EFFECT OF PROCUREMENT PRACTICE IN SMALL SCALE INDUSTRY

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PROCUREMENT PRACTICE ON A SMALL SCALE INDUSTRY (A CASE STUDY OF EASY LIFE SUPERSTORE PORTHARCOURT
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CHAPTER ONE: INTRODUCTION

1.0 INTRODUCTION
Purchasing and supply management although it is around discipline in Nigeria has existed since the evolution of man because earlier organization and individual were practicing purchasing unknowingly until 19th century when management started to look and think about procurement as an area of management in organization which have to do with careful attention and development.
Procurement was generally regarded as a routine clerical function or as a service function, which only concerned itself with spending the organization, or cooperates money.
The research discovered and found out that procurement practice is of a professional than a clerical function also it can contribute to profit. In this case, there are there basic types of procurement in the business world of procurement

  1. procurement for consumption
  2. procurement for conversion

Speculators and merchants perform procurement for resale. It has been the prime responsibility of merchant. The merchant devoted a large portion of their time to the search for procurement of new and desirable materials. They spent some of their time dealing with sales problems, but their basic problem has not changed.
Procurement managers buying for consumption are involved in the activity and function that involve more than determine or ascertaining customers’ requirement.
Referring to industrial buyer i.e. those that buy goods and services for tangible production or for commercial significant purpose such as manufacturers, primary producers, agricultural producers, etc. they determined what product their company should make,. What parts or components should be purchased from outside suppliers? They selected suppliers from whom purchasers can be made on a continuing and mutually profitable.

1.1 BACKGROUND OF THE STUDY
The superstore started as a small business in 1996, marketing of items (varieties). It metamorphoses in Easy Life in 1998. The founder guiding principle of preservative handwork honesty and integrity, helped set Easy-Life stores on the path to resumption of business and strong believe in almighty, he nurtured Easy Life stores through the most critical time. In 1999, it was incorporated and together with their enormous trading experience and distributive network started the same year. Determination lead to the establishment of a pharmaceutical store in 2000 and chemist shops modernized to present a credible outlet for our ever increasing range of products. It is interesting to note that a vertical system existed between the superstores and pharmaceutical store.
Easy Life senior management is that procurement activities, be it for resale consumption of conversion require a good degree of knowledge of the market and the requirement of the user or customers.
On the final note it must be understood that the major purpose of nay business is profit maximization profit is an essential prerequisite for maintaining a business. As a result procurement practice in a small scale industry should aim at exploiting all possible avenues towards contributing to the overall profit earning of the company. However the extent of application can depend on the expenditure value the system in place, and the resources available.
In this case, the researcher has examined the nature of purchase activities in a small scale industry to determine the following:

  1. Determination of requirement
  2. Authority of purchasing personnel
  3. Quality control value analysis
  4. Under rating activities.
  5. Procurement audits with a view to identify the problems associated with those functions and suggesting process of improvement.
  6. Purchasing process and organization
  7. Selection of possible source of supply
  8. Pricing determination and availability
  9. Placing order.

1.2 STATEMENTS OF THE PROBLEM
A detailed analysis of the procurement practices in the smalls scale industry regards both its internal and external environment will indicate the following problems:

  1. The purchasing as an organization function has always been associated with neglects by management, thus it is yet to be given its pride of place in industries.
  2. There is a tendency of fewer and often large source of supply.
  3. The imposition of high impact duties a purchasing abroad and the need to exploit alternative sources of supply pose a lot of uncertainties to the profession.

The above outlined problems are however not exhaustible as others may exist hence the aim of this research is not only to identify problems but most important to fined out alternative sources with the organization constraints and yet accomplish the set objectives use to solve them.

1.3 OBJECTIVES OF THE STUDY
Within purchasing, we have a responsibility top contribute positively to our company survival by improving on our efficient.
Today’s economic condition and environment within the small scale, industry for a proactive and in some cases, reflective approach to achievement.
The purpose of this study includes the following:

  1. To evaluate the future requirement of the customers so that materials or goods could be ordered before they runs out.
  2. To analyze the major factors effecting to day buying decisions making in the small scale industry and to determine the what factor towards a successful buying decision.
  3. To appraise the purchasing performance ion reducing purchased materials costs, through sourcing, vendor rating, price indexing and contractual agreement.
  4. To examine the purchasing system and techniques in practice and to develop ways to improve their overall performance.

1.4 RESEARCH QUESTIONS

  1. What are the types of perishable goods?
  2. Who is a buyer?
  3. What type of goods are been purchased?
  4. Does purchasing have any effect in stock management
  5. What is the quality control value analysis?
  6. What is the contribute of purchasing and supply in manufacturing industry
  7. What is purchasing and supply management?

1.5 SIGNIFICANCE OF THE STUDY
This research work is of relevance to the organizational purchasing in Nigeria in the area of procurement practice, it will serve as a reference guide to those who may want to write on this similar topic in procurement.
The research will help use to know the importance and essentials of procurement in an organization which include buying materials at the five rights, to met organization needs, it also help to find out procurement methods and the organization needs and strategic plans. It will equally help to find out problem affecting problems affecting procurement practices in an organization environment.

1.6 THE SCOPE OF THE STUDY
The scope of this study is limited to the activities of Easy Life Superstores portharcourt I rivers state. It will embrace all the activities of procurement function and the procurement associated with it. This organization (E.L.S) is considered as the key on which has a lest of material to purchase for their respective activities.
Furthermore, as the research project on procurement in the small scale industry with particular reference to (E.L.S) portharcourt organization.

1.7 LIMITATIONS OF THE STUDY
The finding of this research will be limited by on availability of vital data and information from the store which would have thrown more light on the analysis of data. The superstore may regard some information to be confidential to the economy by the government or not being familiar with the purpose of student research studies.
Furthermore, time act as another constraint as students are required to combine the work with normal academic studies.

1.8 DEFINITIONS OF TERMS
ACCESSORY EQUIPMENT: these are durable major equipment used to facilitate the production of goods and services or to enhance the operation of organizations.
OPERATING EQUIPMENT: these are semi-durable minor equipment which is movable used in but not generally essential to the production of goods and services.
FURNISHING AND FITTINGS: these relate all goods and material employed to fit building for their organization purpose but not that equipment used specifically in production of goods or services.
In case in which operation requirement re not severe, a used machine in sound condition frequently provides economic services for many years

 

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