The term “Purchasing” is widely used in industry commerce, public corporation and management to denote the act, the function and responsibility for procuring materials supplier and service.
The researcher is aware that most serious problems facing the world is the scarcity and the growing trend towards higher cost of materials and service. But it is amazing the purchasing which can be so vital to an organization survival is still little understood. Although as function spend a significant portion of very income of organization, yet many still look upon it as little and not more than a clerical or routine activity.
Too many assumed the function is just a simple exercise of processing requisition and placing order. Professional purchasing however is not a clerical task.
Table of Contents
1.1 Statement of Problem
1.2 Objective of Study
1.3 Significance of Study
1.4 Scope of Study
1.5 Limitation of the Study
1.6 Historical Background of the Case Study
1.7 Definition of Terms
2.0 Literature Review
2.1 Theoretical Review
2.2 Suggested Reason Behind The Decision To Make Parts
2.3 The Violating of Make Or Buy Decision
2.4 Procedures And Personal Involved In Make Or Buy Decision
2.5 Delivery Price Quotations Offers
3.0 Research Methodology
3.1 Population And Sample Size
3.2 Sampling Technique
3.3 Sample Size
3.4 Research Design
3.5 Sources of Data Collection
3.6 Method of Data Collection
3.7 Presentation And Analyzing Data
3.8 Reliability And Validity
4.1 Presentation And Analysis of Data
4.2 Analysis of Data
4.3 Discussion of Findings
5.1 Summary of Finding
5.2 Recommendation And Conclusion
The term “purchasing” is widely used in
industry, commerce’s, public corporations and management to denote the act, the
functions and responsibility for procuring materials supplies and services.
The research is aware that most serious
problems facing the world is the scarcity and the growing trend towards higher
cost of materials and service. But it is amazing the purchasing, which can be
so vital to an organization survival is still little understood. Although, the
function spend a significant portion of every income of organization, yet many
still look upon it as little and not more than a clerical or routine activity.
Too many people assumed the function is
just a simple exercise of processing requisition and placing order. Professional
purchasing however is not a clerical task.
However, in narrow sense and considering
the topic make-buy decision as an important tool for increased profitability,
the term determine the need, selecting the supplies, arriving of proper price
term and condition issuing the order, follow up to ensure proper delivery.
The basic elements involved in
performance of this purchasing function at a Coca-Cola Plc, Ilorin, are
obtaining the proper equipment, materials, supplier and services that are
needed, where they are needed at the right time, at the right price, in the
right quantity and quality, from the right source through since Cullintin found
that make or buy decision often attracts attention than need and it tends to be
taken on the basic of incomplete or inaccurate information and for years
without being re-considered, although they have changed significantly.
STATEMENT OF THE PROBLEM
General problems in this research induces
whether to make or buy in the special focus in order not to miss its
usefulness. At the initial stage, there may be every tendency for the
organization not to make it all in that level of profit maximum may be very low
and it may be lead to the close down of the firm in the future.
The company may even find it difficult
to achieve its pre-set objectives if it fails to run smooth production at a
given period or as stated, as to be able to meet the demand of the timing
customers. A merchandising firm will run the risk of loosing customer without
adequate supplies to meet the rogues of customers.
Decision to either make or buy
constitute the most significant part of the current production of most
manufacturing merchandizing firms which indicates clearly that substantial
amount of money is committed to this important tool. It is essential therefore
to efficiently monitor to either make or buy to avoid in the production
process, under investigation and over investigation.
OBJECTIVE OF THE STUDY
The purpose of this project is to
contribute to the standard and buying performance of an organization. It is
aimed at examining the ways in which manufacturing organizations can achieve
corporate goals in the area of profitability, lower operating cost, lower cost
of financial procedure by applying make or buy decision in the strategic
SIGNIFICANCE OF THE STUDY
Apart from the researcher, there are
other parties to whom the research work is remarkably significant and could
benefit from. The client company i.e. Coca-Cola Company Ilorin is also an
advantage of gaining from the research works as its focused on its operation as
the subject matter.
The reference company could benefit in
the area of purchasing and supply impact made by researcher. Lastly, the
professional colleagues will equally learn much about make or buy decision as
particularly carried out in the manufacturing industry in an additional
knowledge which has been learnt already in the lecture room.
SCOPE OF STUDY
The scope of this research work is based
and centers on core areas of make or buy decision i.e. who determine what or
buy decision i.e. who determine what or buy and the effect of this decision on
the organization profit.
In order to consider to scope of making
or buy decision, there is the need to actually minimum effort and cost taking
into consideration make or buy decision as an important tool for increased
profitability at Coca-Cola Company Plc Ilorin.
Before any purchase order is raised of
Coca-Cola Company Plc, Ilorin, decision has to be made whether the item in
question to be purchased or manufacturing internally as will be necessary.
This decision regarding what to purchase
or make is essentially the decision often seem to be taken as required by
design, production or purchasing people acting together or separately with no
writing policy guide and no apparent provision for periodic review.
There is no need to distinguish between
tactical decision and strategic decision.
Make or buy decisions taken at
departmental level are those which simply apply to the existing policy. They
are tactical decision. When a change in policy in invariably considered, it is
then this decision are taken at higher level where the company strategy is
Considering make or buy decision, it is
worth nothing that 60% of company annual budget is open by the purchasing
departments and millions of naira are lost annually as a result of purchasing
items. This would therefore be more economically decided whether make or buy.
This was the conclusion of Culling research first published in 1942 and
subsequent investigation do not reveal that there is considerable improvement
over know that before purchase orders are raised, a decision, a decision is
made on whether the item in question is to be manufacture or bought as the case
The basic elements involve in the
performed of this purchasing functions are obtaining the proper equipment,
material and services that are needed and where they are needed at the right
piece, time, quantity and quality with minimum efforts. It covers all fact of
purchasing in Coca-Cola Company, Ilorin. For example whether the decision has
reduced, in a storage spaces or has added whether quality of product or falls
with make or buy decision at Coca-Cola company Ilorin.
LIMITATION OF THE STUDY
There cannot be any successful research
of this nature without encountering some difficulties which might cause it
success or failure. Different in securing some of the vital documents
containing some valid information relating to the subject matter because of
Lukeworm attitude of some officers who are suppose to assist in the research
work. This occurred with the view that such a research can secure a deterrent
to them, forgetting that it may be of immense improvement in their performance.
BACKGROUND OF COCA-COLA COMPANY
Coca-Cola is the world leading soft
drink sold in more than 145 countries. A total of 270 million of bottles of
Coca-Cola are consumed everything in all parts of the globe from Canada on the
north to Argentina and New Zealand in the south, from Alaska to China, from
Mexico to Nigeria. It first comes to Nigeria in 1963 when Bottling Company set
up its first plant in Lagos. It was to be the beginning of an exciting story of
growth and development particularly during the past ten years.
The success of Coca-Cola has brought
with it the development of a number of sister industries, they all contribute
to the Nigeria economy. For example Delta Glass Company Ughu, which supplies
the million of bottles required to keep a large Bottling Company in operation
and the crown Product factories in Ijebu-Ode and Kano which manufacture the
metal crown to seal the bottles. Also, the Benin Plastic Company which make the
plastic crate for carrying the bottle.
In addition, the trucks which are a
familiar sight in many parts of the country, delivery soft drink to more than
80,000 dealers are also assembling in Nigeria.
Nigeria Bottling Industry is also the
largest manufacturer of carbon dioxide in the country.
This is used to carbonate the favourite
soft drink: Nigeria Bottling Company employed over 60,000 Nigerians in all
Quality is the words which determine the
success of the whole operation. Only the very best ingredient are used for
making soft drink and sophisticated washing and filling equipments have been
installed at all plant extremely high standard for hygiene are maintained to
ensure that top quality products reach the customers.
The manufacturing process of Coca-Cola
is based on a carefully increased combination of sugar, water and the same
standard is maintained throughout the world. Nigeria Bottling Company plants
are situated in many parts of the country; the headquarters of Nigeria Bottling
Company is at Leventis Building Iddo House, Lagos.
DEFINITION OF TERMS USED FOR CLARIFICATION AND
MAKE: It is the act of producing certain things
BUY: It is an idea of paid or getting by buying a price.
POLICY: The plan of action to be taking by management of an
organization policies defines the boundaries within which decision can be made
by their direct decision towards the accomplishment of objective.
DECISION: It is the act of making up one’s mind about certain
EQUIPMENT: Is the installation
of equipment such as plant machinery, and other major equipment used directly
for production of goods and services.
POLICY AND PROCEDURE AUDITS:
This is used to determine of established policy and procedure are being adhere
PURCHASING: Is the continuous management process that is
responsible for anticipation, identification and the provision of the goods and
services that are required by an organization with objective of increasing organization’s
PRODUCTION: It is the process of production or making an item.
CAPACITY: Ability to contain, hold or get hold of something.
UNSATISFACTORY: Not giving pleasure of satisfaction,
from need or desire.
SPECIFICATION: Is a defined description of what is wanted.
SUPPLIER: One where responsibility to supply or make
available for further usage either for production or normal consumption.
STANDARD: It is model with which something is compared.
QUALITY: Is anything that conforms with one’s pre-determined
EVALUATION: Evaluation in purchasing is required to ensure that
progress is being made toward objective according to plan. Evaluation is part
of the control process.