like IMT library and some local library in order to get enough information I needed. b) Time Constriranits: The time available for me is too limited, coupled with the numerous term papers, Assignments and the short semester. I was happy at first, thinking that the research work is an easy work, but as time goes on, I begin to get fade up, including our fast approaching examination which one has to read and pass very well Also, I encountered a lot of difficulty when carrying out a research in some organizations. They often bombard me with such questions:
-Which school are you from?
-What level are you?
- What is your discipline?
- What will you do with this information?
-Will it be confidential?
I had to promise them of it confidentiality before they will release some vital information. While some ask for official letter from the department H.O.D
