CHAPTER ONE
1.0 INTRODUCTION
Business all over the world owes
success prospects, existence and growths to the effective application of the
purchasing concept to their operations. A business usually start with an
awareness of what is really needed for manufacturing and finding out what these
needs are whether major or minor, they would them develop the idea of how to
get it.
Purchasing as the name denotes is the
procurements of the right quality of material in the right quantity, at the
right time, from the right source at the right price and delivered to the right
place.
These six rights are basic things
which purchasing deals with responsibility of purchasing in achieving
organizations objectives is not well recognized because many people assume that
the function is just a sample exercise of processing requisition and placing
orders which is critical task involved in buying.
However, it is a value creating
functions and the role of the buyers is to ensure that the value of money spent
reflects not only on the price paid but also the subsequent cost of receiving
stores, replenishing and expediting.
In some cases there is some cost
incurred when the supplier fail to meet delivery and satisfy the quality of
material required, it is obviously agreed that about sixty-five percent (65%) of
company’s total expenditure goes to the procurement of various materials and
this has made it so clear that any for the organization without materials no
cannot operates effectively as expected.
An efficient purchasing and supply
management is the pre-requisite for formal and efficient management of
materials, manpower and stock in an organization.
1.1 HISTORICAL BACKGROUND OF NIGERIAN BOTTLING
COMPANY’S PLC
The Nigerian Bottling Company Plc came
into existence on 22nd November 1881 the company was founded by late
A.G. Leventis and was the fairest in
the country to be Franchise by an international “Soft Drink Firm” the first
plant which was sited in Lagos went into operation in March 1955 with 6 Coke.
This had a very modest success and the company decides to stick to this by
monitoring the good reputation.
Coke was the first soft drink to have
its own designed shaped bottle which was different from the common bottles in
1972, the company went public by issues of 372 compliance with the Nigerian Enterprises
complies promotion Degree of 1972. The
company offers 650 ordinary shares for 50 kobo per share.
The company offered 1.4million shares
for subscription and added 81.921 shares, which was transferred from
non-resident share holders to 14,000 when
the company first started the operation distribution of its product to the Northern parts of the country’s
this was made possible by A.G. Lenventis made this possible. Group companies of
which Bottling Company is a number in other to meet the demand of the
customers, additional plant s were established Ibrahim Plant, Port-Harcourt,
other area of locations are Apapa, Jos, Kano, Benin and Kaduna in fact the ultimate
objective of the company is to establish a factory in each of the state in
Nigerian.
The share was said to have growth by
15 times in the 70’s and with higher hope for 80it is a huge sales recorded for
the first half of 90’s every high sales record is being made.
The subsidence includes Delta Glass
Limited, Ugheli which produce the bottle for company use Ijebu Ode. The plastic
create are made by NBC in the plastic division of Benin.
However, the Ilorin plant was
established in the year 1976 after a lot of delibration on how day, the Ilorin
plant as one of the plant, has offa Okene, bida, Jebba, Oshogo, Ogbomosho as
its depot.
The 20th year of the
establishment of Ilorin plants will be
marked in his year 1996. It has located at Coco-Cola Road industrial Estate
Folawiyo Road Ilorin.
There is the administration block at
the right side of entrance into the company’s compound followed by the
production binding/department the company is well situated for easy movement
and locations within the company’s compound.
1.2 STATEMENT OF THE PROBLEMS
During the course of the study, the
research discovered that purchasing function of the company under study was
faced with some problems, some of which includes.
One of the major problem identified by
the research was the failure of the organization to recognize the purchasing
functions this results to the personnel of other department, handling
productive job who have little knowledge of what purchasing is all about.
Another problem facing the purchasing
function in achieving its set goals and objective is the general financial
instability of the organization release fund to buy the required materials at
the right time. This may so affect the ability or the buyer supplier in
settling supplier bills and consequently obtaining better terms and conditions
of the contract
1.3 OBJECTIVES OF THE STUDY
The primary objective of the research
study is to satisfy one of the basic conditions for the award of Higher
National Diploma Certificate (HND) in purchasing and supply awarded by the
Purchasing and Supply Department, Institute of Finance And Management studies,
Kwara State Polytechnic, Ilorin.
Another objective of is to examine the
contribution of purchasing towards the attainment of the organizational goals
objective.
1.4 SIGNIFICANCE OF THE STUDY
The study is significant because it
will help to focus the attention of the management of the organization to the
problems militating against purchasing activities in the course of its day to
day operations.
The Project is also signification in
that it will serve as reference points to future researcher writing on similar
topics.
1.5 SCOPE OF THE STUDY
This study will focus on the effects of
well planned purchasing functions in the attainment of an organization desired
objectives.
The scope will be Limited of Nigerian
Bottling Company Plc, Ilorin.
1.6 LIMITATIONS OF THE STUDY
In the course of this study the
researcher encountered following problem.
i.
FINANCIAL
CONSTRAINTS:
The economic
situation in the country today has an adverse effect on the financial aspect of
this research work. The cost of investigation, in terms of printing of
questionnaire, transport fares binding materials and typing of the project was
very exorbitant that the researcher cannot afford to incorpate all necessary
data relating to purchasing activities into this project.
ii.
TIME
CONSTRAINT:
This constitutes a
fundamental factor in the project based on the fact that times available didn’t
allow for in depth treatment of the topic, lack of Full Corporation from
officers of the company under study, they are reluctant in relating some
information relating to procurement function of the country.
1.7 HYPOTHESIS FORMULATION
A hypothesis is an assumption made
about the researcher is trying to verify. Two major hypothesis will be
formulated in the course of this study. The null hypothesis and the alternative
hypothesis.
Ho: A well planned purchasing function has no effects
on the attainment of organization desired objective.
Hi: Alternative hypothesis a well planned purchasing functions
has positive effect on the attainment of organizations desired objective.
1.8 DEFINITION OF TERMS
Purchasing can be defined
as the process of procuring goods and services of the right quality at the
right quantity, at the right price, at the right time, from the right suppliers
or sources and to be delivered to where it is required (place).
i.
PURCHASING REQUISTION
A purchasing is the
document used to record details of users requirement for the purchasing action.
ii.
SOURCING
Sourcing is the process
and procedure by which the buyer survey and evaluate suppliers and determines
policies relating to those who can most suitably meet the requirement of the
buyer.
iii.
NEGOTIATION
This is the act and
science by which the buyer and seller (usually by personal discussion) resolve
exact terms and conditions for a contract; the terms and conditions are
analyzed, discussed and a common understanding is reached between be the
parties.
iv.
EXPENDITING
This is the process of ensuring that
relied goods are promptly delivered on time to meet the production schedules.
Expediting is otherwise known as progressing, chasing and follows up. It is an
important part of supply management task whose aim is to avoid late delivery of
materials.
v.
VALUE ANALYSIS
Is the study of the relationship of design
function and cost of any product, material with the objectives of reducing it
cost; through modification of design material specifications, manufacture by
more efficient process or change in source of supply.
vi.
VALUE ENGINEERING
Can be described as a
systematic effort directed to analyzing the functional requirement of systems
equipment facilities, procedures and supplies for the purpose of achieving the
essential functions of the lowest total cost consistent with performances
reliability and quality.