The Impact of Sourcing as a Supply Chain Function on the Profitability of a Company
Chapter One
Objectives of the study
General objective
The main objective of this study is to examine the impact of sourcing, as a supply chain function on the profitability of a company and its importance in the manufacturing industries in Nigeria and to identify problems and difficulties in sourcing and procurement of these materials to find possible solutions to the problem.
Specific Objectives
To determine the impact of Supplier Development on the profitability of Zartech Ltd.
To establish the impact of contract management on the profitability of Zartech Ltd.
To determine the impact of Supplier relationship management on the profitability of Zartech Ltd.
To establish the impact of early supplier Involvement on the profitability of Zartech Ltd.
CHAPTER TWO
LITERATURE REVIEW
Review of theoretical literature Resource Based Theory
Resource Dependence Theory (RDT) promoted by Pfeffer and salancikin (1978), is the study of how the exterior resources of organizations affects the profitability of the organization. The procurement of exterior resources is a significant tenet of both the strategic and tactical management of any company. An implication in the procurement efficiency of the buying firms especially in tapping into the connection with suppliers as their important and dependable associates. Thus this theory props up the concept of supplier development. RBT proposes that actors lacking in crucial resources will seek to create relationships with (i.e., be dependent upon) others in order to acquire required resources. Just like sellers on buyers for precious markets and buyer will depend on suppliers for external resources. Also, organizations endeavor to alter their reliance relationships by lessening their own reliance or by increasing the dependence of other organizations on them.
Within this viewpoint, organizations are viewed as coalitions alerting their structure and patterns of behavior to acquire and maintain required external resources. Acquiring the external resources required by an organization comes by diminishing the organization’s reliance on others and/or by increasing other’s reliance on it, that is, modifying an organization’s influence with other organizations.
Network Theory
Network theory is the core on the relationships a firm has with other firms, and on how these relationships influence a firm’s behavior and outcomes (Thorelli, 1986). Network theory inform on choice of which firms an organization chooses to buy from or engage with as alliance partners.
Centrality is a key concept within network theory. Centrality refers to how critical a firm is within a network. High supremacy refers to a firm that is always sought out as a partner. Such firms enjoy high regard and status among the network (Gulati et al., 2000). Being central within a network would seem to offer the potential to improve the four key competitive priorities within supply chains: quality, speed, cost, and flexibility (Hultet al., 2006).
A highly central firm can tap its tight links in order to rush orders when required, make seamless transitions over time and seek out the provider offering the best materials and lowest prices. Therefore, with regard to sourcing, a firm should endeavor to be central to its network and should seek sources that are central to their networks.
CHAPTER THREE
RESEARCH METHODOLOGY
Research Design
This study used a descriptive research design. The purpose of descriptive surveys, according to Ezeani (1998), is to collect detailed and factual information that describes an existing phenomenon. A thorough review of literature was conducted before selecting the topic of the study. The research design that was used in this study was a descriptive design. The researcher chose this research design because the study aimed at collecting information from respondents on their attitudes and opinions in relation to impact of sourcing as a supply chain function on profitability in the manufacturing industry
Research population
The focus of the study was the employees of Zartech Limited who worked in the Procurement Department. The accessible population was made up of 35 employees who included Chief Procurement officer, Assistant Chief Procurement officer, Accountant, Procurement officers and storekeepers.
CHAPTER FOUR
DATA ANALYSIS, PRESENTATION AND INTERPRETATION
Bio Data Of Respondents
CHAPTER FIVE
SUMMARY OF FINDINGS, CONCLUSIONS AND RECOMMENDATIONS
Summary of the findings
General findings
The study findings show that Zartech Ltd has achieved gender parity of 1/3 of either gender as stipulated in the constitution of Nigeria. This was shown by 57% of the respondents who were male while 43% were female.
The company has employees of all ages with majority being of age 20-49 years. This was indicated by 31% of the respondents who were between the ages of 40-49 years, 26% was of age 30-39 years and 20% were of ages 20-29 years.
According to the study, most of the employees had acquired post-secondary levels of education. This was indicated by 32% who had acquired diploma level of education while 17% had acquired degree level. Only 11% had acquired secondary level of education.
More than half of the employees at Zartech Ltd had only worked for less than 5 years. This was shown by 57% of the respondents who had worked in the company for less than 5 years, 40% had worked for between 6-10 years, and 3% had worked for between 11-20 years.
Majority of the employees hold the view that sourcing as a supply chain function at Zartech Ltd was good. This as indicated by 51% of the respondents who felt sourcing as a supply chain function was good, and 23% felt that it very good as well as fair.
How Supplier Development affect profitability of Zartech Ltd According to the study findings, supplier development affected profitability of Zartech Ltd. This was shown by 61% of the respondents who held the opinion that suppliers’ development affected profitability of Zartech Ltd with only 28% holding a contrary opinion. most (54%) of the respondents were of the opinion that Supplier Development affected profitability of Zartech Ltd to a high extent and 30% were of the opinion that it affected to a very high extent.
According to the findings of the study, Supplier Development affected profitability of Zartech Ltd in the following ways; it Improves supplier performance, Reduces costs, Resolves serious quality issues, Developing new routes to supply, Improving business alignment between supplier and the buying organization, Developing a product or service not currently available in the marketplace, and Generating competition for high price product dominating the marketplace.
How Contract management affect profitability of Zartech Ltd According to the study, contract management affected profitability of Zartech Ltd. This was shown by majority (66%) of the respondents who said that contract management affected profitability of Zartech Ltd while 29% were of contrary opinion.
The findings show that Contract management affected profitability of Zartech Ltd to a high extent as shown by slightly half (51%) of the respondents who said that Contract management affected profitability of Zartech Ltd to a high extent, while 23% said that it affected to a very high extent.
The findings show that Contract management affected profitability of Zartech Ltd by; Leading to completion of projects within set budget and period, enabling organization to achieve their competitive advantage, and Leading to reduction on supply chain cost.
How Supplier Relationship Management affect profitability of Zartech Ltd
According to the study, Supplier Relationship Management affected profitability of Zartech Ltd. This was indicated by majority (70%) of the respondents who were of the opinion that Supplier Relationship Management affected profitability of Zartech Ltd with only 21% having the contrary opinion.
Conclusions
The study findings show that Zartech Ltd has achieved gender parity of 1/3 of either gender as stipulated in the constitution of Nigeria. The company has employees of all ages with majority being of age 20-49 years. Most of the employees had acquired post-secondary levels of education and had only worked for less than 5 years. Majority of the employees hold the view that sourcing as a supply chain function at Zartech Ltd was good.
Supplier development affected profitability of Zartech Ltd to a high extent in the following ways; it Improves supplier performance, Reduces costs, Resolves serious quality issues, Developing new routes to supply, Improving business alignment between supplier and the buying organization, Developing a product or service not currently available in the marketplace, and Generating competition for high price product dominating the marketplace.
Contract management affected profitability of Zartech Ltd to a high extent by; leading to completion of projects within set budget and period, enabling organization to achieve their competitive advantage, and Leading to reduction on supply chain cost.
Supplier Relationship Management affected profitability of Zartech Ltd to a high extent in the following ways; Leads to reduction on lead time, Enables take advantage of the best available prices; Leads to improve customer service and Long term relationship has led to supplier complacency.
Early Supplier Involvement affected profitability of Zartech Ltd to a high extent in various ways which include; improving the customer service delivery, Improving chances of selecting competent suppliers and Leading to reduction on supply chain cost.
Recommendations
Supplier development is an important factor in enhancing profitability of floricultural industries, the integration of the organization should enhanced for maximization of the output Contract management should be enhanced in all floricultural industries to enable them achieve their competitive advantage.
Manufacturing industries should ensure Supplier Relationship Management is enhanced to improve on customer service satisfaction to achieve a leading edge in the growing manufacturing industry.
Manufacturing industries should ensure early Supplier Involvement in coming up with new products or new technologies. The lead time in the procurement of material in the production line will be definitive as well as minimum errors in the production.
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