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CONTRIBUTIONS OF PURCHASING AND STOCK CONTROL IN COSTS REDUCTION

ABSTRACT

This project on the contributions of purchasing and stock control in cost reduction. Purchasing and survival, get purchasing the wrong material or carrying too little can be catastrophic for the organization. The question then is, what is the ideal level of the stock control to carry? These are some of the questions the purchasing manager is expected to answer and they will be the focuss project. In chapter one, introduction of what purchasing and stock control is all what and well explained, background of the study, statement of problem, objective of the study, both limitation of study and definition of the terms were well explained. In chapter three the design used in conducting various researches was described showing the methods used in collecting data during the researcher eg primary method and the secondary method. In chapter four the data was analyzed and presented accurately and clearly with the use of tables. Lastly, chapter five is made up of summary of findings from research work conclusion and recommendation have been made as to know how the various problems could be averted. 

CHAPTER ONE

1.0 INTRODUCTION

1.1 BACKGROUND TO THE STUDY

Purchasing and store form the main important area in many organizations especially in the manufacturing sector. However, given the average, manufacturing company disposes more than half of its income on materials supplies and service. The important of procurement as a key function in the management of business can be emphasized by considering the total cost of materials tend in many cases to account for an increasing proportion of product. Also the problems encountered in connection with materials are tendering to become more difficult and more numerous than was previously the case. The term materials is used in general sense and refers to the whole range of goods and services which are used purchased or produced from sources outside the organization and are distributed or processed in order to provide finish products for sales.

Purchasing has long been considered one of the basic functions common to all organization long before the large organization appeared with functionally specialized department, people bought and sold. Buying, that is acquiring goods and services in return for a price, dates back before the invention of written records. This is the same thing with selling which is the disposal of goods and services in return for a price.  It is likely that human communicates, have always bought and sold and that culturally and materially they have benefited form these transaction.

1.2 STATEMENT OF PROBLEMS

Industries are charged with the responsibility of producing goods of high quality and standard at a very reduced and affordable cost to the citizen. Materials in this respect become so vital that no result could be achieved without a good procurement. In the topic “ The CONTRIBUTION OF PURCHASING AND STOCK CONTROL IN COSTS REDUCTION” Nigerian Breweries PLC, as the case study is faced with the following problems. (1) There is the need for the purchasing department to have a good knowledge it stock control and better understanding of its specification requirement  (2) The research is faced with the problem of working out modalities for the improvement of the purchase of the right quality. (3) Research should be conducted to find out specifically the role of purchasing in a manufacturing company. (4) Good numbers of manufacturing firm to not take their regularly and this practice could give chance for dishonest and unreliable workers to defraud their companies (5) There is also a problem of unprofessionally in purchasing function.

1.3 OBJECTIVES OF THE STUDY

The main reasons behind my undertaking of this research are

(1) To find out to what extent an efficient stock control system can contribute in reducing production and other general costs in all organization

(2) To know how good purchasing practice and technique could aid efficient stock control procedure. 

(3) To identify the degree of committement of an organization management team to the adoption of a proper stock control system with a view to reducing the organization operation costs.

(4) To identify some of the factors militating against a through adoption or installation of an effective control system of stock in an organization and after suggestions and recommendation as to how best to approach this issue.

1.4 RESEARCH QUESTION

A lot of questions needs to be asked and answered while carrying out researches in order not to encounter much problems. Some of the questions that needs to be asked and evaluated are therefore as follows. 

(i) What is the ideal level of stock control to carry?

(ii) What and from whom shall we order?

(iii) Are the right materials bought at the right time to meet the need?

(iv) Are those in charger of stock control expert in the field?

(v) Is over stocking advisable? 

These are some of the question the purchasing manger should answer in order to known how what and when to purchase and not to purchase wrong materials or carrying too little that can be catastrophic for the organization. 

1.5 SIGNFICANCE OF THE STUDY

Firstly, this study will be of immense important to the organization or company used as case study because it will be a guide to them towards making certain changes in the required areas hence improving their productivity. In the researchers side it will help him to know more of stock control how to ensure economies in stock control through standard purchase. He is also able to know how to avoid running out of stock which could be dangerous if steady operation could be ensured. The study will also be helped to other students or researchers in acquiring more knowledge and make connection where necessary in the former knowledge they have about the topic “purchasing and stock control”

1.6 SCOPE OF THE STUDY

The research is on contribution of purchasing and stock control in an organization in reducing cost. However, for purpose of this research, ideas are deduced from as many textbooks, journals, review, newspapers and from the researchers experience as possible laying emphasis on concepts, model techniques and theories principle.

1.7 LIMITATION OF THE STUDY

The researcher may encounter a lot of problem in the course of carrying out this study effectively some of the constraints may be the following:- (i) FINANCIAL CONSTRANT: The researcher is a student depending an parents for financial assistance to travel from school to the company or institution under study in order to obtain relevant information needed. (ii) TIME CONSTRAINT: The time lag required to carry out the research work is short, the researcher may find it difficult to combine other academic activities with the research work. (iii) INSUFFICIENT LITTERATURE MATERIAL: The greatest hindrance to this project work is the unavailability of sufficient literature materials, for this work to be effectively carried out by the researcher.  There is also the risk of running up and down to different places in order to get the necessary data for the project as the may not be readily available and cannot be collected once. There is also this transport problem one has to face in the course of carrying out this research work because most of the time, vehicle are not available to and fro the sources of the data collection. The condition under which we are subjected to study is very poor the research has to attend to his lecture at the same time do other assignment and carry out this project work also. However, these do not affect the design of the project, rather the figures and facts counted inside are accurate to the best of my knowledge.

1.8 DEFINITION OF TERMS

(i) PURCHASING: Purchasing is the acquisition or buying of materials and services needed by an organization from an outside source, at right quality, right quantity, right price and right place, which involves the related activities of selecting vendors. 

(ii) STOCK: This is a collection of items held in the organization at a particular time for resale stored for use by the organization and process of carrying out its production of goods and services.

(iii) QUALITY: Quality means the ability of bought to serve the intended purpose of functions according to specification.

(iv) STORE: Store is a place where goods are kept for future use.

(v) PLACING OF ORDER: Placing of order in purchasing is the term used by the buyer to tell his suppliers the type of products or items they have to supply to him. It appear in a paper like invoice or receipts.

(vi) PROCUREMENT: Procurement is a purchasing term that is used for buying and selling it is usually seen in the exporting and importing.

(vii) VENDOR: These are the seller of small articles which can be carried around or punch newspaper and magazines is a vendor. But in purchasing he is a supplier in an organization.

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