ABSTRACT

In general, it has been accepted that for an organization to produce and satisfy its stakeholders, this organization must have a good management team that manages its resources according to established rules. In manufacturing firms, inventories make up a larger proportion of assets. procurement management usually raises many issues, from correct volume to ordering and optimizing benefits for those interested. Thus, the research undertook this research work entitled. Evaluation of the effective procurement management. A study of some beverage companies include Coca-Cola Nigeria Plc, Pepsicola Nigeria Plc and Nigeria Mineral Water Industries Limited.

The objective of this work includes: To determine whether profit is maximized and cost minimized due to the application of the efficient procurement management. To determine also whether manufacturing concerns in our country manage inventories effectively by using procurement management techniques e.g. Economic Lot Size, Just-in-Time etc.

Data were collected using questionnaire method, and were analyzed using chisquare (X2) Pearson product moment, correlation co-efficient (r) and regression analysis.

The result therefore shows that they place order at the right time and right quantity overcoming the setbacks of lead time. The companies also minimize costs of holding inventories and maximize their profits. The findings showed that manufacturing concerns in Nigeria meet the target requirement of their customers, stakeholders, and the society where they operate.

The research recommends that: all staff of the manufacturing concerns should be made to have the thorough knowledge of procurement management as this will enable them to work towards their stock protection and cost minimization. The manufacturing concerns should get the recent developed software on procurement management and use to update their knowledge of procurement management on regular bases.

CHAPTER ONE

INTRODUCTION

Background to the study

          Effective procurement is one of the key functions of any manufacturing organization; profit is the excess of return over expenditure in any transaction or service of transaction especially the excess of selling price of goods over their cost or the net income for a given period of time. The word profit to the aforementioned fact, is the ratio of profit for a given year to the amount of invested or to the value of sales.

          In distance profit to some business experts is the compensation accruing to entrepreneurs for the assumption of risk in business enterprise of distinguished from wages or rent? However; in making the maximization of profit a reality in any business setup, the management team must be ready to harness her strength by making used of her available resources in maximum, implies the uses of the entire latent and uncultivated avenue for possible investment to suppress the environmental threats.

          Any cost incurred by a firm may be classed into two groups. Fixed cost and variable cost. Fixed costs are incurred by the business at any level of output, including none. These may include equipment maintenance, rent, wages and general up keep. Variable cost changes with the level of output, increasing as more products are generated. Materials consumed during production often have the largest impact on this category. Fixed cost and variable cost, combined, equal total cost.

          Revenue is the total amount of money that flows in to the firm. This can be from any source, including product sales, government subsidies, venture capital and personal find.

          Profit to an economist is the differences between total revenue and total cost or symbolically it is = TR – TC where represent profit. In view of these, business man, manufacture investors, marketers and what have you must ensure the effective validation of marketing tools and techniques through planning, implementation, monitoring and control to establish an equilibrium between the company(s) available and potential resources and the desire of the consuming populace towards profit maximization actualization.

1.2     STATEMENT OF RESEARCH PROBLEM

          Nigerian business organizations conceive and yield to effective procurement in varying degree. Taking a wider look at firm’s different industries in Nigeria, one can conclude that many going concerns do not reach with “Effective procurement and maximization of profit business activities, especially in the area of organizational growth and profit ability level of a firm.

1.3 OBJECTIVES OF THE STUDY   

 The general objective of this work is to evaluate the application of effective procurement management in Nigeria manufacturing firms, so as to know whether they operate efficiently like in other countries of the world such as Japan, United States of America and Britain among others. While the specific objectives are to:     

(a)    Determine if manufacturing firms place orders at the right time and obtain quantities of procurement that are economical through the use of procurement management.

(b)    Determine whether the companies do not have enough  inventory size or quantity that help them have hitch-free/smooth production and sales to their customers.  

(c)    Ascertain whether the use of inventory management enables the concerns to reduce the cost of inventories ad thereby improve on their liquidity. 

(d)    Ascertain whether the companies maximize their profit for the full benefits of their stakeholders.

(e)    Assess if the organizations render efficient services to their customers through prompt delivery of their orders at attractive prices.

1.4   RESEARCH QUESTIONS        

For a meaningful research work to be carried out on the usefulness of inventory management in manufacturing concerns, a number of questions must be asked and answered. The following are therefore, some of the research questions:

(i)     Do manufacturing concerns use efficient procurement management techniques such as: economic order quantity (economic lot size) and just-in-time, among others?

(ii)    Does economic lot size technique in particular assist manufacturing concerns to hold sustainable size of inventory, for efficient and smooth production?

(iii)    Has the inventory management and control techniques help them to minimize their costs of inventories?

(iv)   How have the manufacturing concerns contributed to the economic growth of their host communities in particular and the country, Nigeria at large?

(v)    Does efficient inventory management help the manufacturing companies to maximize their profits?

(vi)   To what extent have the customers of manufacturing concerns received satisfactory services from the manufacturing companies?

        These question will be structured in such a way that the

respondents will state whether they strongly agree, agree or are neutral or disagree in their responses. The answers from these questions will form the basis of the analysis.

1.5 STATEMENT OF HYPOTHESES 

 A research hypothesis is a generalized and verifiable statement about a state of phenomena which may be true or false.

 According to Onu (1996:13), the validity of a hypothetical statement is subject to verification which must be based on adequate information on which decisions could be objectively based for either to accept or reject such a hypothesis. Thus, a research hypothesis is defined further as a rule of accepting or rejecting the validity of a statement on the basis of random samples from the chosen

population.

Therefore, these research null hypotheses will be empirically tested in this research work.   

1.     Ho: Manufacturing concerns do not minimize costs of inventories through the use of economic lot size (economic order quantities). 

2.     Ho: Just-in-Time (JIT), Economic Lot Size and Quick Response Manufacture (tools of inventory management) do not assist manufacture concerns to hold sustainable size of inventories for efficient and smooth production.

3.     Ho: Economic Lot Size (ELS), Just-in-Time material Requirement Planning (MRP) and Quick Response Management (QRM) tools of inventory management do not help manufacturing concerns to maximize profit.

1.6   SIGNIFICANCE OF THE STUDY

        Having gone through the statement of the research problem,

the significance of this research work are as follows:

(i)     It will enable manufacturing concern to discover and maintain optimum level of investment in inventory.

(ii)    It will enable the manufacturing concerns attend to their social responsibilities as their hoist countries constitute part of their stakeholders.

(iii)    It will enable inventory managers to know the ideal quantity of stocks to order that is economical to the organization and when

to order for it.

(iv)   It will assist the organizations to maximize their profits and reduce their risk of liquidity.

(v)    It will enable the manufacturing companies obtain the right size of inventories that will always support their smooth and hitch free production and sales operations

(vi)   It will assist the organizational managers know that level of inventory that will be kept to cover errors in forecasting the lead time or the demand during the lead time.

(vii)   Customers goodwill towards the organization will be maintained as it enables delivery committed to be met all the time.

(viii)  It will provide a base for other research works that might be carried out on stock management in any other sector.

(ix)    Lastly, it will help reduce business failure in our society as inventory constitutes one of the core pillars of business operation. 

1.7   SCOPE OF STUDY

 This research work is intended to evaluate the usefulness of effective procurement management in manufacturing concerns but the field of manufacturing is very vast and for this reason the researcher based this study on some selected beverage companies in Nigeria namely:

Coca-cola Nigeria PLC, Pepsi cola Nigeria Plc and Nigerian Mineral Water Industries Limited.

 The research also x-rayed how the usefulness of inventory management has assisted manufacturing companies to reduce cost of inventories obtained the size of inventory that is economical and that supports hitch free production, maximize the profit for the stakeholders and render efficient services to their customers, etcetera.

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