Assessment On The Importance Of Purchasing Procedures In An Organization
(A Case Study Of Nigeria Bottling Company, Aba)
Purchasing procedures play a crucial role in organizational efficiency and success, serving as a structured framework for acquiring goods and services. These procedures encompass a range of activities, including identifying needs, supplier selection, negotiation, purchase order creation, and receipt of goods. Effective purchasing procedures ensure cost savings through competitive pricing, quality assurance through vendor evaluation, and timely delivery of goods, thereby enhancing operational performance. Additionally, they promote transparency, accountability, and compliance with legal and ethical standards, mitigating risks such as fraud, corruption, and supplier non-performance. By integrating technology and streamlining processes, organizations can optimize their purchasing procedures, enabling better resource allocation, supplier relationship management, and strategic decision-making. Overall, investing in robust purchasing procedures is essential for organizational sustainability, resilience, and competitive advantage in today’s dynamic business environment.
This is a procedures study on the Assessment of Purchasing procedures in an organization. This procedures project is written to analysis critically the strategies involved in the assessment of purchasing procedures how it will profit the organization and the basic need to adopt the purchasing procedures for the profitability of an . It will help to gather useful information about the product which is to be purchased and to ensure the quality and the quantity and at a good price. It is also intended to make useful suggestions and recommendation that will help in purchasing materials for the organization. The language used is simple enough to be understood by the headers. This procedures project has been specially and carefully prepared in five chapters and the materials, which has been collected personally by full observation and study. Chapter one of the project is focus on the background of the study, brief history of the company, statement of the problems, objective of the study, significance of the study, scope of the study, limitation of the study. Chapter two deals on procedures review the related literature. Chapter three is based on the presentation of data analysis chapter four, it centers on testing of hypothesis, while chapter five is al about the summary, conclusion and recommendation also with bibliography.
1.0 INTRODUCTION
Procedures has been identified as one of the most powerful tools and a panacea to many of the worlds greatest problems. Procedures is a goal oriented and its goals determine its nature and form.
Studies have shown that one of the major problems militating against the profitability of human endeavour in general and organization in particular is lack of adequate procedures .
It is in the light of these, that this procedures work is geared towards the assessment of purchasing procedures and how it affects the profitability of an organization using Nigeria bottling compaby as a case study.
1.1 BACKGROUND OF THE STUDY
As seen from the introduction, procedures affects all spheres of man’s activities. The companies are not therefore left out, especially is regards materials sources of supply and other important and related issues about purchasing, hence, purchasing procedures .
The first world countries have embraced procedures that they have made remarkable and outstanding success and progress in the technological advancement of the world. This study seeks to encourage third world countries especially universities and polytechnics procedures institutions and the like not to overlook the importance of procedures .
Moreso, companies are advised to pay good attention to the contribution of purchasing procedures for their increased profitability. They are encouraged to know that purchasing procedures is a tool that can assist them in their daily purchasing decisions. As an aid to enhance purchasing activities, companies are against this background, expected to embraced purchasing procedures and provide the finance necessary to carry out this procedures for better performance of the purchasing functions, which in turn contributed to the overall organizational profitability.
1.2 STATEMENT OF THE PROBLEMS
The essence of purchasing procedures in any organization is to identify those salient activities as regards materials, sources of supply and other important and related issues about purchasing.
In view of this fact, it is imperative to take insight into the purchasing procedures activities of an organization, using Nigeria bottling company Aba as a case in point in the light of its procedures efforts and how the impacts has contributed to the profitability of the organization.
Closely related to this are the needs for price in the purchasing of materials for production, lack of inadequate raw materials as it affects production etc.
In undertaking this study, the procedures er intends to investigate to what extend, procedures es on price and lack of adequate raw materials have affected the profitability of Nigeria bottling company Aba.
1.3 OBJECTIVES OF THE STUDY
As earlier stated, purchasing by its nature is a basic and integral part of business management. In addition, the basic goal of any business organization is to produce goods and services which can be marketed at a profit. However, this goal is achieved by blending appropriately the five M’s of management viz machine, manpower, materials, money and management of all the five, materials have seen as the life blood of industries and as such need not be treated carelessly.
Purchasing procedures is therefore undertaking to solve problems such as sudden shortages or an unacceptable price increase, or in response to other exceptioned situation such as a change in the law governing such as a change in the rate of exchange.
From the foregoing the objective of the study are: –
1. To ascertain the important areas of purchasing procedures
2. To investigate into important areas of purchasing procedures
3. To examine the reasons for purchasing procedures
4. To x – ray the relationship between purchasing procedures in an organization
5. To find out the relationship between purchasing, purchasing procedures and company’s profitability.
1.4 THE SIGNIFICANCE OF THE STUDY
This study or procedures work is very important to a number of persons. To me as the procedures er carrying out this procedures is an adventure. In the course of the writing, it is a way of developing my talent and creative gift of writing as a student. Again, it is a requirement for the award of the Higher National Diploma (HND) in Purchasing and Supply chain management.
In addition, this study will serve as a data bank for reference point for other procedures er. Furthermore, the department of purchasing in every industry will appreciate the content of this procedures work as it assist. There is their constant procedures for materials, products or seminars, purchasing personnel, suppliers on commodities on purchasing procedures.
In addition, this procedures will profit a number of students in the purchasing and other department of any higher institution by providing the necessary information for writing on similar or related topic. It will therefore provide a yards tick topic or standard for such student when they shall make reference to this materials.
1.5 PROCEDURES QUESTION
1. Does the organization attach importance to purchasing procedures ?
2. If purchasing is given a top management, approval is purchasing procedures of important concern to management?
3. How has purchasing procedures contributed to be company’s overall profitability?
4. What are the greas that purchasing procedures is carried out in your industry?
5. What impact have purchasing procedures been playing in your industry?
1.6 HYPOTHESIS FORMULATION
The following hypothesis have been put forward in order to carry out to validate the essence of this procedures work.
HYPOTHESIS I
Ho: Purchasing procedures does not contribute to the company’s profitability
Hi: Purchasing procedures contribute to the company’s profitability
HYPOTHESIS II
Ho: The impact of purchasing procedures does not affect the entire industry
Hi: The impact of purchasing procedures affects the entire industry
1.7 SCOPE OF THE STUDY
Purchasing procedures is an important and vast area of study, moreso, it is carried out by a lot of manufacturing firms in order to increase their profitability. This being the case, this procedures on purchased materials, products or service purchasing personnel, on suppliers on commodities and on methods purchase that is purchasing procedure or system.
Furthermore, this work will concentrate more on profit making organization preciusely manufacturing industries with particular reference to Peterson Zochonis Plc (Pz Industries Plc, Aba Abia State.)
1.8 LIMITATION OF THE STUDY
In carrying out this procedures work, a lot of things interested me for example, the joy of ending my first degree with writing of my project. However, I was constrained with time because we were given a short period to write and defend our project immediately after our exams. I was therefore hurrying to meet up with the date given to use and there was also no time to visit other libraries for vital information.
In addition, there was also the problem of finance to move around in order to visit the industry used as a case study. There was also problem of insufficient procedures materials on the topic, these problems were however adjusted to by the procedures er in order to ensure that this procedures work is a success.
1.9 DEFINITION OF TERMS
It is also important to define some unfamiliar terms to that other procedures ers can find their meanings easily in case they want to make use of this work.
PURCHASING
Is defined as planned buying. It is a function in the organization that fulfills organizational needs through acquisition of the right materials, supplies, plants, tools, machineries and services that will enable the organization to attain its targeted goals.
PROCEDURES
This is a sustained inquiry into problems and seeking out ways to solve it. According to Anyanwu (2006) procedures is the systematic and objective search for and analysis of data with a view to generate information necessary for the solution to problems.
PURCHASING PROCEDURES ER
According to Uzor (2003) purchasing procedures is defined as the systematic collection, classification and analysis of data as the basis for better purchasing decision. It is therefore a formalized means of obtaining information to be used in making decision. It is concerned with collecting and analyzing information concerning the supplies environment as a basis for planning of strategies for the future.
SUPPLIERS
These are the people who supply materials, parts, goods or services to the buying organization.
ORGANIZATION
This is a firm that may be either profit or non – profit oriented that exists for the sake of producing goods and services at the profit or rendering services
HYPOTHESIS
A statement of put position which can be investigated to either be true or false.
PROFITABILITY
This is the end target of ever profit oriented firm increasing their capital base in the form of additional revenue which can be ploughed back into the business as retains earnings.
Assessment On The Importance Of Purchasing Procedures In An Organization:
Purchasing procedures are a critical component of an organization’s overall operations, and they play a vital role in ensuring the efficient and effective acquisition of goods and services. Here are some key points to consider when assessing the importance of purchasing procedures in an organization:
Cost Control:
Purchasing procedures help control costs by establishing guidelines for procurement. This ensures that purchases are made at the best possible price, taking advantage of bulk discounts and negotiating favorable terms with suppliers.
Budget Management:
Purchasing procedures are essential for maintaining budgetary discipline. They help align purchasing decisions with the organization’s financial resources and strategic objectives, preventing overspending and budget overruns.
Supplier Relationships:
Effective purchasing procedures foster positive relationships with suppliers. Consistent and transparent procedures can lead to better communication, trust, and long-term partnerships, which can result in better pricing, quality, and reliability of supplies.
Quality Assurance:
Purchasing procedures often include quality control measures. By specifying product or service standards, organizations can ensure that they receive goods and services that meet their quality requirements, reducing the risk of defects or subpar performance.
Risk Mitigation:
Procedures can help mitigate risks associated with procurement. They include steps for due diligence on suppliers, contract negotiations, and dispute resolution mechanisms, reducing the chances of legal and financial issues arising from purchasing decisions.
Compliance:
Purchasing procedures help ensure compliance with legal and regulatory requirements. This is especially crucial in industries with strict regulations, as non-compliance can lead to fines, legal troubles, and reputational damage.
Transparency and Accountability:
Well-defined procedures promote transparency in the procurement process. They establish clear roles and responsibilities, making it easier to track and evaluate purchasing activities. This transparency enhances accountability, as deviations from established procedures can be identified and addressed.
Efficiency and Productivity:
Standardized procedures streamline the purchasing process, reducing administrative overhead and the time spent on procurement tasks. This can free up resources for more strategic activities within the organization.
Strategic Alignment:
Purchasing procedures should align with an organization’s strategic goals. By ensuring that purchases support the organization’s mission and objectives, these procedures contribute to overall success.
Continuous Improvement:
Regularly reviewing and updating purchasing procedures allows organizations to adapt to changing market conditions, technology advancements, and business needs. This commitment to continuous improvement can enhance an organization’s competitiveness.
In conclusion, purchasing procedures are a fundamental element of effective procurement management within an organization. They contribute to cost control, supplier relationships, risk mitigation, compliance, and overall operational efficiency. Properly designed and implemented procedures not only ensure that the organization gets value for its money but also help it achieve its strategic objectives while minimizing risks and maximizing opportunities.