Relevance Of Purchasing Planning And Control In The Organizational Productivity
(A Case Study Of Nigerian Bottling Company Plc, Owerri Plant)
Purchasing planning and control play a crucial role in enhancing organizational productivity by strategically managing the procurement process. Efficient procurement practices are essential for businesses to secure the necessary resources and goods required for their operations. This involves a meticulous approach to planning, ensuring that the procurement strategy aligns with the organization’s goals and objectives. Effective planning involves forecasting demand, evaluating suppliers, and optimizing cost considerations. The control aspect involves implementing mechanisms to monitor and regulate the purchasing process, mitigating risks and ensuring compliance with established guidelines. By integrating these practices seamlessly into the operational framework, organizations can achieve enhanced productivity through streamlined procurement processes, timely access to resources, and cost-effective acquisition of goods and services, ultimately contributing to the overall success of the enterprise.
The major purpose of the study was to determine the relevance of purchasing planning and control in the organizational productivity. The Nigerian bottling company Owerri plant was chosen as a model in this research study among other manufacturing firms. In this study, the researcher made use of descriptive research design and use of questionnaire and personal interviews in collection of the data. The population of the study was made up of 100 workers, four research questions and two hypotheses were formulated.
Chi-square was used to test the hypothesis of 0.05 level of significant the major findings of the study were
1. The firm reviewed its plan and budget quarterly basis so as to take into consideration the major seasons of the year.
2. The analysis of variation by the purchasing planning and control department during production process helped the firm to discover areas of shortcoming in production process. It was concluded that profitability and efficiency would be improved based on an efficient purchasing planning and control it was recommended that management should ensure that through the purchasing department and purchasing planning and control department, production budget ensured minimization of cost so as to meet customers satisfaction and profit maximization. There should be periodical on the job training for the workers in the purchasing planning and control department.
i Title Page
ii Approval Page
iii Dedication
iv Acknowledgement
v Abstract
vii Table of Content
CHAPTER ONE
1.0 INTRODUCTION
1.1 Background of the Study
1.2 Statement of the Problem
1.3 The Objectives of the Study
1.4 Research Questions
1.5 Significance of the Study
1.6 Scope / Delimitation of the Study
1.7 Limitation of the Study
1.8 Definition of the Terms
CHAPTER TWO
2.0 LITERATURE REVIEW
2.1 What is Planning?
2.2 Development of Plan
2.3 Objectives of Planning
2.4 Activities of Purchasing planning and control
2.5 Production Control
2.6 Types of Production Control
2.7 Production/Manufacturing Process
CHAPTER THREE
3.0 RESEARCH METHODOLOGY
3.1 Introduction
3.2 Sample of Study
3.3 Methods of Data Collection
3.4 Administration of Questionnaire
3.5 Method of Data Analysis
CHAPTER FOUR
4.0 PRESENTATION, ANALYSIS OF DATA AND INTERPRETATION
4.1 Presentation of Data
4.2 Analysis of Data
4.3 Interpretation of Data
CHAPTER FIVE
5.0 SUMMARY, CONCLUSION AND RECOMMENDATION
5.1 Summary
5.2 Conclusion
5.3 Recommendation
Bibliography
1.0 INTRODUCTION
1.1 THE BACKGROUND OF THE STUDY
The study therefore aims at identifying the problem that delay or inhibit the smooth flow production processes in the manufacturing establishments, using the Nigerian bottling company Owerri plant as a case study.
In this study, we shall examine what the Nigerian bottling company Owerri plant encounters in their attempts of satisfying customers’ needs through their purchasing planning and control systems.
Planning means deciding what is to be done, where, how and by whom. It involves “scheduling” the timing of processing assembly and manufacturing (i.e. determining the start, completion and delivery time). Machine loading (i.e. assignment of work to particular machines equipment) materials and availability planning (including the storage and handling of items) and arranging for dispatch to customers.
Effective purchasing planning and control depends on information about work priorities, constraints, available machinery, labour and materials and about the existing workload. Employees know as progress chasers follow work all the way through the production processes, reasons for delays is investigated, interruption in workflow are remedied. An effective progress chaser will know at any moment in time.
What work is being done?
How work is done?
Which machines are being used?
How much labour is available?
What raw materials and other inputs are carried in stock. Interruptions may result from non- or late delivery of materials, machine breakdowns, staff sickness, strikes, and staff lateness due to public transport difficulties computer malfunctioning or stock shortages. Breakdown in communication especially between the shop foll and the controlling unit will also delay production. There has to be a continuous flow of information on work load, raw materials availabilities, surplus capacities, breakdowns and maintenance activities scheduling, most times is problematic when demand for output fluctuates suddenly. Often, it is cheaper to continue production during “slack period” because of set up costs and the problems of regulating skilled labour following temporary shutdowns.
Activities relevant to production includes: design specification of dimensions, materials inputs and quality, ensuring the compatibility of one component with others, job description issuing detailed instructions to supervisors, inspections, quality control, packaging, loading and dispatch. Plans are implemented by controllers responsible for minimizing manufacturing delays by regulating the flow of work.
1.2 THE STATEMENT OF THE PROBLEM
Production of goods in batches is subject to complex movement of items between work units and operatives and it is easy for batches mistakenly to be broken up. Machine loading can be complicated also.
Further difficulties are:
It might not be possible to avoid particular batches lying around for long periods between operations.
Extensive documentation of movements of batches around a factory may be required.
Conversely the problems are:
Coping with a breakdown in the system. Things will cease to operate in its entirety following just a minor hold up. Input materials will have to be put into storage while the stoppage is sorted out. Ensuring the uninterrupted arrival at the firms premises of large amount of raw materials and or inputs components.
When batches planning for continuous flow for production is perhaps easier than that of items are involved because of less detailed scheduling (and associated paper work) is required. There is a single flow of work through the system. Changes to which are simple to implement. On the other hand planning for continuous production is inflexible in that labour and other resources cannot readily be re-deployed among different machines/equipment groups in the event of a breakdown. (As the case with batch production. Where orders can be re-routed, temporarily held back or accelerated through part of the system).
1.3 THE OBJECTIVE OF THE STUDY
1. To ascertain whether the mode of operation and system of production is adequate for the Nigerian bottling company Owerri plant.
2. To evaluate the techniques of purchasing planning and control in Nigerian bottling company Owerri plant.
3. To examine the effectiveness of their control system.
4. To find out any inherent deficiency and to make recommendations for solving identified problems.
1.4 THE RESEARCH QUESTIONS
• To what extent is the mode of operation and system of production adequate for the company?
• How effective is the control system of the company?
• Is there any inherent problem associated to purchasing planning and control
• How adequate is the technique employed by the company in the purchasing planning and control decisions.
1.5 THE SIGNIFICANCE OF THE STUDY
This research work hopefully will be a useful and unavoidable guide for future decision makers and serve as a benchmark for future research studies in the field of purchasing planning and control in manufacturing establishments especially to the Nigerian bottling company, Owerri, mostly in their purchasing planning and control to enhance effectiveness and efficiency in their production/manufacturing process so as to meet with their customers’ demands of needs satisfaction.
The work will also be of benefit or recommend ways by which the establishment or firm could reduce production costs to the barest level in order to achieve its desired profit level of maximization. The work will mostly direct future research scholars carrying on work in the same or related problem areas.
1.6 SCOPE/DELIMITATION OF THE STUDY
This research work is an attempt to provide an in-dept study into the daunting task purchasing planning and control in the organizational productivity in the light of such policies and programmes aimed at increasing local production to meet domestic needs and provide raw materials for local industries. It studied the production process of the Nigerian bottling company Owerri plant. The study explored the entire production and maintenance departments of the firm under study.
Meanwhile, the various subsections in the department formed the nucleus of the study and all their subordinates that are related.
As such, results obtained would be used to make generalizations about what is obtainable in other manufacturing establishments. The data responses for the study were from interviews conducted with the management of the Nigeria bottling company Owerri, and some staff in the purchasing planning and control department of the organization on whom questionnaires were administered.
1.7 LIMITATIONS OF THE STUDY
The following limitations were inherent in the study:
1. The limitation inherent in the use of questionnaire in terms of objectivity, truthfulness and sincerity from respondents are acknowledged, there is therefore the tendency for a degree of error to occur in the evaluation of data.
2. The inability of the researcher to include all the workers in that organization, due to lack of fund and time at the researchers disposal, therefore, the finding and generalization were only restricted to top managers, middle managers and supervisors.
1.8 DEFINITION OF TERMS
PLANNING: This is the regulation, co-ordination and controlling of production facilities so as to meet a set delivery date and at a reasonable cost.
PRODUCTION CONTROL: This is the function of directing or regulating the orderly movement of goods through the entire manufacturing cycle from the requisition of the raw materials to the delivery of the finished products to meet the objectives of customer services, minimum inventory investment and manufacturing efficiency.
PRODUCTION COST: This constitutes the aggregate of direct materials, direct labour and factory overhead cost that have been accumulated by some natural classification and allocated so as to reflect the cost involved in the production of an item.
MANUFACTURING PROCESS: This is defined as any organization or arrangement that converts raw materials into finished products (input > process > output)
CONTROL SYSTEM: Is a set of mechanism designed to increase the chances of meeting organization goals.
OBJECTIVES: These are specific goals which have to be accomplished in order to achieve the mission.
COMMUNICATION: This is the medium through which inform is passed.
PLANNING: This could be defined as the process of setting policies, procedures, methods, rules and regulations which are necessary to guide the use of resources in achieving organizational goal.
MANAGEMENT: This is act of getting things done through and with people.
SYSTEM: A combination of interrelated small units working together to produce a result.
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Relevance Of Purchasing Planning And Control In The Organizational Productivity:
Purchasing planning and control play a crucial role in enhancing organizational productivity in several ways:
- Cost Management: Effective purchasing planning ensures that materials and resources are procured at the best possible prices. This helps in controlling costs and maximizing the value obtained from the resources, thereby improving overall productivity.
- Inventory Management: Purchasing planning involves forecasting demand and ensuring that appropriate inventory levels are maintained. By managing inventory efficiently, organizations can prevent stockouts, minimize excess inventory costs, and optimize working capital utilization, leading to enhanced productivity.
- Supplier Relationship Management: A well-structured purchasing plan involves selecting reliable suppliers and building strong relationships with them. This ensures timely delivery of quality materials, reduces lead times, and minimizes disruptions in the production process, thus improving productivity.
- Quality Assurance: Purchasing control involves monitoring the quality of materials procured. By ensuring that only high-quality materials are used in production, organizations can reduce defects, rework, and wastage, ultimately leading to improved productivity.
- Risk Mitigation: Effective purchasing planning includes risk assessment and mitigation strategies. By identifying potential risks such as supply chain disruptions, price fluctuations, or quality issues, organizations can proactively implement measures to mitigate these risks, thereby safeguarding productivity.
- Strategic Alignment: Purchasing planning should be aligned with overall organizational goals and strategies. By ensuring that purchasing decisions support strategic objectives such as cost reduction, product innovation, or market expansion, organizations can enhance productivity and competitiveness.
- Process Efficiency: Streamlining purchasing processes through effective planning and control can lead to increased efficiency. Automation, standardization, and optimization of procurement processes reduce cycle times, administrative burdens, and errors, thereby freeing up resources to focus on value-added activities and enhancing productivity.
In conclusion, purchasing planning and control are integral components of organizational productivity. By effectively managing costs, optimizing resources, fostering supplier relationships, ensuring quality, mitigating risks, aligning with strategic goals, and enhancing process efficiency, organizations can significantly improve productivity and gain a competitive edge in the marketplace.