Project Materials

ROLE OF SOURCING IN THE ACHIEVEMENT OF THE PROFIT OBJECTIVE OF ORGANIZATION (A CASE STUDY OF NIGERIA BOTTLING COMPANY PLC)

Chapter one

Introduction

1.1 Background of the Study

The most important thing in the hierarchy of all organisations’ objectives is profit maximisation, which can only be achieved when an organisation is able to meet their customers’ demands satisfactorily as soon as possible.

For this objective to be met, there must be a right source of supply; that is, if the correct source decision is made in a particular instance, the buying company’s needs will be perfectly met.

In such cases, it would receive the necessary commodities or services at all times. Sourcing thus entails considerably more than merely selecting a supplier or contractor for each requirement individually.

It entails maintaining ties, both with favoured sources who are already supplying goods and services and with potential sources who have been passed over for the time being but are still in the running.

It entails making judgements about how to do business. For sourcing to function properly, supply market research is required. This is a routine aspect of procurement and supply activity, which buyers do informally when they speak with representatives, attend fairs, read trade publications, and research the market before making orders.

Furthermore, it is the primary responsibility of purchasing to identify suitable sources of supply and ensure that the appropriate quality and quantity of material is obtained at the appropriate prices, as well as to devote time and effort to investigating and evaluating prospective supplies and continuously assessing the performance of current suppliers.

In such a way that there will be a consistent inflow of materials supplied to avoid production stoppages and their associated expenses, and for the organisation to be able to maximise its client requirements in order to reach its profit goal.

1.2 Statement of Problem

In many organisations, it is obvious that faulty sourcing procedures result in the granting of contracts to suppliers that are not financially or technically capable of providing the organization’s demand or requirement.

This is frequently based on erroneous selections made by many purchasers, and as a result, the organisation is constantly hampered in meeting its profit goals.

The majority of other sourcing issues range from excessive material costs to late deliveries and the sale of defective products, all of which can be traced back to poor sourcing decisions.

1.3 Objectives of the Study

The purpose of this study is to evaluate the role of sourcing in meeting the profit objectives of the Nigeria Bottling Company Kaduna plant.

Specifically, the study is designed to

1. Identify the organization’s sourcing policy for material procurement needs.

2. Identify criteria for source selection.

3. Identify the criteria used by the organisation to rate their suppliers.

4. Identify the type of buyer-supplier relationship.

1.4 Significance of the Study

The research study focusses on the role of sourcing in the achievement of the profit objective of the organisation of Nigeria bottling company PLC Kaduna, so the research study will be of benefit to the organisation, executives, students, and other researchers in this field, as well as the entire population.

To the organisations, the study will explain in detail what sourcing is all about, how important and beneficial it is, and why it should be done proactively in the organisation.

To the executives, the research work will highlight the various sourcing methods available to them when sourcing for suppliers in their organisation, as well as the type of relationship that must be fostered to ensure timely delivery of material at the right time, price, and location.

To the student, the study will act as study materials as well as a reference book, so expanding their knowledge, and to the researcher in this field, the study will serve as a guide and stepping stone for future research.

The research study will help the student extend their perspective on what sourcing is all about. It is also a requirement for partial fulfilment for the award of a higher national diploma in the purchasing and supply department at Kaduna Polytechnic.

1.5 Scope of the Study

The study will focus on the Kaduna plant of Nigeria’s bottling industry. The investigation will focus on the organization’s sourcing policies and practices. The work will also consider the nature of the relationship between the organisation and its suppliers, as well as supplier rating or evaluation.

1.6 Research Questions.

This study will attempt to provide answer to the research questions below.

1. What are the sourcing policies employed by the organization for the procurement of their materials?

2. What are the criteria utilised for source selection?

3. What are the criteria employed by the organization for rating their supplier?

4. What form of relationship exist between the buying organization and their suppliers?

1.7 Definition of Terms

Sourcing: as the process of locating, choosing and developing suppliers is a fundamental purchasing activity.

Out Sourcing: May be characterised as a management approach by which important non-core operations are moved to specialist efficient, external providers.

Partnering: is a generic term that refers to the arrangement of collaborative connections.

Intra-Company Trading: This term refers to major corporations and conglomerates in which it is possible to purchase specific resources from a group member.

Subcontracting is the comprehensive restructuring of an enterprise around core competencies and external relationships.

Tactical and operational sourcing focusses on low-risk, non-critical items.

Reciprocity, sometimes known as selling through the order book, is a policy that prioritises suppliers who are also customers of the buying organisation.

Single Sourcing indicates a situation in which all orders are placed with a single supplier.

Dual or Multiple Sourcing: is a circumstance in which the buyer divides the order between two or more suppliers, particularly when the order is big.

Categorical Plan: The process is primarily reliant on the buyer’s experiences and abilities, as well as those of other departments.

International sourcing is the practice of purchasing goods outside of the buyer’s or importer’s country’s borders.