A visit to most production company as shows that sourcing now have a
great impact on the profitability of a company. Such as lowering cost
structures, maintaining the product quality of a company, ability to
meet customer requirements, and lot of other benefits.
This study attempts to evaluate the impact of sourcing in the
profitability of company using ZARTECH LIMITED as a case study. It seeks
to examine the responses of the procurement department on how suppliers
are selected during the process of procurement of materials, which will
eventually help to increase the company’s profit.
This study drew literature on sourcing strategies and its benefits
from several sources. Data were gathered from Zartech limited and also
from other sources like internet, text books, journal e.tc. Results of
analysis of the data collected show that the company contacted are
convinced that sourcing is a necessity for the profitability of any
company however they agreed that sourcing strategies should be
effectively carried out. Other facts were elucidated by the study but
generalization of the study findings cannot be total, due to certain
limitations.
CHAPTER ONE
1.0 INTRODUCTION
Over the years, procurement function contains activities
that have attracted the attention of many researchers and companies
worldwide. However, most studies conducted focused only on the
manufacturing industries and associated with functional indicator.
This research presents and discusses some key points and
noticed important changes recording the ways business are carried out.
In connection with the market worldwide process managerial models have
been customer constantly reviewed and improved, as well as new concepts
and paradigms, such as the contemporary business and mass customization,
have quickly emerged. It is this competitive context that the supply
chains management (SCM) should be understood.
A supply chain can be represented by a group of
integrated logical process that originates from source of raw materials
and comprises several companies, until products are delivered to final
customers in form of goods and aggregated services.
In the past, every layman in Nigeria were ignorant of
what exactly purchasing and supply is all about. Most people believe
that procurement of raw materials is non-task or a non-issue matter.
Foremost, most manufacturing companies of which ZARTECH
LIMITED MAYA happens to be one of them, dispose more than half of its
income on materials, supplies and services. We would bear in mind that
intensive sourcing is the rudiments of purchasing.
Sourcing comprises of the identification or development
of suitable sources. Sourcing decision indicates which supplier to
patronize. How many suppliers are needed to supply a given item?
How to allocate available business and in what term to do
the business, the continuing relationship both with preferred sources
which are still in the running although they have been passed over for
the present.
For its proper performance, sourcing requires supply
market research. This is often undertaken informally by the buyers as
part of their buying work, when they interview salesman, visit
exhibition, read trade journals, obtain catalogues and research the
market before placing an order. It is sometime undertaking formally by
research personnel, in a purchasing services section as a support
function to the buyers. Supply market research identifies the set of
actual and potential supply sources which contribute the market,
investigates their capabilities analyses the structural features of the
market trends and long term supply prospects, and generally keep on ear
to the ground.
Purchasing does not mean buying raw materials Only, but
it involve determining the needs, selecting the supplier (S), arriving
at affordable price, terms and condition issuing the contract or order
and following basic elements involved in performing the purchasing
function which are: Obtain the procurement of materials, goods and
services of the right quality, in the right quantity, from the right
source at the right price and at the right time.
Infact, purchasing was formally regarded purely as
function, where the purchasing department acts on behalf of all
department in its organization which requires an item to be purchased,
and also hand all contracts and orders between its organization and the
supplier.
But now, purchasing is seen as a major impact on
profitability. Expediting action in finding better or cheaper new
sources of purchasing and quality responsible for the entire ranges of
materials and commodities required by the company for efficient
maintenance of adequate stock levels at the central store.
From the above introduction, it is clearly shown that it
is impossible for any organization to achieve its full goals objectives
without a successful sourcing and procurement activities. Therefore, the
success of business enterprises greatly depend on sourcing and
procurement of raw materials for the organization’s objectives.
1.1 OBJECTIVE OF THE STUDY
The main objective of this studies 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 with a view to finding possible solutions to the
problem.