ANALYSIS OF PURCHASING CONTRIBUTIONS TO PROFITABILITY
ABSTRACT
Purchasing has been one of the major important functioning activity in industries. Its existence started from the early time of life though it was not notice until when division of labour and specialization became practicable. Efficiency of purchasing contributes much to profitability but its efficiency is determined by various factors life sourcing, determination and price and availability etc. Purchasing contribution to profitability could be traced from the purchasing of the raw materials; when the right raw material is bought and delivered at the right price and time. It enhance productivity and at the short run it contributes to the manufacturing of the right finished product thereby increasing the gross profit of the company.
Manufacturing companies like the Rokana industry Owerri and star paper mill Aba need increase in profitability of which purchasing is one of the profit making centres. But this can only by achieved if the management will appreciate the function of purchasing and allow it to carryout its responsibilities effectively through employing efficient and skilled purchaser.
CHAPTER ONE
INTRODUCTION
1.1 BACKGROUND OF THE STUDY
Purchasing has its origin from the early men when goods were exchange for goods. It grew from the stage and past through the exchange of goods for money and finally at the present day stage of the modern and formal purchasing. In manufacturing organization, any activity you can think of starts with purchasing and the sole target is profit making. Therefore, there is no profit making without purchasing.
In this study, the nature of the purchasing effectiveness, its need, efficiency and management will be examined. The proper performance of purchasing function-efficient purchasing will show the vitality purchasing to the smooth operation of other departments of the industrials sector with particular reference to the Rokana industry Owerri and star paper mill Aba. A close and meticulous look at most industrial sectors, show that materials purchases represent the largest element in operational expenditure. It follows therefore, that the exercise of prudence and good judgment in securing the best possible, ultimate value for money expended is one of the purchasing man’s “harvest” burden of responsibility. This cannot be achieved without strict adherence to purchasing techniques, and ethics which is best practiced by men of the profession who are really trained in the field.
In this research work, the researcher has taken bold step in finding out why most industrial sectors need a purchasing department and what leads to its inefficiency, particularly as it relates to Rokana industry Owerri and star paper mill Aba.
