Effect of Procurement Practice in Small Scale Industry
CHAPTER ONE
OBJECTIVE OF THE STUDY
With purchasing we have a responsibility to contribute positively to our company survival by improving our efficient today’s economic condition and environment within the small scale industry for a proactive and in some cases, reflective approach to achievement. The purpose of this study is:
- To know reasons for procurement practices in small scale industry
- To identify purchasing functions and roles in an organization most especially in small scale business or industry.
- To also reduce the imposition of high import duties on purchasing abroad and find the needs to export alternative sources of supply.
- Another purpose is to examine purchasing performance and reducing purchased materials cost through sourcing vendor rating, price indexing and contractual agreement.
CHAPTER TWO
REVIEW OF RELATED LITERATURE
Procurement Practices
Procurement practices aim at ensuring that organizations get value for money when committing their expenditure. This involves the firm meeting its strategic objectives by purchasing the required goods and services from the right suppliers in an efficient manner. Timeliness, user integration and process efficiency are used as indicators to measure green purchasing. Procurement plans in the long run helps organizations save costs and organizations that purchase items without a procurement plan in the end incur a lot of costs. Money spent to boost service levels in the long run increases market share and business performance. Cost savings are achieved through procurement of quality goods and services, economies of scale and the reduction of products in stock. The use of information technology in procurement, quickens order fulfillment and improves purchaser supplier relationship. Procurement practices reduce the amount of resources allocated, increases profitability and improves the quality.
PROCUREMENT BEHAVIOUR
This study will explain the nature of procurement behaviour and explore the literature on purchasing behaviour in small firms. It will introduce a study exploring the procurement behaviour of small firms in the plastics moulding industry and illustrate the key results. The study explores the value of understanding such behaviour and highlights how owner-manager’s approaches to purchasing might differ from those of ‘professional’ purchasing managers.
CHAPTER THREE
RESEARCH METHODOLOGY
INTRODUCTION
In this chapter, we described the research procedure for this study. A research methodology is a research process adopted or employed to systematically and scientifically present the results of a study to the research audience viz. a vis, the study beneficiaries.
RESEARCH DESIGN
Research designs are perceived to be an overall strategy adopted by the researcher whereby different components of the study are integrated in a logical manner to effectively address a research problem. In this study, the researcher employed the survey research design. This is due to the nature of the study whereby the opinion and views of people are sampled. According to Singleton & Straits, (2009), Survey research can use quantitative research strategies (e.g., using questionnaires with numerically rated items), qualitative research strategies (e.g., using open-ended questions), or both strategies (i.e., mixed methods). As it is often used to describe and explore human behaviour, surveys are therefore frequently used in social and psychological research.
CHAPTER FOUR
DATA PRESENTATION AND ANALYSIS
INTRODUCTION
This chapter presents the analysis of data derived through the questionnaire and key informant interview administered on the respondents in the study area. The analysis and interpretation were derived from the findings of the study. The data analysis depicts the simple frequency and percentage of the respondents as well as interpretation of the information gathered. A total of eighty (80) questionnaires were administered to respondents of which only seventy-seven (77) were returned and validated. This was due to irregular, incomplete and inappropriate responses to some questionnaire. For this study a total of 77 was validated for the analysis.
CHAPTER FIVE
SUMMARY, CONCLUSION AND RECOMMENDATION
Introduction
It is important to ascertain that the objective of this study was to ascertain effect of procurement practice in small scale industry. In the preceding chapter, the relevant data collected for this study were presented, critically analyzed and appropriate interpretation given. In this chapter, certain recommendations made which in the opinion of the researcher will be of benefits in addressing the challenges of procurement practice in small scale industry
Summary
This study was on effect of procurement practice in small scale industry. Four objectives were raised which included: To know reasons for procurement practices in small scale industry, to identify purchasing functions and roles in an organization most especially in small scale business or industry, to also reduce the imposition of high import duties on purchasing abroad and find the needs to export alternative sources of supply and another purpose is to examine purchasing performance and reducing purchased materials cost through sourcing vendor rating, price indexing and contractual agreement. A total of 77 responses were received and validated from the enrolled participants where all respondents were drawn from selected SMES in FCT Abuja. Hypothesis was tested using Chi-Square statistical tool (SPSS).
Conclusion
The research brought to light the connection between procurement procedures and the performance of an organization. Proper structures and systems in procurement ensured transparency, accountability, reduced costs and improved quality and specifications. Continuity of the workforce greatly contributed to organizational performance. More than 50 26 percent of the members of staff in procurement have worked in the organization for more than 5 years. This level of staff retention means waste is able to be minimized and resources are used to their optimum through increased knowledge gained over the long duration. More training on technology acceptance and use is still needed for the members of staff. Continuous improvement of skills especially in the Information Technology field should be promoted as the industry is very dynamic. Finally, for an organization to require its workforce to uphold ethical values, it should itself lead by example and uphold the same values with equity and fairness. There should not be any unnecessary interference from the organization heads on procurement processes
Recommendation
Suppliers should be communicated to using the company’s website and their responses received in the same manner to ensure competitiveness, coverage of a large number of potential suppliers, transparency in the procurement process and consistency in the way specifications are received. An in house department with competent professionals dealing specifically in employee training should be created. This will in turn save on costs incurred from outsourcing and enable members of staff access training at any time from individuals they can relate to. This requires top management support and willingness.
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