TABLE OF CONTENTS
OF THE PROBLEM
OF THE STUDY
OF THE STUDY
AND LIMITAIONS OF THE STUDY
DEFINITION OF TERMS
BACKGROUND OF NIGERIAN BOTTLING COMPANY
PROFITABILITY PLAN APPROACH
PRACTICES AND RECOMMENDATIONS
OF PURCHASING FUNCTION FOR THE COMPANY
TO INCREASE THE VALUE ADDED BY THE PURCHASING DEPARTMENT
2.6.2 VALUE ADDED:
OF VALUES ADDD BY THE PURCHASING DEPARTMENT
ADDED TO THE INTERNAL CUSTOMER
WHEN MANAGING INTERNAL CUSTOMER
2.10 FACTORS AFFECTING THE VALUES ADDES BY THE
USED IN DATA COLLECTION
METHOD OF DATA ANALYSIS
PRESENTATION AND ANALYSIS
Purchasing refers to the process of ordering and
receiving goods and services. It is a subset of the wider procurement process.
Purchasing refers to the process involved in ordering goods such as request,
approval, creation of purchase order record (P.O) and the receipting of goods.
Purchasing is the function that describes the activities and process to acquire
goods and services. It involves the activities involved in establishing
fundamental requirements, sourcing activities such as market research and
vendor evaluation and negotiation of contracts.
The purchasing function is a supporting
activity that during the last few years has been gaining recognition as a
strategic activity for the company. It is therefore to know and understand how
this function can provide value for the organization. The purchasing function
has three interactions that can be identified: the interaction that exists
between purchasing department itself, the interaction that exists between
purchasing department and other departments in the organization and the
interaction between purchasing department and the suppliers.
Although the relationship between
purchasing department and the supplier is currently subject to research and
proposals for improvement, the relationship buyer-internal customer are not
commonly addressed by researchers.
OF THE PROBLEM
The purpose of an organization is to achieve its
objectives, and to achieve this, not has to have effective and efficient
purchasing department. This however is not the case in most organization, what
we see are purchasing departments that are not well equipped, slow to act
unconcerned about their job. They are said to lack the zeal, the brightness and
the motivation of hardworking people, and they dislike hearing anybody talk
about efficiency, dedication, honesty, competence and productivity, all which
characterize achievement of people in an organization (the guardian, 2004).
OF THE STUDY
The objectives of the students are as
analyse and explain how the purchasing department regarding factors of value
creation coincides with the perception of internal customers.
which factor influence the value added by purchasing department to the internal
the internal customer’s satisfaction level for these factors at the purchasing
department of the organization.
improvement options for the purchasing department of the organization.
a gap analysis for the organization subject of the empirical study.
OF THE STUDY
This project work will serve as a study to those who
have no knowledge of purchasing department and its importance in an
organization. It will also help to know how important the purchasing department
is in achieving organizational profitability.
At the end of this project work, the readers will be
able to understand the meaning and concept of purchasing as well as be able to
know how important the purchasing department is in an organization towards
their profit maximization objective.
AND LIMITAIONS OF THE STUDY
This project work is limited to the importance of
purchasing department towards organizational profitability (a case study of
Nigerian Bottling Company). It aims at analyzing the importance of purchasing
department towards making profit in an organization.
One of the limitations of this research work comes
from the restriction of approaching personnel inside the organization without previous
authorization from the chief of purchasing. This resulted in the fact that the
samples for interviews and survey were not determined by statistical methods
but the head of the department. Although this had a positive impact, making it
possible to contact relevant people inside the firm but it would be better to
use a bigger sample especially for confirmation purposes.
Another limitation is the financial commitment
involved in this research work which militates against wider coverage. Scarcity
of resources in our depressed economy made it extremely difficult to conduct
this research work in a wider scope and area. Also, data and information about
the importance of purchasing department towards the organization profit
realization was difficult because of the secrecy in their product as a result
of market competition from the competitors, therefore they are reluctant in
giving real data.
This research work is also limited by time constraints
in my schedule. The time to visit the company and the time for lectures in
school are both within the same range, making it difficult to leave lectures in
school and attending to the project by visiting the company. The closing hours
in school lectures is the only free time available and before getting to the
company after school, the organization has also closed for the day’s activity
Inspite of its limitations, the study contribute to
the better understanding on how to measure the value added provided by the
purchasing department to its internal client. It also constitute a detailed
analysis of the current operation of the purchasing department and a strong
source of ideas where to focus the effort, having identified several
1.6 DEFINITION OF TERMS
the state or conditions of yielding a financial gain. It is often measured by
price to earnings ratio.
a social unit of people that is structural that determines relationship between
the different activities members.
Subdivides and assigns roles, responsibilities and authorities to carryout
different tasks. Organizations affects and are affected by their environment.
this is the different in stock record and stocktaking discrepancy occurs when
there is different between the physical quantity and the record. It is surplus
when the physical quantity is more than the record while it deficit if the
physical quantity is not up to the stock record.
these are materials that can no longer be used in production process as they
are cut out from the raw material used in production.
requisition: it is a document used by the user department to make request from
the user department to make request from the stores.
this can be referred to as materials that are out of fashion but can be
alternatively used in maintenance.
Parts: these are product used in completion of another products.
this is the document used by the supplier informing the buyer telling him or
her the price and the detail composition of the price. It shows the cost
breakdown of the specification required by the buyer.
the local purchases order is the document used to request for purchases from the
local seller or supplier. It is used in local buying only.
goods receive note is used to record the details of the goods received from the
suppliers. It includes order number, description type of package, method of
transport, quantity received e.t.c.
the economic ordering quantity is an inventory model that determines how much
to order by determining the amount that will meet customer service levels white
minimizing total ordering and holding costs.
Level: a predetermined inventory level that triggers the need to place an
order. The minimum level provides inventory to meet anticipated demand during
the time it takes to receive the order
Time: the total time that elapses between an order`s placement and its receipt.
It includes the time required for order transmitted, order processing, order
preparation, and transit. Variants are supplier lead time, manufacturing,
assembly lead time, and customer order lead time.
Out: a term referring to a situation where no stock was available to fill
customer or production order during a pick operation. Stock out can be costly,
including the profit lost for not having the item available for sale, lost
goodwill, substitutions or lost customer.
Sheet: a printed form on which companies records, by making an appropriate
mark, the number of items they receive or ship. In many operations, tally sheet
becomes a part of the permanent inventory records.
rate of product movement through a warehouse.
Stream: all activities, both value added and non-value added, required to bring
a product from raw materials state into the hands of the customer, bring a
customer requirement from order to delivery and bring a design from concept to
Chain: a series of activities, which combined, define a business process, the
series of activities from manufacturers to the retail stores that defines the
industry supply chain.
Analysis: a method to determine how features of a product or service relate to
cost, functionality, appeal and utility to a customer.
Based Return (VBR): a measure of the creation of value. it is the difference
between economic profit and capital charge.
Added: increased or improved value, worth, functionality or usefulness.
Adding/Non-Value Adding: assessing the relative value of activities according
to how they contribute to customer value or to meeting an organization’s needs.
the degree of contribution reflects the influence of an activity`s cost
Maturity: it means the level of professionalization in the purchasing function.