Effectiveness Of Purchasing Planning And Control In A Manufacturing Organization
(A Case Study Of Anammco In Enugu)
Purchasing planning and control play a critical role in optimizing operations within manufacturing organizations, ensuring efficiency, cost-effectiveness, and uninterrupted production cycles. By strategically forecasting demand, analyzing market trends, and establishing robust supplier relationships, manufacturing firms can mitigate risks associated with supply chain disruptions and fluctuating raw material prices. Implementing effective purchasing strategies enables organizations to streamline procurement processes, negotiate favorable terms, and minimize inventory costs while maintaining high-quality standards. Moreover, meticulous control mechanisms, such as inventory management systems and performance metrics monitoring, facilitate real-time decision-making and continuous improvement initiatives. Through the integration of advanced technologies like data analytics and automation, manufacturing enterprises enhance their agility and responsiveness to dynamic market conditions, thus gaining a competitive edge. Consequently, the synergy between efficient purchasing planning and control fosters operational resilience, cost savings, and sustained growth in the highly competitive manufacturing landscape.
The researcher is determined to see and threw more high on the effectiveness of Purchasing Planning and Control in a Manufacturing Organization with ANAMMCO in Enugu as a case study.
For orderly presentation the researcher undertake a background study of the company which enable the researcher touch some major problems encountered by the company purchasing planning and control. The researcher also undertook a study of the population size and area undertook a study of the population size and area of study for collection of data about the population. The researcher used questionnaire to determine the attitude of customers and company personnel’s about the effectiveness of purchasing planning and control.
The administering of the questionnaire was done in such a way that not part of the customer was neglected.
The sample size and sampling technique used by the researcher was dividing the questionnaire into customers and company personnel’s by using Bourley’s formular in determine them to make sure that a good representation of the entire element in the market was represented. The presentation and analysis of data for testing hypothesis was the chi – square method since data gotten appear low and incomprehensible percentage were used to make them clear.
Finally, the researcher recommended to ANAMMCO that their effectiveness of their purchasing planning and control must be improved more than it is to enable their plan be more effective.
TITLE PAGE
APPROVAL PAGE
DEDICATION
ACKNOWLEDGEMENT
ABSTRACT
TABLE OF CONTENT
CHAPTER ONE
1.1 Introduction
1.2 Statement of problem
1.3 Objective of the study
1.4 Research hypotheses
1.5 Significance of the study
1.6 Definition of terms
CHAPTER TWO
2.1 Review of related literature
2.2 What is purchasing planning
2.3 The purchasing planning process
2.4 Managing the plan
2.5 Corporate planning
2.6 The importance of measurement and control
2.7 The purchasing control process.
CHAPTER THREE
3.1 Research methodology
3.2 Area of study / population
3.3 The sample size and sampling techniques
3.4 Method of data collection
3.5 Method of distributing questionnaire
3.6 Description of data analysis tool for testing hypothesis
CHAPTER FOUR
4.1 Presentation and analysis of data
4.2 Resting of hypothesis
CHAPTER FIVE
5.1 Summary of research finding
5.2 Recommendation
5.3 Conclusion
INTRODUCTION
1.1 BACKGROUND OF THE STUDY
Looking ahead and prepare for future is better than to look back and regret. An organization especially a manufacturing in a very competitive needs to examine how it can effectively develop plan and strategies for serving its purchasing.
The aim of any purchasing operation is to make the future happier. But this was not well recognized by most firms initially so job that should be handled by experts in the field of purchasing were given to less qualified personnel’s and in most case this shorten the life of most business.
Planning is the management function of setting target or objective to be achieved and detailing out ways by which the target will be achieved.
Planning is sometime greater than first thinking ahead. In manufacturing organization (Anammco) purchasing planning and control show who is to do the job (qualified purchasing personnel’s) how the qualified purchasing personnel’s will carryout the job and when the job will be done.
Purchasing planning and control share with the others activities of the purchasing mix the distinction in commerce of being a dynamic element in operation of business. The effective of purchasing planning and control in a manufacturing organization enable the organization to absorb possible shock emitting from purchasing environmental change.
The subject matter is chosen by the researcher to explain the foregoing Anamco marketing planning and control in other to know its effectiveness.
According to Adirika (2003, P.11) in this lecture note, “purchasing planning is an exercise of analysis for and to increase the effectiveness of purchasing. Or drawing from the past to decide in the present what to do in further in other to achieve the purchasing objective enterprise efficient effective.
Purchasing planning does not depends on only theory or book knowledge. In other to plan effectively we need to understand and know about our own environment (Macro – and Mirco environment) where the purchasing plan will operate.
For purchasing planning and control to be effective the qualified purchasing personnel that carried out the purchasing and control may consider some element or feature such as time.
Purchasing planning and control will be effective if the plan has a stated time, for completion, the estimate of time may be varied depending on the product or firm.
For purchasing planning and control to be effective the money for material needed for the effective planning must be available and human resources.
The qualified purchasing personnel’s would have a group of consumers or target markets in mind and then position the organization’s or company’s product on this target market or segment.
Purchasing control played a vital role in a manufacturing organization. If all purchasing programme or plan along with other sub function are ideal and well harnessed but lack control it will be likened to driving a well structured comfortable vehicle without a steering on a very busy road.
Control is the vital follow – up process which is complementary to planning while purchasing planning is deciding in advance what needs to be done, how and when it should be done.
As clearly recognized decade ago in an undertaking control consist on verifying whether everything occurs in conformity with the plan adopted, the instruction issued and principle established. It has for object to point out weakness and error in order to rectify them and present recurrence.
Purchasing control as concerned with establishing and maintaining appropriate procedure and apparatus for monitoring and measuring the implementation of purchasing plan and strategies set out to active purchasing objective and taking necessary corrective action.
1.2 STATEMENT OF THE PROBLEM
It has been said that planning is determining the future ad control what have been planned.
In having good and effective purchasing planning and control in a manufacturing organization, some basic problem confront purchasing management.
One of the problem is availability of funds to the purchasing department, the company may lack adequate finance to carryout set purchasing planning and control effective. The absence of funds at the right time to back the plan means incapacitate by the executive in implementing the plan and ensuring that deviation are connected.
Another problem may be problem of recruitment of qualified personnel to handle the planning and having experience person to execute the set plan.
Frequent change of purchasing personnel may also contribute or improve the effectiveness of purchasing planning and control in a manufacturing organization.
In looking at this, one would want to know the effectiveness of purchasing planning and control in a manufacturing organization how it can be effectively implemented and also the various ways to improve on it effectiveness to achieve organizational goals and objective.
1.3 OBJECTIVE OF THE STUDY
1) The primary objective of this study is to know the effectiveness of purchasing panning and control in a manufacturing organization (ANAMMCO)
2) This study will enable the research to know some basic problems that develop in the process of having good purchasing planning and control in a manufacturing organization.
3) This study will provide the researcher some solution to the problem and reduce bottleneck in planning process of the particular organization.
4) To know the benefit on good purchasing planning and control in a manufacturing organization.
5) This research can equally serve as a base for further study on topic related to the subject.
1.4 RESEARCH HYPOTHESES
1) The presence of unqualified purchasing personnel’s makes Purchasing planning and control ineffective.
2) Due to frequent change of purchasing personnel’s, Purchasing planning and control in ANAMMCO becomes ineffective.
Lack of effective improvement and change in Purchasing plans and control doesn’t led to lose of market to other competing firms by Anamco.
1.5 SIGNIFICANCE OF THE STUDY
The significance of the stud is to draw the attention of other researchers in the field of business especially purchasing to be interested in the conduct of more indept research in the area of the Purchasing planning and control effectively.
The idea will act as a framework ie to put the plan together to direct market managers on how to put the plan together so s to make it effective in formulating good Purchasing planning and control over foreign investor in Nigeria.
The study will also induce business managers, entrepreneurs, purchasing managers, and sales managers to take proper care to develop a purchasing pan and control that will be devoid of the problem identified by the research in the study. This write up is also expected to teach young learners to serve as history for them during their own time of learning.
Based on the findings, the researcher will work within his scope to provide some solution to the research problems and reduce unavoidable ones.
1.6 DEFINITION OF TERMS
Planning: Is deciding in the present what to do in the future.
Control: A process of monitoring what has been planned
Strategy: Is the pattern of major objective purpose of goal and essential
Policies and plan for achieving those goal stated.
Effectiveness: To be able to bring about the result intended.
Manufacturing Organization: Those companies that produced good
Either consumer goods or industrial goods for consumption or for further product.
Qualified Purchasing Personnel’s: They are those purchasing that are
Competent in carrying out purchasing activities in an organization.
Goal / objectives: What the company intends to achieve.
Potential Customers: Those people that may be the company’s products
Market: Is the set of all actual and potential buyers of the company
Product
Market Opportunity: Is an area of buyer need in which a company can
perform profitably.
Purchasing Mix: Is the set of purchasing tools that the firm uses to pursue
its purchasing objective in the target market.
Effectiveness Of Purchasing Planning And Control In A Manufacturing Organization:
Purchasing planning and control play a crucial role in the success of a manufacturing organization. These functions are essential for ensuring that a company procures the right materials, at the right time, in the right quantities, and at the right cost. Here are some key factors that highlight the effectiveness of purchasing planning and control in a manufacturing organization:
Cost Reduction:
Effective purchasing planning and control can help a manufacturing organization negotiate better prices with suppliers, take advantage of volume discounts, and reduce overall procurement costs.
By optimizing inventory levels, purchasing can minimize carrying costs, including storage and holding expenses.
Supplier Relationship Management:
Establishing strong relationships with suppliers is vital for a manufacturing organization. Purchasing planning and control can help identify reliable suppliers and maintain positive long-term relationships.
Effective communication with suppliers ensures a smooth flow of materials and helps resolve any issues promptly.
Quality Assurance:
Purchasing planning and control processes can include quality checks and inspections of incoming materials. This helps ensure that only high-quality raw materials are used in the manufacturing process, reducing defects and rework.
It can also involve audits of suppliers to assess their quality management systems.
On-Time Delivery:
Timely procurement of materials is critical to meeting production schedules. Effective planning and control help ensure that materials are available when needed.
This minimizes production disruptions, avoids costly delays, and helps meet customer demand on time.
Inventory Management:
Efficient inventory management is a key aspect of purchasing planning and control. It involves maintaining the right level of stock to meet production needs without excessive holding costs.
Proper inventory control prevents overstocking or understocking of materials, which can lead to financial losses.
Risk Mitigation:
Purchasing planning and control also involve risk assessment and mitigation. Identifying potential risks, such as supply chain disruptions, and having contingency plans in place can help a manufacturing organization respond effectively to unexpected events.
Strategic Sourcing:
Effective purchasing planning goes beyond day-to-day procurement activities. It involves strategic sourcing decisions, such as selecting the right suppliers, sourcing globally, and evaluating alternative materials or suppliers for cost savings or risk mitigation.
Data Analysis and Technology:
Modern purchasing planning and control often leverage data analytics and technology solutions to optimize procurement processes.
Data-driven decision-making helps in forecasting demand, identifying cost-saving opportunities, and improving overall efficiency.
Compliance and Ethics:
Effective control processes ensure that the organization complies with relevant regulations, industry standards, and ethical guidelines in its procurement practices.
Performance Measurement:
Regularly measuring and analyzing key performance indicators (KPIs) related to purchasing and procurement processes allows for continuous improvement and better decision-making.
In summary, the effectiveness of purchasing planning and control in a manufacturing organization is essential for cost reduction, supplier management, quality assurance, on-time delivery, inventory management, risk mitigation, and overall operational efficiency. These functions are integral to the success and competitiveness of a manufacturing organization in today’s dynamic business environment.