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USE OF NON PROFESSIONAL BUYERS IN THE PROCUREMENT OF GOODS AND SERVICE PROBLEMS AND SOLUTIONS

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 an 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.

CHAPTER ONE

INTRODUCTION

1.1 BACKGROUND TO 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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