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IMPACT OF A GOOD BUYER/SUPPLER RELATIONSHIP TO THE PURCHASING AND SUPPLY CHAIN MANAGEMENT

ABSTRACT

The main aim of embarking on this project is to know the need for a good buyer/supplier relationship to the purchasing and supply chain management. This study attempts on finding out whether the company has a good (cordial) relationship with its suppliers and buyers of its product. Certain factors like ineffective sourcing, lack of specialist in the field, neglect of purchasing and supply functions and falsification of documents so that they will destroy the image of the profession were found out to be problems of this study. Based on these findings, it is recommended that the different types of sourcing should be adopted to know which is suitable for the company and professionals in the field of purchasing supply should be used.

CHAPTER ONE

1.0 INTRODUCTION

1.1 BACKGROUND OF THE STUDY: A BREIF HISTORY OF STAR PAPER MILL LIMITED;

It was founded by one industrialist Chief Nnanna Kalu an ex- officer of the Federal Republic. The company was set up in 1977 with the factory located at Aba for the production of exercise books, envelops, writing pads, typing sheets, that is to say production of stationeries.  By 1984, as the started progressing, another production line was opened and the factory located at Owerenta for the production of tissue paper. The tissue paper factory also produces napkin tissue, that is, the serviettes. They produced about three categories of the product, that is, the special white or the double wrapper, the blue wrapper and the red wrapper. The prices vary as the final analysis based on the input of production process.

The structure is managed by the board of directors and the managing directors through whom the staff are reached. The decisions made by the board are channeled through the aid of administration in the person of the human resources manager who is also the head of the department. The company operates with sets of manners, the human resources managers, production manager, administration manager, the chief accountant both at Aba and Owerenta plus dues of engineers and technical support teams .Its other divisions are located at Abuja, Onitsha, Lagos, Kaduna and Kano. These divisions are used as serving point of the finished products and at the same time as collection centers for raw materials in the form of waste paper.

The purchasing unit is under the production department. The various units of the company have their own purchasing officer, like transport purchasing officer, purchasing officer for production etc. all report to the head of the units overall boss. Many of their raw materials are sourced locally through selective tendering system whereby invitations are given to selected number of contractors. Another source of the raw materials is the waste gathered from waste products from the stationeries which is added value for the production of tissue papers; they buy raw materials in bulk which are stored in the store house to avoid operational risk and for continuous production to satisfy there numerous customers.

1.2 STATEMENT OF THE STUDY/ PROBLEM

The problem that is generally associated with this search is efficient and effective sourcing. A key to achieving successful purchasing function is two fold concerned with sourcing in organizations both public and private sectors of the economy and those related to the achievement of the purchasing with sourcing in both public and private sectors of the economy. One discovers with dismay that almost every worker in an organization is interested in mismanagement and squandering of public or tax payer’s money, contracts are inflated arbitrarily, so also are prices of suppliers meant for production which have all contributed to the present high cost of living.

Problems are encountered in deciding where one can find the best information on suitable potential suppliers. How do we assess a supplier’s long term stability and how can buyers cope with the hazards of purchasing from starting –up companies not having a tract record to help in his purchase decisions. These problems can however, be solved by employing trained and professionally qualified buyers to handle the important task of sourcing. Untrained and unqualified buyers should not be allowed to encroach into the profession. 

According to Mr. R. E. J. Nwannka, a senior lecturer in the department of purchasing and supply management in one of his articles in purchaser 1999, pg 19 which he captioned “purchasing and supply profession, The way forward 1999”, he aptly referred to people who encroach into the profession without adequate knowledge and experience as uniformed generals in purchasing practice whose only interest in forcing and bulldozing their way in through the purchase seat is to cheat and have quick money by inflating contracts and falsifying documents so that they will destroy the image of the profession.

Problems associated with purchasing is that of neglect, where purchasing as a profession has not been given its pride of place in organizations. In some organizations, it is like a routine, unimportant function while in others, it is treated as an important management function which immensely contributes to profits. It should however, be noted that in these of high prices of materials and shortages, inflation and unstable supply market, it is not encouraging for any business organization to ignore purchasing and supply functions. There is also the lack of specialist in the field. This has resulted to incompetence and inefficiency in the performance of purchasing and supply function. The performance of experienced professionals is employed to handle the procurement of goods and services. They would employ source judgement with their knowledge and experience to procure materials and services efficiently and effectively.

1.3 PURPOSE OF THE STUDY

It should be realized that sourcing is a very important aspect of purchasing and supply. If it done efficiently and effectively, the purchasing objective of the lowest price in the right quality source will be achieved. The purposes of the study are;

a) To analyse and identify the strategy behind the effectiveness of organization in the sourcing of raw materials.

b) To highlight the methods of sourcing for raw materials adopted by organizations.

c) To make recommendations where necessary, thus, aimed at improving the raw materials purchase system of the industry.

d) To indicate the relevance of sourcing function in purchasing and thereby reveal what is required and the ability of personnel who should be involved.

e) To examine such infrastructures needed for efficient raw materials purchase management.

1.4 SIGNIFICANCE OF THE STUDY

This study will expose the researcher to the need for effective and efficient sourcing which is an important key to achieving successful purchasing function. It will also help or assist the buyer in obtaining the right quality of material at the right time, in the right quantity from the right source at the right price. This project therefore, attempts to examine how effective and efficient sourcing for materials and services can contribute to the profitability of the buying organization thereby reducing waste, cost and obsolescence.

1.5 RESEARCH QUESTIONS

In carrying out this research the following questions were addressed,

i. Do improper decisions on sourcing lead to problems in star paper mill Ltd Aba?

ii. How can buyers cope with the hazards of purchasing from a staring-up company/

iii. Does assessment on supplier’s long term stability lead to problem or whether it helps?

iv. How can one decide on where to find the best information on suitable potential suppliers?

1.6 HYPOTHESIS

The following testable null and alternative hypotheses are drawn to guide this study thus:

i. Ho: Sourcing will not have a positive impact on purchasing and supply chain management.

ii. Hi: Sourcing will have a positive impact on purchasing and supply chain management.

1.7 SCOPE OF WORK/ STUDY

This work covers the methods employed by many organizations in seeking, surveying and evaluating performance of suppliers in Nigeria with reference to star Paper Mill Ltd Aba, Akaraka Industries Ltd Mbaise and Dunhill Industries Ltd Mbaise.

1.8 LIMITATIONS OF THE STUDY

When this study was being carried out, the researcher encountered some defaulting. Owing to limited time, the researcher was unable to visit or call for the company or libraries on several things to be done at that period of time. Also, the research study was not adequately funded due to financial constraints; most of the staff of the company was so busy that they could not attend to the time given for the gathering and analyzing of the data. The consistent interruptions of light by the power Holdings affected the progress of this research work. In many occasions, the domestic activities also affected the progress of this research study as first time of searching and writing a project.

1.9 DEFINITION OF TERMS

1. SOURCING: Is defined as the process by which a buyer or purchaser seeks, surveys and ultimately evaluates suppliers in order to determine policies which relate to those who can suitably meet the requirement of this undertaking.

2. QUALITY: This is the totality of features and characteristics of a product or a service that bears on the ability to satisfy a stated or given or implied needs.

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