THE IMPACT OF EFFECTIVE PLANNING AND CONTROL ON THE PURCHASING ACTIVITIES OF A MANUFACTURING COMPANY
- Department: Purchasing and Supply
- Project ID: PAS0022
- Access Fee: ₦5,000
- Pages: 77 Pages
- Chapters: 5 Chapters
- Methodology: Descriptive and Inferential Statistics
- Reference: YES
- Format: Microsoft Word
- Views: 3,776
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THE IMPACT OF EFFECTIVE PLANNING AND CONTROL ON THE PURCHASING
ACTIVITIES OF A MANUFACTURING COMPANY (CABUARY LTD AS A CASE STUDY)
ABSTRACT
A
company will have stated objectives, but the individual manager must
interpret what company officials actually say and do. For example: chief
executive financial officers (CFOs), backed by the law of the land,
will usually stress their responsibility to the stockholders. But the
company’s objectives are usually composites of many decisions, resulting
in various cross-functional compromises. So in actual practice the
CFO’s goal is to balance the objectives of a fair return on investment
to stockholders, stable and satisfying employment for employees,
satisfaction of customers and the community, and so forth.
In setting
procurement’s functional objectives, the Purchasing Manager must be
aware of the CFO’s (and accordingly, the company’s) objectives, and
ensure consistency in constructing the specific objectives for the
purchasing department. With increased focus on meeting customer needs
more effectively, many enterprises have begun to evaluate the results of
the entire supply chain in satisfying these needs. This has given rise
to the concept of competition between supply chains rather than merely
between companies. Consequently, the importance of supplier
contributions to enterprise results has further increased expectations
of the supply management organization.
The evolution of purchase
planning system from a clerical task to a strategic value chain makes it
a means of creating competitive advantages for organizations.
Generally, this development happens slowly with no previous design and
plan in organizations. Therefore, to mitigate risks of this change and
to increase its effectiveness, this development process should be
carefully structured and planned. In this paper, in order to achieve a
purchase planning system transformation model, purchasing development
models are used as a basic framework. By benefiting of organizational
change concepts and theories, the reference model has been designed as a
tool to assess the current purchase planning system development
situation and the potential strategic growth path. Finally,
relationships between purchasing content change elements development
have been identified as a departure point to develop the purchasing
transformation strategy. In the empirical research path, this
exploratory research has an inductive approach and the strategy by which
the research is conducted is grounded theory. Case studies are the
chief tools for data collection and analysis.
TABLE OF CONTENT
ABSTRACT
CHAPTER ONE INTRODUCTION
BACKGROUND OF THE STUDY
STATEMENT OF PROBLEM
RESEARCH QUESTIONS
GENERAL OBJECTIVE
SIGNIFICANCE OF THE STUDY
SCOPE OF THE STUY
LIMITATION OF STUDY
DEFINITION OPF TERMS
CHAPTER TWO LITERATURE REVIEW
INTROPDUCTION
PURCHASE PLANNING CHAIN MANAGEMENT
HISTORY OF PURCHASE PLANNING FUNCTIONS:
THE ROLE, OBJECTIVES AND CONTRIBUTION OF SUPPLY CHAIN STRATEGIES TO CORPORATE AND STRATEGIC PLANNING PROCESS
THEORITICAL FRAMEWORK
ORGANIZATION TRANSFORMATION
EMPIRICAL LITERATURE REVIEW
CONCEPTUAL ISSUES
HISTORY OF PURCHASING AND PROCUREMENT
FACTORS FOR PURCHASING
CHAPTER THREE RESEARCH METHODOLOGY
INTRODUCTION
THE RESEARCH DESIGN
THE QUESTIONNAIRES DESIGN
SAMPLING METHOD
SOURCES OF DATA
DATA COLLECTION METHOD
CHAPTER FOUR PRESENTATION, ANALYSIS OF DATA AND TESTING OF HYPOTHESIS
INTRODUCTION
ANALYSIS OF DATA
TESTING OF HYPOTHESIS
CHAPTER FIVE SUMMARY, CONCLUSION AND RECOMMENDATION
SUMMARY
CONCLUSION
RECOMMENDATION
BIBLIOGRAPHY
CHAPTER ONE
INTRODUCTION
BACKGROUND OF THE STUDY
Considering
the increasing significance of purchasing role and with the idea that
this function has the ability to influence profitability favorably, the
way purchasing function develops within organizations over time has been
a topic of great interest. The evolution of the purchasing function is
well acknowledged in the literature. Departing from the passive,
re-active clerical viewpoint of the 70’s, the purchasing function has
the ability to develop itself in a strategic pro-active function
contributing, as much as other business functions, to the creation of
sustainable competitive advantages (Versendaal et al, 2005).Cavinato and
Freeman (1990) in their studies declared that in today’s changing and
dynamic global markets, organizations stressing on the high quality
production must focus their purchase planning on planning, development
and operation. They realized that purchasing groups of many
organizations have been slowly developed without a specific plan in
response.
In response to today's unprecedented economic uncertainty,
supply managers have adopted a "wait-and- see" attitude. Many are wary
of spending their company's most valued asset: cash. And since inventory
is cash's evil stepchild, companies continue to aggressively reduce
inventory levels. In fact, current inventory management practices have
regressed beyond "Lean" and are anorexic. As a result, popular Christmas
gifts, such as electronics and appliances, may be in short supply.
The
Institute of Supply Management's Purchasing Managers Index (PMI) tells a
strange and interesting story about today's supply chain management.
The data suggest that today's organizations have deliberately whittled
their inventories down to dangerously low levels.
At its surface,
uncertainty is straight forward to manage. Factory physics, the science
of manufacturing, teaches us that manufacturers have three buffers to
manage variability in their businesses: capacity, time and inventory. It
is clear when looking at the PMI that most companies are using only one
of these buffers: time. ISM reports a long trend of contracting
inventories with little or no noticeable increase or investment in
capacity.
As a result, lead times for supplies gradually (and now
dramatically) increased in the face of a steady trend of increased
demand (new orders). The recent and striking increase in lead time is a
reflection that much excess capacity is being put to use, leaving time
as the only remaining buffer. Lead times have ballooned from 10 to 12
days to 53 days.
Purchasing is the act of buying the goods and
services that a company needs to operate and/or manufacture products.
Many people are ignorant of what purchasing is all about. “Purchasing”
is the term used in industries, commerce, public corporations to denote
the act of and the financial responsibility for procuring material,
supplies and services. It simply describes the process of buying.
However in a broader sense, the term involves determining the needs,
selecting the supplier, arriving at a proper price, terms and
conditions, issuing the contract or order, and following up to ensure
proper delivery. It focus is to purchase or obtain materials in the
right quantity, in the right quality, at the right price, at the right
time, and from the right supplier and delivering to the right place.
Global
markets are expanding beyond borders and re-defining the way demand and
supplies are managed. Global companies are driven by markets across
continents. In order to keep the cost of manufacturing down, they are
forced to keep looking to set up production centers where cost of raw
materials and labor is cheap. Sourcing of raw materials and vendors to
supply the right quality, quantity and at right price calls for dynamic
procurement strategy spanning across countries.
With the above
scenario you find companies procuring materials globally from various
vendors to supply raw materials to their factories situated in different
continents. The finished goods out of these different factory locations
then pass through different chains of distribution network involving
warehouses, exports to different countries or local markets,
distributors, retailers and finally to the end customer.
In simple
language, managing all of the above activities in tandem to manage
demand and supply on a global scale is Supply Chain Management. As per
definition SCM is the management of a network of all business processes
and activities involving procurement of raw materials, manufacturing and
distribution management of Finished Goods. SCM is also called the art
of management of providing the Right Product, At the Right Time, Right
Place and at the Right Cost to the Customer.
Why SCM strategy is important for an Organization
Supply
Chain Strategies are the critical backbone to Business Organizations
today. Effective Market coverage, Availability of Products at locations
which hold the key to revenue recognition depends upon the effectiveness
of Supply Chain Strategy rolled out. Very simply stated, when a product
is introduced in the market and advertised, the entire market in the
country and all the sales counters need to have the product where the
customer is able to buy and take delivery. Any glitch in product not
being available at the right time can result in drop in customer
interest and demand which can be disastrous. Transportation network
design and management assume importance to support sales and marketing
strategy.
Inventory control and inventory visibility are two very
critical elements in any operations for these are the cost drivers and
directly impact the bottom lines in the balance sheet. Inventory means
value and is an asset of the company. Every business has a standard for
inventory turnaround that is optimum for the business. Inventory
turnaround refers to the number of times the inventory is sold and
replaced in a period of twelve months. The health of the inventory turn
relates to the health of business.
In a global scenario, the finished
goods inventory is held at many locations and distribution centers,
managed by third parties. A lot of inventory would also be in the
pipeline in transportation, besides the inventory with distributors and
retail stocking points. Since any loss of inventory anywhere in the
supply chain would result in loss of value, effective control of
inventory and visibility of inventory gains importance as a key factor
of Supply Chain Management function.
STATEMENT OF PROBLEM
Strictly,
this project is a case study of the effective purchase planning
management and profitability. The impact for efficient negotiation in
purchasing function in manufacturing company cannot be over stated. This
is because when fairly in contract management result from poor
negotiation. The problem of the study therefore are as follow:
1. Firms or organization fair to see the element of pricing and negotiation as a vital element in contract management.
2. Most firms adopt the concept of I will” when you lose attitude this result into poor project execution.
3. Most people involving in purchasing of capital and management do not possess the right skill and knowledge of negotiation.
4.
The economic situation of the country has serious effect on the
quality of negotiation purchasing function in manufacturing company firm
attempt.
5. There is no serious attempt on the part of firms to empower negotiation contract managers.
RESEARCH QUESTIONS
The following questions regarding the implementation of the Procurement planning guided the study:
1. Do the Selected manufacturing companies have well prepared Procurement
Plan in place, and adhering to it?
2. Do various entities in the selected manufacturing companies have active Procurement Committees in place?
3.
Have the authorities of the Selected manufacturing companies organized
in-service training for staff involved in logistics management?
4. Do stocks and stores purchases go through the procurement system?
GENERAL OBJECTIVE
The
main objective of the study was to assess the critical implementation
issues associated with the operationalisation of Procurement planning
in health entities in the Selected manufacturing companies.
SPECIFIC OBJECTIVES
• To determine the level of compliance of Health facilities in the district with the Public
Procurement plan.
•
To assess the involvement of the various departments and units in the
selection of inputs and logistics they require to perform their duties
• To find out whether an Annual Procurement plan is prepared and followed for all purchases.
• To assess the current practices related to stores management.
• To make policy recommendations to improve current situation.
SIGNIFICANCE OF THE STUDY
The
primary significance of this study is for partial fulfillment of the
requirements for the award of Batchelor Degree in Purchase planning
Management.
The secondary significance is also geared towards
exploring the academic relationship between classroom theory and what is
practically attainable in industries and government establishment thus
the carefulness in choosing the research topic.
The third
significance of the project is to help and guide the younger ones on
what to do when writing project or carrying out any research.
The
fourth significance of the project is to guide industrial purchasing s
to effective and efficient negotiation to enable them to obtain the
“best buy which is the ultimate goal of the purchasing function.
SCOPE OF THE STUY
This research work is on the effectiveness of purchase planning management and profitability.
LIMITATION OF STUDY
Despite
the limited scope of this study certain constraints were encountered
during the research of this project. Some of the constraints experienced
by the researcher were given below:
i. TIME: This was a major
constraint on the researcher during the period of the work. Considering
the limited time given for this study, there was not much time to give
this research the needed attention.
ii. FINANCE: Owing to the
financial difficulty prevalent in the country and it’s resultant prices
of commodities, transportation fares, research materials etc. The
researcher did not find it easy meeting all his financial obligations.
iii.
INFORMATION CONSTRAINTS: Nigerian researchers have never had it easy
when it comes to obtaining necessary information relevant to their area
of study from private business organization and even government
agencies. Women in Mina, Niger state find it difficult to reveal their
internal operations. The primary information was collected through
face-to-face interview getting the published materials on this topic
meant going from one library to other which was not easy. Although these
problems placed limitations on the study, but it did not prevent the
researcher from carrying out a detailed and comprehensive research work
on the subject matter.
DEFINITION OPF TERMS
E-Procurement: .
E-procurement (Electronic Procurement) is the business-to-business (B2B)
purchase and sale of supplies and services through the Internet as well
as other information and networking systems, such as electronic data
interchange (EDI) and Enterprise Resource Planning (ERP).
PURCHASING: Purchasing is the act of buying the goods and services that a company needs to operate and/or manufacture products.
The
master schedule: master schedule also refers to as mater production
schedule, states which end items are to be produced, when they are
needed, and what quantities.
Bill-of-Materials file: BOM contains a
listing of all the assemblies, subassemblies, parts, and raw materials
that are needed to produce one unit of a finished product. Thus each
finished product has its own bill of materials.
Inventory Record
file: This is used to store information on the status of each item by
time period. This includes gross requirements, scheduled receipts, and
expected amount on hand. It also includes other details for each items,
such as supplier, lead-time, and lot-size, changes due to stock receipts
and cancelled order, withdrawals and similar events are also recorded
in this file.
Hardware and Software: Computers and appropriate software program to handle computations and maintained records.
- Department: Purchasing and Supply
- Project ID: PAS0022
- Access Fee: ₦5,000
- Pages: 77 Pages
- Chapters: 5 Chapters
- Methodology: Descriptive and Inferential Statistics
- Reference: YES
- Format: Microsoft Word
- Views: 3,776
Get this Project Materials