Negotiation As A Cost Reduction Tools In Materials Purchases

This research work on negotiation as a cost reduction tools on materials purchases a case study of Asaba Tex Nig. Ltd. The scope of this research work covers every activity which has to do with negotiation problems, background to the subject matter, rationale for the study and the limitations of the study. The research reviews the related literature about the topic under discussion by gathering from distinguished authors and scholars, facts and opinions the finding of this study through the administration and oval interview of some employees of the company, revealed that effective negotiation lead to cost reduction and also contributed to the company"s profitability.

Finally, based on the findings a number of recommendations were made that Asaba Tex Nig ltd should ensure that all worker should under the professional training in the field. Also the company should amend their policy and responsibility for transportation and inspections during negotiation because this is not a good policy. The seller is suppose to be responsible since in is the one to sell his products to the organisation.

DISCUSSION OF FINDINGS, RECOMMENDATIONS AND CONCLUSION

5.1 Discussion of Results

The analysis of results in chapter four shows that effective negotiation is a good cost reduction tool in materials purchasing.

That Effective negotiation help to achieve high cost reduction in materials purchasing

However, negotiation is only a tool for achieving cost reduction in materials purchasing.

5.2 CONCLUSION

There are several different strategies and tools that a buying organization can use to reduce the cost of purchased services. Each buying organization will have to determine the best strategies to use based on its own unique factors, strategic goals, and core competencies. Strategies that work well for one organization may not work effectively for another.

Carefully evaluate the options available to you and choose the strategies that fit the particular needs and situations of your organization.

Some of the money saving strategies identified in this paper include tracking spend more closely to identify opportunities to take advantage of volume aggregation; being involved in supplier development efforts to improve relationships with key suppliers; developing integrated sourcing strategies that decrease maverick buying by promoting purchasing compliance, increasing contract compliance, increasing the level of financial controls and improving payment efficiencies; assigning the tasks of services purchasing to the most appropriate staff members; exploring group or consortium buying opportunities; outsourcing some or all of the services purchasing responsibilities to a third party; and using reverse auctions appropriately. By effectively using some or all of these strategies, any organization can begin to realize significant savings on its services spend.

5.3 Recommendations

Negotiation skills are important to organisations, but can't substitute for good management of materials to reduce cost, they can assist management but do not replace management of provide an excuse for poor management. The following recommendations are adopted.

There should be a continue control on the part of management and low level of wastage to ensure adequate cost reduction.

There should be adequate management system to ensure proper accountability.

• Procurement and Purchasing Project Topics and Materials