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Use Of Non Professional Buyers In The Procurement Of Goods And Service Problems And Solutions

5 Chapters
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77 Pages
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9,463 Words

The engagement of non-professional buyers in the procurement process of goods and services presents both challenges and opportunities. One issue arises from the lack of specialized knowledge and experience, leading to potential inefficiencies, errors, and even risks such as poor quality or inappropriate purchases. Additionally, non-professional buyers may not be familiar with procurement regulations and ethical standards, increasing the likelihood of non-compliance and legal complications. However, these challenges can be mitigated through several solutions. Firstly, comprehensive training programs tailored to non-professional buyers can enhance their understanding of procurement principles, regulations, and best practices. Secondly, implementing user-friendly procurement platforms and tools equipped with decision support systems can streamline the purchasing process and guide non-professional buyers towards optimal choices. Thirdly, establishing clear procurement policies and guidelines, along with effective oversight mechanisms, ensures adherence to standards and facilitates accountability. Finally, fostering collaboration between non-professional buyers and procurement professionals enables knowledge sharing and skill development, promoting more informed decision-making and enhancing the overall efficiency and effectiveness of the procurement process.

ABSTRACT

Over the years, the student/ research has been reading about the “hi-jacking” of purchasing profession by non-professional executive. Also the delegation of the purchasing function to the background of a mere clerical function, despite the fact that this function/profession is in charge of spending up to 65% of an organization’s fund.
The researcher had also during her one year industrial attachment witnessed that way purchasing function were mishandled by non-professionals who claimed to know the job (purchasing). The student has equally encountered some questions which say that if a illiterate woman in the village can buy her want successfully in the market, why studying purchasing and supply?
However, all this combined to motivate the researcher to compact a research on this topic “The use of non-professional buyer in the procurement of goods and service – problems and solution. This work will cover all aspect of purchasing as it affects this establishment PZ Plc, with particular reference to the organization in general.
It will also help to make some suggestion toward the solutions to the problems.
However, the research work will be treated in five chapters. Chapter one will discuss the introduction of the subject matter, the statement of problem, purpose for the research, the research will go further to explain the scope at which the work will go.
The literature review in chapter two will look into this past work of other authors and related areas of the topic.
Chapter three will treat methods and procedures used in collecting information on topic while chapter four would discuss on the presentation and analysis.
Finally, chapter five will give the summary, conclusion and the recommendation of the research based on the outcome of this research work.

TABLE OF CONTENT

TITLE PAGE
APPROVAL PAGE
DEDICATION
ACKNOWLEDGEMENT
ABSTRACT
TABLE OF CONTENT

CHAPTER ONE
1.0 INTRODUCTION
1.1 Background of the Study
1.2 Statement of the Problem
1.3 Objective of the Study
1.4 Significant of the Study
1.5 Research Question
1.6 Statement of Hypothesis
1.7 The Scope of Study
1.8 Limitation of the Study
1.9 Definition of terms

CHAPTER TWO
2.0 LITERATURE REVIEW
2.1 General Overview of buyers in Industries
2.1.1 The informed Professionals
2.1.2 The Uninformed generals
2.2 The position of a buyer in the organization/Structure
2.3 Role of buyer in an Organization
2.3.1 Management Responsibility
2.3.2 Buying Responsibility
2.3.3 Expediting Responsibility
2.3.4 Clerical Responsibility
2.4 Buying Contribution to Profitability
2.5 Determination of Right quality
2.6 Determination of right quantity
2.7 Determination of Right time
2.8 Determination of Right Source of Supply
2.9 Determination of right price
2.10 Problems for not using Professional buy in the procurements of goods and service
2.11 Solution to eliminate such problems
Summary of Literature Review

CHAPTER THREE
3.0 RESEARCH METHODOLOGY
3.1 Introduction
3.2 Research Design
3.3 Sources/Methods of Data Collection
3.4 Population and Sample Size
3.5 Sample Technique
3.6 Validity and Reliability of Measuring Instrument
3.7 Method of data Analysis

CHAPTER FOUR
4.0 PRESENTATION AND ANALYSIS OF DATA
4.1 Introduction
4.2 Presentation of Data
4.3 Analysis of Data
4.4 Test of Hypothesis
4.5 Interpretation of Results

CHAPTER FIVE
5.0 SUMMARY, CONCLUSION AND RECOMMENDATION
5.1 Introduction
5.2 Summary of Findings
5.3 Conclusion
5.4 Recommendation
REFERENCE
APPENDIX

CHAPTER ONE

1.0 INTRODUCTION
1.1 BACKGROUND OF STUDY
Any organization whether private or public needs efficient management for its survival and success. Therefore efficient management is quite necessary more especially as technology is changing, change in taste and population, inflation abound. All these factors are increasing geometrically as against scarce resources.
For efficient management requires the co-ordination of all the functional units of any organization towards the realization of its goals, hence purchasing and supply is inclusive.
However, for you to have an efficient management, purchasing is on its part achieved when the buyer purchases the required quality and quantity of raw materials, supplies parts tooling, equipment, etc, at the right time, from the right source, to the right place and at the right price. This can be achieved when the right person who must have past through some steps in obtaining the required profession. This qualification can be either HND, NIPSM, CIPSM, etc.
BRIEFlagbTORY OF PETERSON ZOCHONIS INDUSTRY PLC
Peterson Zochonis Industry Plc (PZ) is a manufacturing company with three (3) factories in Nigeria one is located at Umunyasi Aba North in Abia state, while the other two are both in Lagos state at Illupeju and Ikorodu respectively.
Two friends namely Peter a British man and Zochonis a Greek man established this company in 1884 it was incorporated in Nigeria on the 4th day of December 1948 under the name P.B. Wicholls and company Ltd. Its name was changed to Alagbon industries limited in 1953 and associated industry limited in 1960.
The company later became a public company in 1972 and was granted a listing of the Nigerian stock exchange. The name was changed to Peterson Zochonis Industry Limited on 24th day of November 1976 and in compliance with the companies and allied members act of 1960. It adopted its present name as Peterson Zoochonis industry plc. On 22 November 1990, on 25th day of June 2001, Peterson Zochonis industry plc Groove properties Ekopak Nigerian plc was emerged.
The principal activities of the group are to manufacture and sale off a wide range of consumer products and home appliances which leading brand names through out the country in cosmetics refrigeration, detergent, soap, freezers, air conditioner, plastic container and component.
The company is made up of five (5) departments, namely administrative department quality control department, produce from department, which constitutes production processing unit, engineering service factor electrical unit and engineering finishing unit.
PZ has grown both financially and in staff strengthen it has assets over ten billion (10 billion) as its running capital. This company creates employment opportunities to Nigerians.

1.2 STATEMENT OF PROBLEMS
The basic and critical problems of research are set down, the problem that appears on the surface, in order to find out nature and gravity of the problems. This is vital and must be done correctly to guide the researcher on what aspect to channel his research work. Any mistake at the first step will lead to committing first degut error that is selecting wrong problem will result to subsequent mistakes and errors.
Among the problems are:
1. A lots of private and public establishment are yet to recognize the relevance of this noble profession.
2. Lack of strict adherence to purchasing rules and ethics.
3. The problem of conflicting interest of chief executive and other functional unit to purchasing practice, hence culminating into what is described as purchasing syndrome.
4. Non-existence of independence purchasing department to under take purchasing functions.
5. Lack of trained and professional qualified purchasing personnel.
6. Lack of recognition of the importance of efficient purchasing practice to profitability.
Effort will be made to establish these problems with a view of finding solution to them in our present economic environment.

1.3 OBJECTIVE OF THE STUDY
Having clearly stated the problems, the objective of writing this research can not be over emphasized. Therefore the objective of this research is to find out:
1. The reason for the neglect of purchasing function.
2. The problems this causes to purchasing profession and the organization in general.
3. Through the review of the contribution of different authors on the subject matter, it will expose people’s view about purchasing profession.
4. Establish the need for an independent purchasing department that will be headed by a purchasing expert.
5. Help the student get empowered to the practical experience for the purpose of solving further purchasing problems.

1.4 SIGNIFICANCE OF THE STUDY
The importance of this study is given credence in Rockly’s word (1983) which state that a professional such as purchasing and stores management like the expertise, the professionalism and the benefit of the function live in the quality of men doing the jobs.
However, it is essential for principles, their applications and techniques which are devised from them to be written down and made available for all to consult and study.
In a nutshell, this study will help to expose the student who is preparing to enter into the field, the challenges he is likely to face and what will be his contribution.
It will go a long to correcting the impression people have about purchasing profession. It will equally help PZ plc to utilize the service of purchasing professionals so as to benefit from their contribution to profitability.

1.5 RESEARCH QUESTION
The study will center its finding on the following question:
1. Who is a buyer?
2. What is the contribution of a buyer to the profitability of an organization?
3. Why the neglect of this profession, though is the greatest user to organizations find?
4. Why the use of non-professional buyer in the procurement of good and service?

1.6 STATEMENT OF HYPOTHESIS
A hypothesis is a prepositional statement assuming some link or relationship (causal or otherwise) between two variables. The variable of the hypothesis used in any work must of course derive from the research topic or problems. A hypothesis seeks to establish a fact about the assured relationship, but this is not possible until the hypothesis is tested and found to be either valid or otherwise.
HO: Most companies do not give their purchasing department the authority they needed to procure.
HI: most companies do not use professional buyer in the procurement of goods and services.
Ho: many companies do not use of professional buyers in the procurement of goods and service.
Hi: many companies make use of professional buyers in thee procurement of goods and services
Ho: Most organization does not staff their purchasing department with personnel who are trained in purchasing management.
Hi: most organization staffs their purchasing department with personnel who are trained in purchasing and supply management.

1.7 THE SCOPE OF STUDY
This research topic centers on the use of non-professional buyer in the procurement of goods and services on manufacturing companies in Nigeria. It is a comparative study and it is hoped that information would be obtained from PZ industry plc in Aba Abia state Board on the findings it will be possible to generalize the findings to other similar industries.

1.8 LIMITATION OF THE STUDY
In carrying out this study, the researcher encountered some contains the made it possible for her to cover such areas one may expect to lay emphasis on. This is so because the researcher had some constraints as:
1. Financial Constraints.
2. The research was limited to be completed within a stipulated time and as such, he could not have enough time to touch all the areas one may think necessary.
3. The research was unable to examine all the variable of purchasing and supply in the manufacturing industries, this limiting the study only in PZ plc Aba Abia state.
4. The profession being a new discipline, the research had problem of obtaining adequate literature to market references.
5. The research some time is faced with non-co-operating attitude of some staff at the place she collected her data
6. There were problems of bureaucracy

1.9 DEFINITION OF TERMS
1. PROFESSION: Profession is used in this study as an occupational group which can only be entered by those who have qualified by a training which includes a high education and a special test administered by members of that group.
2. UNIFORMED BUYERS: Those who are buyer by virtue of opportunity
3. PURCHASING ETHICS: A moral conduct guiding a purchasing profession in which all members must abide by
4. PROCUREMENT: The act of buying goods and services necessary for continued working of an organization.
5. SOURCING: The process of searching for a reliable supplier that can meet the requirement of the buying.
6. EXPEDITING: This is the processing of following up an order to ensure on time delivery
7. NIPSM: Nigeria Institute of Purchasing and Supply Management
8. PURCHASING AND BUYERS: Purchaser and buyer are used interchangeably.
9. DATA: A pull of information necessary to carryout a research
10. INFORMED PROFESSIONAL: Those classes of buyers who are trained in the field of purchasing and supply management.
11. RIGHT QUANTITY: The amount that will satisfy a need in the most efficient and economic manner.
12 RIGHT QUALITY: The degree or grade of excellence which is appropriate for a particular purpose.
13. I.P.S: Institute of purchasing and supply
14. HYPOTHESIS: A statement that needs to be tested.
15. INSPECTION: Making sure that item coming into the stores are in good condition.
16. ORGANIZATION: It is the combination of people or individual effort, working together in pursuit of certain common purpose called organizational goal.
17. RIGHT PRICE: The amount of money for which a thing is offered to be sold or brought.
18. RIGHT TIME: The time when an order is placed to obtain requirement at the most economic cost which is consistent with the quality specified.
19. SPECIFICATION: Description of any object, material or process in sufficient detail to enable its manufacture and further identical reproduction.
20. PURCHASING: Buying material from the market
21. SPECIALIZATION: To become expert in a particular area of work, study or business.
22. CONTRIBUTION: An action or a service that helps to cause or increase something
23. PROBLEM: A thing that is difficult to deal with or understand.
24. SOLUTION: A way of solving problems or dealing with difficult situation.
25. HND: Higher National Diploma.

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Use Of Non Professional Buyers In The Procurement Of Goods And Service Problems And Solutions:

The use of non-professional buyers in the procurement of goods and services can present several challenges, but there are also potential solutions to address these issues. Non-professional buyers may include individuals or departments within an organization that do not have formal procurement training or expertise. Here are some common problems and their corresponding solutions:

Problems:

Inefficient Procurement: Non-professional buyers may not have the knowledge or experience to efficiently procure goods and services. This can result in wasted time and resources.

Solution: Provide training and resources to non-professional buyers. Offer procurement training programs, establish procurement policies and procedures, and create easy-to-follow procurement guidelines.

Lack of Supplier Knowledge: Non-professional buyers may not be familiar with the supplier landscape, leading to suboptimal supplier selection and negotiations.

Solution: Develop a supplier database or directory that includes pre-vetted suppliers, their capabilities, and performance history. Provide non-professional buyers with access to this database to aid in supplier selection.

Risk Management: Non-professional buyers may not be aware of the various risks associated with procurement, such as legal, financial, and operational risks.

Solution: Implement risk assessment processes and templates that non-professional buyers can use when evaluating potential suppliers or contracts. Conduct regular risk management training sessions.

Lack of Cost Control: Non-professional buyers may struggle to negotiate favorable terms and pricing, potentially leading to cost overruns.

Solution: Develop negotiation guidelines and templates for non-professional buyers to follow. Encourage collaboration with experienced procurement professionals when negotiating high-value contracts.

Compliance Issues: Non-professional buyers may inadvertently overlook legal and regulatory requirements, exposing the organization to compliance risks.

Solution: Establish clear compliance checklists and require non-professional buyers to consult with legal or compliance teams when necessary. Implement automated procurement software that includes compliance checks.

Limited Supplier Relationships: Non-professional buyers may not invest in building and maintaining strategic supplier relationships, missing out on potential cost savings and innovation opportunities.

Solution: Promote supplier relationship management (SRM) practices within the organization. Encourage non-professional buyers to engage with key suppliers to foster long-term partnerships.

Inconsistent Processes: Non-professional buyers may have inconsistent procurement processes, leading to confusion and inefficiency.

Solution: Standardize procurement processes and workflows. Use procurement software to automate and streamline processes, ensuring consistency across the organization.

Lack of Transparency: Non-professional buyers may not maintain proper records or documentation, leading to transparency issues.

Solution: Implement a centralized procurement system that tracks all procurement activities, approvals, and documentation. Require non-professional buyers to maintain accurate records.

Quality Control: Non-professional buyers may struggle to ensure the quality of goods and services procured.

Solution: Establish quality control standards and inspection processes. Train non-professional buyers on quality assurance protocols and the importance of supplier performance monitoring.

Limited Cost-Benefit Analysis: Non-professional buyers may not conduct thorough cost-benefit analyses when making procurement decisions.

Solution: Provide tools and templates for cost-benefit analysis. Encourage non-professional buyers to consider the long-term value and impact of procurement decisions.

Incorporating these solutions into your organization’s procurement practices can help mitigate the challenges associated with non-professional buyers and contribute to more efficient and effective procurement processes. Additionally, ongoing training and support are essential to ensure that non-professional buyers continually improve their procurement skills and knowledge.