ROLE OF PURCHASING IN COST REDUCTION AND CONTRIBUTION TO PROFITABILITY – AN APPRAISAL OF A MANUFACTURING COMPANY (CASE STUDY OF NIGERIA DISTILLERIES LIMITED)

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ROLE OF PURCHASING IN COST REDUCTION AND CONTRIBUTION TO PROFITABILITY – AN APPRAISAL OF A MANUFACTURING COMPANY (CASE STUDY OF NIGERIA DISTILLERIES LIMITED)

ABSTRACT

The purchasing function contributes directly to the operating results, cost reduction and profitability of an organization. It has been argued out that, the fact that purchasing is responsible for spending more than 70 percent of an organization’s sales capital highlights the profit enhancing potentials of the purchasing on an organization.

The purpose of this research is to describe the role purchasing played in cost reduction and its impact on the profitability of Nigeria Distilleries Limited.

Primary and secondary data collected were collected in order to fulfil the research work; the primary data was gathered directly from relevant sources in, Nigeria Distilleries Limited through one on one interview and questionnaires. The secondary data was obtained from indirect sources, such as textbooks, articles, and websites. Due to population size of the entire staff which was 200, 10% of the entire population was chosen which amounted to 20 staff to administer the questionnaires.

These findings revealed so many problems encountered by the study which includes the problems of stock out, overstocking which had devastating effects on cost and profitability of the company. Recommendation was made to correct all the problems in the concerned company.

TABLE OF CONTENTS

CHAPTER ONE

1.0. Introduction

1.1 Problem statement of research

1.2 Brief background of company of study

1.3 Staff Strength/Structure

1.4 Vision and mission statement

1.5 Purpose of research

1.6 Significance of research

1.7 Research questions

1.8 Limitation of research

1.9 Definition of terms

CHAPTER TWO

2.0 Literature review

2.1 Definition of purchasing

2.1.1 Role of purchasing in an organization

2.1.2 Function of purchasing department

2.1.3 Centralized and decentralized purchasing strategy

2.1.4 Centralized and decentralization purchasing strategy

2.1.5 Supplier sourcing and evaluation

2.1.6 Supplier sourcing strategy

2.1.7 Partnership sourcing strategy

2.2 concept of cost

2.2.1 Program of Controlling Cost in an Organization

2.2.2 Importance of purchasing in cost reducing and

Contribution to profitability

2.2.3 Profitability program recommendation

2.3. Published pricing lists

2.3.1 Negotiation

2.3.2 Process of Negotiation

2.3.3 NDL Material Management Division

2.4 Purchasing function in NDL

2.5 Centralized purchasing

2.5.1 Centralized Purchasing

2.6 Procedures for procurement

2.7 Procedure for Receipt of Materials from suppliers

2.8 Procedure for payment/invoice treatment

2.9 Process for Vendor Development and selection

CHAPTER THREE

3.0 METHODOLOGY

3.1 Research strategy

3.2 Choice of Company

3.3 Sample Size

3.4 Data collection

3.4.1 How data was collected

3.5 Primary data

3.5.1 Questionnaires

3.5.2 Oral Interview

3.6 Secondary data

3.7 Method of data Analysis

3.7.1 Literature search

3.8 Reliability and Validity tests

3.8.1 Internal and External Validity Test

3.9 Frame of Reference

CHAPTER FOUR

4.0 Presentation Analysis and interpretation of data

4.1 Presentation of Data

4.2 Analysis of Result

4.3 Purchasing and purchasing Strategy in NDL

4.4 NDL Supplier Souring Strategy

4.5 NDL Supplier Souring Evaluation Criteria

CHAPTER FIVE

5.0 Conclusion

5.1 Recommendation

5.2 Conclusion

References

Appendixes

ROLE OF PURCHASING IN COST REDUCTION AND CONTRIBUTION TO PROFITABILITY – AN APPRAISAL OF A MANUFACTURING COMPANY (CASE STUDY OF NIGERIA DISTILLERIES LIMITED)

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