MAKE OR BUY DECISION AS AN IMPORTANT TOOLS FOR PROFITABILITY IN MANUFACTURING ORGANIZATION. (A CASE STUDY OF GLOBAL SOAP DETERGENT INDUSTRY LIMITED, ILORIN).

ABSTRACT

        This project has been specially written to cover “make or buy decision as important tool for profitability in a firm” with particular reference to global soaps and detergent industries Ltd, Ilorin. The term “purchasing” is used in industry to denote the act of the functional responsibility for procuring materials, supplies and services.

        However, in a narrow sense an considering the topic make or buy decision as an important element for profitability, the term supply describes the process of buying and in a broader sense, the term determine the need, selecting the supplier, arriving at proper price, terms and conditions, issuing the order, follow up to ensure proper delivery.

        This project work is divided into five (5) chapters. Chapter one of this project discussed the introduction of the subject matter, statement of general problem, rational behind the study, scope and limitation of the study, historical background of the organization and definition of the term used.

        Chapter two contains details of different type of literature review on the subject of make or buy decision.

        Chapter three entails the research method used, instrument used in data collection, research population and sample size, sampling procedures used, statistical techniques used in presenting and analyzing data setting of hypothesis.

        Chapter four deals with presentation and analysis of data, interpretation of data, reason behind make or buy decision at global soap and detergent industries ltd, Ilorin, benefit of make or buy decision to Global soap, and detergent industries Ltd, Ilorin and testing of hypothesis.

        Lastly, chapter five comprises of summary of finding, conclusion and recommendation as considered necessary for implementation and recommendation.

TABLE OF CONTENTS

TITLE PAGE                                                                                     I

CERTIFICATION                                                                    II

DEDICATION                                                                                   III

ACKNOWLEDGEMENT                                                                   IV

ABSTRACT                                                                                       VII

TABLE OF CONTENT                                                                      XI

CHAPTER ONE

1.0    Introduction                                                                           1

1.1    Statement of Problems                                                           2

1.2    Rational for the Study.                                                 3

1.3    Scope of the Study                                                                 4

1.4    Limitation and Constraint                                                    5

1.5    Historical Background and Organizational chart               6

1.6    Definition of terms.                                                                12

CHAPTER TWO

2.0    Literature Review                                                                   14

 CHAPTER THREE

3.0    Research Methods Used                                                        41

3.1    Instrument used in Data Collection.                                    42

 3.2   Research Population and Sample size                                 44

 3.3   SAMPLE PROCESSING USED                                              45

 3.4  Statistical Techniques in Presenting and Analyzing Data   45

 3.6   Setting of Hypothesis                                                             46

CHAPTER FOUR

4.0    Presentation Analysis of Data                                               47

           4.1        Interpretation of Data                                                           59

4.2.   Reasons behind Makes or Buy Decision at Global Soap and Detergent Industries Limited Ilorin.                                   62

         4.3.      Benefits of Make of Buy Decision to Global Soap and Detergent Industries Limited Ilorin.                                   64

4.4    Testing of Hypothesis.                                                            66

CHAPTER FIVE

5.0    SUMMARY OF FINDINGS                                                     68

5.1    CONCLUSION                                                                        70

5.2    RECOMMENDATION                                                             71

REFERENCE                                                                                    73

CHAPTER ONE

1.1  INTRODUCTION

The decision to either make or buy material required for production processes and other purpose is very paramount most especially   in manufacturing companies such as global soap and detergent industry limited Ilorin. Many organizations consider it profit ability o manufacture (make) the material required in he house, if here are enough facilities to embark  on such, while the decision to make materials in house is considered wrong by some organization due to their lack of enabling facilities or simply says they are not aware of the benefits there in.

The decision has regard to make or buy should not be handling with levity. These is so because, failure to make appropriate decision here is the beginning of failure.  Many organizations are facing problems today just because they take the decision that is most profitable for their concern.   However this decision often seems to be taken as required by design, production and purchasing department.

In considering these decisions it is worth not things than 50% of company’s annual budget spends by the purchasing department, and millions of naira is   lost annually as a result of purchased items.  It would therefore be more economical to decide whether to make or buy material required.

(A) Cost :- the cost associated with manufacturing needs materials in house and the current cost f purchase, if material must be bought, it determine which one is cost effective.

(B) Availability of product capacity:- the firm should consider whether there is enough person machinery and technical know how that would be place then, the firm ma embark on “make” decision  and if otherwise, it has to locate right source a supply  form who to buy.

1.2   STATEMENT OF PROBLEMS

The common problem that faces many organization including global soap and detergent industries limited Ilorin.  Toda is how to make appropriate decisions concerning whether to make or buy materials required in organizations out of the race, while some fail to record substantial profit in their business endeavors.

          The inability for their inability for their organization may lead to production stoppage if the required materials are not in a place at the right time or it may lead to loss of profit as a result of excess investment on inventory.

          All these problem needs to be systematically investigated. To know the possible causes so that lasting solution may be prefer.

1.3   RATIONAL FOR THE STUDY.               

The research study is directed toward the practical approaches of make or buys decision as an important tools for profitability in global soap & detergent industries limited Ilorin.

          This study is aimed at giving the global soap and detergent industries limited Ilorin an insight into the essential steps to making or buying and how best the company profit could be maximized.

The evaluation of making or buying of items used in global soap and detergent industries constitute a purpose of this study. The interests of the research in the manufacturing sector lies in the fact that make or buy decision constitute the most important part of current asset of manufacturing firms.

1.4   SCOPE OF THE STUDY

The scopes of this research works in centered on make or buy decision as important tools for profitability in manufacturing industry limited.

In carrying out he research, the research in make of buy decision. It will also review briefly the factor to be considered in make or buy decision. It will also review who determine what to make or buy and the effect of these decision on each department in the organization.

          The research can cover the advantage and disadvantage of make or buys decision in an organization and weather the quality or product rises and falls with make or buy decision at global soap & detergent industries limited, Ilorin.

          Therefore, the suggestion and recommendation made as a result of this study will be of    benefit to management to the limited mentioned above on make or buy decision.

1.5   LIMITATION AND CONSTRAINT

          During the process of the research works encounter numerous problems among which are:-

·        Finance

·        Time

·        Attitude of respondents.

This research work was faced with so many obstacles and problem it was difficult to obtain the co-operation of personnel in charge of vital document containing information about the topic.  There was the need to travel o collect information or the other,  and in most cases, here will be no tangible result, the researcher only being asked  ask o come back.

Another problem faced by the research was finance. The researcher often found it highly impossible to travel to the firm location.

The research also found out that it is not easy to combine the normal class lecture with written of these project work management invariably become a watchword for the researcher.

1.6   HISTORICAL BACKGROUND OF THE ORGANIZATION

The global soap & detergent industries limited is a member of the Doyin group of companies, and the firs worthy indigenous soap and detergent   manufacturing company in Nigeria.  It was incorporated on 8^th October 1984 with hand in Lagos and factory situated along Asa-dam road, Ilorin Kwara state capital, the company is operated, managed and directed by full blooded Nigeria.

Own by courageous and experienced industrialist Prince (Dr) Samuel Adedoyin who has for many years been championing indigenous technology background integration and use of Local raw materials in Nigeria Global soap and detergent Industries was established in response to the call of the Kwara State Government and indigene of the State to join hands with the state government in industrialization Kwara State.

          Despite the economic downturn at time the factory metamorphosed tremendously from its one Detergent factory and a pioneer staff strength of 40 in1985 to a conglomerate  of (7) seven factories in 1994 with a strong belief in self reliance and resourcefulness, sourcing about 40% of its raw materials locally.

This is one way by which Global Soap and Detergent Industries has contributing significantly to the country’s economic rehabilitation and industrial revolution.

The company has consistently paired up with existing multi national detergent manufacturing company in competition toward enhancing the growth of the Nigerian economy operating through the under mentioned plants.

            Besides the infrastructural enhancement of Kwara state, Global soap $ Detergent industries limited existence has provide handsome business and employment opportunities for thousand of Nigerian such as suppliers, manufacturers, contractors, transporters, and distributors e.t.c.

            The company is blessed with most modern technology available and the plants are ably manned by qualified personnel.

            Presently, the company has an entirely indigenous labor strength 1,000 (one thousand) workers in different grades. The company gives priority to industrial safety and good keeping. Hence solid wastes are periodically lifted by sanitary inspectors from the Kwara state environment protection agency (KWEPA), thus generating revenue to the state government.

The company’s range of product has continued to enjoy good patronage from Nigerian due to their consistently high quality. It was recorded that global soap and detergent industries is the first company to have received the certification mark for quality within its first 3 years of operation. 

As a way of reaching the nooks of cram my of the country, the company has 17 sales depots scattered all over the federation such as Aba, Abeokuta, Benin, Enugu, Gombe, Ibadan, Ilorin, Ilupeju , Jimeta, Jos, Kaduna, Kano, Maiduguri, Ondo, Onitsha, Sokoto, and Uyo. In addition, necessary machinery has been put in place and negotiations have also reached as advanced stage to introduce the company’s products to countries within the ECOWAS. Sub-region as a way of mobilizing foreign exchange into the country.

1.7    DEFINITION OF TERMS

1. Make: - It is used to act of producing certain things.

2. Buy:-Is an idea of getting one’s need in return for the money paid or getting by a price.

3. Understanding: - Not giving pleasure or satisfaction from need or desire.

4. Supplier:-One whose responsibility is to supply or make available material for further usage either for production or normal consumption.

5. Capacity: - Ability to contain, hold or get hold of something.

6. Production:-It is the process of producing or making an item.

7. Stabilize: - To make steady or allow to be normal.

8. Delivery: - It the act of delivery goods where they are needed or required.

9. Standard:- Quality description of an item.

10. Investigation:- It is an act of carefully linking in to or through inquiry which must have been raised.

11. Specialization:-To make or ensure that each performs an aspect where in he/she could be better which leads invariably to perfection.

12. Sub-contracting:- It is a situation where in part of the job is let out another contractor to perform.

13. Quality: - Is anything that conforms with one’s predetermine standard.

14. Specification: - Is a definite description of what is wanted. 

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