SOURCING DECISION AND ITS EFFECT ON MATERIAL AVAILABILITY
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SOURCING DECISION AND ITS EFFECT ON MATERIAL AVAILABILITY
Chapter one
INTRODUCTION
1.1 Background of the Study
Supplier selection is a procurement planning exercise that enables managers to search for and identify reputable sources of supply to ensure the availability of materials, equipment, fools, components, protects, consumables, and services at the proper price, amount, time, and location.
To ensure supply consistency, purchasing officers must devote time and effort to investigating and evaluating prospective sources or suppliers, as well as continuously evaluating the performance of current suppliers, in order to avoid the problem of overstocking, understocking, or complete lack of material availability in the organisation.
In order to ensure accuracy in supply, uninterrupted flow of materials in and out of the organisation, purchasing managers have to decide the kind of product or service that best fit needs, whether to buy what they require or to produce (make or buy decision), whether to buy locally, nationally, or internationally
whether to use a single or multiple source of supply, whether to enter into a partnership or reciprocity agreement, whether to engage in negotiation or bidding All of these difficulties necessitate thoughtful and efficient decisions that will help the organisation reach its maximum potential.
1.2 Statement of the Problem
Sourcing decisions are critical because if done correctly, they may propel an organisation to new heights. In most circumstances, the correct sources of supply assure the organization’s consistent availability of resources of the appropriate quality and quantity.
However, if the appropriate source of supply is not contracted owing to corruption, personal interests, or negligence, the supply of materials may be delayed.
This delay may result in impulse buying, which may lead to the acquisition of low-quality goods or items at an exorbitant price. This delay may also cause the organisation to run out of materials.
This could lead to the breakdown of production activities in the organisation, as well as other issues such as low-quality output, idle labourers and machines, a drop in sales turnover, a decrease in profit, and so on.
Will there be experience in the organisation? For the organisation to be able to address these issues, they must decide on the criteria for supplier selection and the sourcing policy that will ensure consistent availability of materials in the organisation, which can improve their chances in the soft drink industry or possibly make them leaders.
1.3 Object of the Study
The purpose of this study is to determine the implications of sourcing decisions on material availability in the Kaduna plant of 7up Bottling Company Plc.
The study is specifically designed to investigate methods for assuring continuous availability of the proper quality and quantity of materials in the organisation at the right time and location in order to avoid supply shortages and, in certain cases, full stock outs.
The objectives of the research work are as follows:
i. Identify the organization’s criteria for supplier selection.
ii. Examine the method used by the organisation.
iii. Examine the approach used by the organisation to evaluate suppliers.
iv. Consider the problems that the organisation typically faces while sourcing supplies.
1.4 Significance of the Study
The significance of this research will be determined by the benefits that will be gained by a broad section of society, including the organisation under study and the researcher. This investigation will broaden the researcher’s understanding of the topic.
The researcher hopes that 7up Bottling Company Plc’s Kaunda factory would have a relevant and beneficial source of supply. Those who want to conduct study on this topic will profit from this work because it will act as a road map for them to create their own. Conducting research. Most notably, it is required for the award of the Higher National Diploma in Purchasing and Supply.
1.5 Scope of the Study
This study will look at how sourcing decisions affect material availability at 7up Bottling Company plc’s Kakuri industrial area Kaduna facility.The investigation will focus on the organization’s manufacturing and store departments.
The researcher’s scope will be limited to the sourcing and supplier selection process, supplier selection criteria, sourcing decisions, supplier selection performance evaluation techniques, and supplier relationship management.
This research was conducted utilising a misleading and case study design since it is the most appropriate circumstance for this type of research, and a questionnaire was used as a data gathering instrument. This research study’s population consists of 100 employees from the organization’s store and production departments.
And 60 questionnaires were distributed, 30 of which were provided to senior personnel in the department and the remaining 30 to senior staff, 45 of which were returned and valid for the research work.
To acquire data, the researcher used documentary material, a closed-ended structured four-point scale questionnaire, and an interview method. This investigation was conducted using a random sample technique.
The technique was chosen because everyone in the population had the same chance of being chosen. The data collected from responses to the research question and interviews was analysed using a basic mean cut-off point.
1.6 RESEARCH QUESTION.
The research questions used for this study are:
i) What are the criteria used to identify suppliers at 7up Bottling Company plc?
ii) What is the organization’s current sourcing policy?
iii) How does the organisation evaluate suppliers?
iv) What challenges does the organisation face while sourcing materials?
v) When the organisation decided which tactics would be most effective in managing supplier relationships.
1.7 Definition of Terms
– Sourcing: Is the process by which buyers search out, survey, and analyse suppliers in order to develop policies for those who will best satisfy the organization’s needs.
– Core Competence: This is the organization’s collective learning, particularly how to coordinate varied production abilities and integrate multiple streams of technology.
– Insourcing: The process by which an organisation assumes responsibility for delivering services and performing operations in-house and in other locations, but only through its own employees.
– Outsourcing: Is the process by which an organisation contracts out services and operations that are typically performed in-house to other organisations who can do them better, cheaper, or faster.
– Negotiation: Is the art and science of reaching an agreement through negotiation on contract elements such as price, quality quantity, delivery time, terms and conditions of service, and so on.
– Bidding: Is a purchasing procedure in which potential suppliers are invited without collusion to present a clear offer of price, terms, and conditions to an organisation or firm, which, if accepted, will serve as the basis of the subsequent contract for the supply of the intended goods and services or the execution of projects.
– Quality: According to Kotler and Armstrong (2004), quality is a product or service’s ability to perform its functions, which include overall durability, reliability, precision, ease of maintenance and repair, and other customer-valued traits.
– Quality: According to Kotler and Armstrong (2004), quality is a product or service’s ability to perform its functions, which include overall durability, reliability, precision, ease of maintenance and repair, and other customer-valued traits.
– Quantity: This comprises having an adequate supply of materials, tools, components, and parts for store replenishment and manufacturing needs.
– Performance: This refers to the product’s operation/features, as well as how well the product performs the purpose for which it was originally built and how well it meets the intended needs.
– Material: Anything that can be provided to the market for attention, acquisition, usage, or consumption and may be capable of meeting needs.
– Leasing: Leasing is a contract in which one party (lessor) grants another party (lessee) the use and possession of an object or property for a predetermined length of time and fixed payments.
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