Impact of Material Sourcing in Enhancing the Organizational Profitability
Chapter One
Objectives of the Study
The purpose or objectives of the study is to examine the impact of material sourcing in enhancing the organizational profitability, its importance, how effective and efficient it is to the overall achievement of the organizational goal and objectives. Under the aspect, the researcher hope to realize the following:
- To determine the most effective sourcing policies adopted by Nigeria Breweries.
- To determine the criteria for selecting supplier in Nigeria Breweries.
- To determine the challenges of manager in material sourcing
- To determine the impact of material resource on the profitability of Nigeria Breweries.
CHAPTER TWO
LITERATURE REVIEW
Introduction
This chapter will attempts to some comments and opinions of the various authors as contained in the books, newspaper, magazine, journal etc in reflection to the subject matter “impact of material sourcing on the profitability in an organization”.
Definition of Sourcing (Material Sourcing)
According to Hassan (2010) define sourcing as a purchasing procedure through which buyers, sales, survey and evaluate suppliers and determine policies relating to those who will most suitable meet the requirement of the organization (p. 99).
Lysons and Farington (2006) define sourcing as the process of identifying, select and developing suppliers key purchasing activities. Sourcing can be either tactical and operational or strategic buds (p. 367).
Sourcing Policies/Decision
According to Hassan (2010), sourcing decision is arguably one of the most important purchasing decisions to be made by managers. It is generally believed that once a “correct’ choice of supply source is made, then needs of the organization would be met. He went on to say that, a lot of factors are considered in making sourcing decision.
- Which product or services best fit needs or whether to produce what we consume or to buy from outside supplier – make or buy.
- Whether to lease or buy, if we are to buy, do we buy locally, nationally or internationally?
- Do we use or buy from one supplier (single source) from several (multiple source).
- Do we enter into partnership or engage in reciprocal agreements, negotiation or bidding and to buy from distributions or direct from manufacture.
Sourcing Decision
Hassan (2010) posits that sourcing decision is arguably one of the most important purchasing decisions to be made by managers. The stated that it is generally believed that once a “correct” choice of supply source is made then need of the organization would met adding that this state over simplifies a very complex situation. He further stressed that a lot of factors are considered in making sourcing decision. But the question that must be addressed by the purchasing manager is which products or services best fit needs or whether to produce what we consumer or buy from outside suppliers (make or buy) another issue is whether to lease or buy. If we are to buy, do we buy locally, nationally or internally? Do we make or buy from one single or multiple suppliers? Again, do we enter into partnership or engage in reciprocal agreements, negotiations or biding and to buy from distributors or direct from manufacture.
CHAPTER THREE:
Research Methodology
Introduction
This chapter is mainly concerned with the views method adopted by the researcher for data collection. The instrument for data collection, area of study, research design, sample and sampling procedure, administration of the data and techniques for analyzing data will be highlighted.
Area of the Study
The study is carried out in Nigeria Breweries Plc Kaduna plant which is located at Kakuri Kaduna South, Kaduna State. The researcher made use of the following departments: purchasing, store, production and administration department, the reasons for choosing these department is for easy access to information and data needed for the study.
Research Design
The research design used by the researcher is survey designed. The survey research is the type of study in which the research studies a group of people or items by collecting and analyzing data from only a few considered to be representative of the entire group. The reason for using the survey research are because it is more appropriate for the choose topic and considering the wide population under study.
Population of the Study
This refers to the overall coverage of the research work in terms of whom to survey. The population of this research work drawn from the workforce of Nigeria Breweries Plc, Kaduna Plant. The researcher design to use a population size of 100 staff covered in this research work includes: purchasing, production, store and administration department of Nigeria Breweries Plc, Kaduna Plant.
CHAPTER FOUR
Data Presentation and Analysis
Introduction
This chapter is divided into two sections: Section A and B. Section A contains personal data and B contains questionnaire which was administered. The data collected from the respondents through the questionnaire and the personal data were tabulated and analyze the data in order to ascertain and find solutions to the problems under the study. 20 questionnaires were distributed to various respondents at the end of which all were returned.
CHAPTER FIVE
SUMMARY, DISCUSSION, IMPLICATION OF FINDING, CONCLUSION AND RECOMMENATION
Summary of Findings
In the course of this research work, the researcher come up with a number of findings as it affect sourcing of raw material and its impact in an organization with particular reference to Nigeria Breweries Plc, Kakuri Kaduna.
One of the objectives of the research work, was to study how sourcing for raw materials is carried out particularly in Nigeria Breweries and whether it has any effect on the profitability of the company under study considering the government calling for the locally raw materials.
In the course of finding out the impact that material sourcing has in a processing industry particular reference to Nigeria Breweries, various areas related to the subject matter covered some literatures regarding sourcing, sourcing process, source of information, sourcing policy etc were renewed.
Though this research work, it has been discovered that the company is making high profit for the use of locally sourcing material. This shows that the organization is satisfied with the contribution of locally sourcing to its growth by making available at the right time and right quality, raw materials availability is the basis for a sustained industries growth in any nation.
It was also ascertained that the company maintain a very cordial relationship with their suppliers through payment of invoice bills and provision for their incent over while lead to better understanding through personnel observations and from interviews conducted.
It was also discovered that various department or units, some of which were allowed to undertake purchase for their individual department requirement such unit as the clinic and canteen. The idea of such department undertaking their purpose is uneconomical and amount to duplication of effort. The method of sourcing observed by one supplier to meet delivery schedule from other outstanding sources.
As regard to cost of local sourcing of raw materials, Nigeria Breweries consented that it is cheaper to foreign sourced. Because foreign sourced materials are always delivered late which I effect could slow down production, but no other options since not all needed materials are found locally, hence sourcing of raw materials is embarked upon to supplement locally source ones.
Discussion of Findings
This section is to highlight the major findings during the process of conducting the research work, in variable 1 which the respondents indicate that sourcing activities reduce cost of purchase or spending and also keep the organization on track in variable 2 which as high number of strongly agreed indicate that sourcing activities increase quality and enhancing performance in operation.
In table 2, variable 5 with a high number of strongly agreed that the personnel involve in sourcing activity are top management of the organization Nigeria Breweries. In variable 6, which as high number of disagreed that the staff or production department carries out sourcing activity in the organization under study. In table 3 variable 9 as a high number of strongly agree that the organization under study source for material locally.
In variable 10, with disagreed as high number indicate that the organization under study outsource all its material or sourcing activity.
Implication of Findings
In view of the finding of this research work, implication can be deducted if actions is taken or not taken. The finding shows that sourcing process in the organization is contributing passively to the efficiency in the use of organization resources. The organization should set up formal mechanism to control the movement of materials in order to have a standard product or item, if this is done effectively, it will simplify the policies and procedures by which material sourcing activities can take place.
If material sourcing is carried out effectively, it will increase the profit potential of the organization and if not carried out properly, it will tie down the organization working capital.
The non-implication of these findings can lead to disruption of the process and operational advantage obtained from material sourcing and in the future. This can reduce the confusion of sourcing by affecting efficiency in the use of firms sourcing and the lead to a great lost in the firm operation.
Conclusion
This has been an establishment fact that raw material availability is the basis for a sustained industrial growth of any nation.
Based on the facts and other finding the researcher has to come to conclusion that local sourcing has available contribution to the profitability of breweries industry than foreign sourcing since it was revealed that local sourcing increased production level, increase sales turnover for high profit by ensuring that needed material are always available local sourcing of raw material for self reliant economy is often a means of reducing a country’s independence on other countries and it is why the government present policy and strategies to encourage the establishment of resource based industries with establishment council.
Recommendations
For industrial sector to develop and perform better, this study proposes a “Home Grow Industrial Policy” where ISI and EPI are jointly pursued and industrial inputs domestically sourced. The EPI should be on specific items which Nigeria has comparative advantage. Industrial policy should be properly conceived and carefully implemented. Human capital development should be given priority in the country, with education especially sciences and technical education properly funded for skill development. To sustain industrialization in Nigeria, manufacturing production should begin to focus on the production of capital goods. Government should make conscious and deliberate efforts to negotiate and acquire available technology in the world in specific areas. The acquisition of technology should be a national issue and not a local firm affair. There should be massive public investment in the provision of electricity, roads, rail system and other infrastructure. National security should be strengthened and tightened to curb the activities of Boko Haram, armed robbers, kidnappers and ethnic militants so as to protect and encourage investment in the country.
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