Project Materials

THE IMPACT OF SOURCING AS A SUPPLY CHAIN FUNCTION ON THE PROFITABILITY OF A COMPANY

ABSTRACT

A visit to most production companies reveals that sourcing has a significant impact on a company’s profitability. Examples include lowering cost structures, preserving a company’s product quality, meeting consumer expectations, and a variety of additional benefits. This study seeks to assess the impact of sourcing on firm profitability using ZARTECH LIMITED as a case study. It tries to investigate the procurement department’s replies to how suppliers are selected during the material procurement process, with the goal of ultimately increasing the company’s profit. This study gathered information on sourcing tactics and their benefits from a variety of sources. Data were collected from Zartech Limited, as well as other sources such as the internet, textbooks, journals, and so on. The results of the data analysis suggest that the companies contacted are sure that sourcing is necessary for any company’s profitability, but they also agreed that sourcing methods should be implemented efficiently. The investigation revealed more facts, although generalisation of the study conclusions is not possible due to specific constraints.

Chapter one

Introduction

Over the years, the procurement function has garnered the interest of many researchers and corporations around the world. However, the majority of research done focused solely on the manufacturing industry and their functional indicators. This study provides and explores some major points, as well as significant changes in the way businesses operate.

In response to the market, global process managerial models have been regularly examined and updated, while new concepts and paradigms, such as current business and mass customisation, have evolved swiftly. Supply chain management (SCM) should be understood within the perspective of competition.

A supply chain can be defined as a collection of interconnected logical processes that begin with the source of raw materials and include several organisations until products are supplied to ultimate customers in the form of commodities and aggregated services. Previously, every layman in Nigeria had no idea what purchasing and supply were all about.

The majority of individuals consider that procuring raw materials is a non-task or non-issue. First and foremost, most manufacturing companies, including ZARTECH LIMITED MAYA, spend more than half of their revenue on materials, supplies, and services.

We would keep in mind that intensive sourcing is the foundation of purchasing. Sourcing refers to the identification or development of acceptable sources. Sourcing decisions show which provider to use. How many suppliers are required to supply a particular item?

How to allocate available business and on what terms, as well as the ongoing relationship with favoured sources who are still in the race despite being passed over for the time being.

Sourcing requires supply market research in order to function well. Buyers frequently do informal interviews with salespeople, visit exhibitions, read trade publications, collect catalogues, and research the market before placing an order. It is sometimes done formally by research specialists in a purchasing services unit to assist buyers.

Supply market research evaluates the current and potential supply sources that contribute to the market, investigates their capabilities, analyses the structural elements of market trends and long-term supply prospects, and generally keeps an ear to the ground.

Purchasing does not imply buying raw commodities. Only, but it includes determining the demands, selecting the supplier (S), reaching at an affordable price, terms and conditions, issuing the contract or order, and the following essential aspects involved in completing the purchasing function, which are: Obtain materials, goods, and services of the appropriate quality, quantity, source, pricing, and timing.

In fact, purchasing was formally recognised solely as a function, with the purchasing department acting on behalf of all departments in its organisation that require an item to be acquired, as well as handling all contracts and orders between the organisation and the supplier.

However, purchasing is now often seen as having a significant impact on profitability. Expediting action to identify better or cheaper new sources of purchasing and quality control for the whole spectrum of goods and commodities required by the company for efficient stock levels at the central store.

The preceding introduction clearly demonstrates that no organisation can fulfil its entire aims and objectives without successful sourcing and procurement activities. As a result, the success of businesses is heavily reliant on the sourcing and purchase of raw resources to achieve their goals.

1.1 Objective of the Study

The primary goal of this research is to investigate the impact of sourcing as a supply chain function on a company’s profitability and its importance in Nigerian manufacturing industries, as well as to identify problems and difficulties in sourcing and procuring these materials in order to find potential solutions.