NEED FOR EFFICIENCY IN PURCHASING MANAGEMENT IN A PUBLIC SECTOR
ABSTRACT
This project is primarily concerned with the need for efficiency in purchasing management in a public sector in the ministry of Agriculture and National resources Enugu State. In doing this, the researcher briefly explain some of the problems public sector can encountered without efficiency in purchasing management and went on to touch background of the subject matter where some of the action of the company were highlighted. The primary data were collected through survey methods using questionnaires and personnel interviews. The analysis of data collected was carried out using chi-square and show the rate at which each response occurs. Base on the analysis, the following finding were made that there are more unqualified purchasing personnel in government ministries than qualified personnel and also that attention has not been given to purchasing in public sector. There is need for efficiency in purchasing management in a public sector so that award given to incompetent contractors with a view to diverting government purse into their own private purses will eliminated.
CHAPTER ONE
1.0 INTRODUCTION
1.1 BACKGROUND OF STUDY
Stripped of an excess verbiage, business can be defined as the striving for profit by adding value.
Based on the above statement, no organization is self sufficient. Procurement is therefore, one of the basic common functions of every organization? The purchasing function is taking an increasing importance in today’s industrial economy. Profit minded management has turn to professionally operated purchasing department to make sure it is getting full value for its outlays on materials and services, which constitute the largest single percentage of its naira.
All business and organisation, including non-profit and government institution, rely to a large extent upon an influx of materials and supplies into their plants or offices so that they can do something further with these materials thus producing a product or performing a service. And organizing the materials function to obtain the appropriate contribution to objective is one of the challenge of management since they involves cost. This cost can be for more than just the naira value of the mission material, for its inventory is not maintained in sufficient quantity to meet production schedules the efficiency of the production line will drop.
If the production line lacks materials, be they raw materials or component parts, the line may have to shut down, and this will force the company to lay off workers.
Frequent or extended lay offs will encourage skill workers to seek jobs in more stable companies. Once laid off, workers may be difficult to retire. Some will have found other positions, some will have moved away, others will have withdrawn from the work force for one reason or another. When production returns to full volume, new workers will have to be hired and trained, there will be additional training costs and a temporary loss in efficiency until the new workers became fully proficient in their jobs. This was exactly what happened with Diamond Breweries Ltd, Enugu, producers or Monarch beer, the production time were often interrupted intermittently at times producing at very low capacity due to shortages of essential raw materials like maize, malt, corks etc. This is because most f their raw materials used in production were imported, thereby leading to mass retrenchment of their workers in 1983.
A more insidious sources of increasing costs due to delay in the arrival of incoming materials is inefficient production. In the event of a shortage in a particular material or plant manufacturing operation may have to adjust to production of some other item during the waiting periods.
Instead of making a straight production run. Basically then, the function of purchasing in this: to obtain the right material, in the right quantity, from the right source, at the best price, at the correct time, and to do this with a minimum of overhead expense. It is an important function, and it is growing more important each year. Over 70 percent of the sales naira of our manufacturing industries is expended and on the purchase of goods and services. This is almost twice the amount expended on labour, the next largest category. Purchasing is extremely important to the profit picture of the company. This is because purchasing is one of the few remaining areas where the opportunity exists for extensive reduction of the cost involved.
Labour contracts have been negotiated to a point where little can be done to reduce costs. But purchasing, with its high percentage of company naira to be spent, is in a position to effect substantial saving through more intelligent purchasing is a full naira of profit to the company equivalent to many naira of additional sales.
