INTERNATIONAL PROCUREMENT AND ITS JUSTIFICATION (A CASE STUDY OF GLOBAL SOAP AND DETERGENT, ILORIN)
ABSTRACT
The research work is basically concerned with the international procurement and its justification. The research work covers the purchasing activities of Global Soap and Detergent Industry limited Ilorin. International buying is the procurement activities which involved source and obtaining needs or requirement from a foreign country for use in another country. International trade is particularly important to consumer in all nations. Nations trade in what they produce most efficiently in an atmosphere of competitive world, resulting increase standard of living for all people of the world. This research work is divided into five chapters in order to aid a better understanding. Chapter one is the introduction of the subject matter, statement of the problem of purchasing in the company, scope and limitation. The historical background of the company understudy. Global soap and detergent industry limited Ilorin and the definition of terms. Chapter two covers the literature review especially on books that are more useful and relevant to the project under study. In addition to the literature review is definition on international buying reason for growth in international buying problem of international buying justification of international purchasing and relationshi6 of local and international buying. Chapter three is based on research methodology instrument used for data collection, population and sample size statistical method used in analyzing data. Chapter four is the presentation and analysis the data used. Chapter five contains the discussion of the summary of findings, conclusion and recommendations and references.
TABLE OF CONTENT
TITLE PAGE i
CERTIFICATION ii
DEDICATION iii
ACKNOWLEDGEMENT iv
ABSTRACT vii
TABLE OF CONTENT viii
CHAPTER ONE
1.0 Introduction 1
1.1 Objectives of the Study 3
1.2 Statement of the Problem 4
1.3 Scope and Limitation of the Study 5
1.4 Significance of the Study 7
1.5 Historical Background of study of the Case Study 8
1.7 Definition of Terms 12
CHAPTER TWO
2.0 Literature Review 15
2.1 Benefit of International Procurement 22
2.2 Justification of International Procurement 28
2.3 Hypothesis Formulation 30
CHAPTER THREE
3.0 Research Methodology 32
3.1 Instrument used for Data Collection 33
3.2 Population and Sample Size 35
3.3 Statistical Method used in Data Analysis 35
CHAPTER FOUR
4.0 Presentation And Analysis Of Data 37
CHAPTER FIVE
5.0 Summary, Conclusion and Recommendation 50
5.1 Recommendation 52
5.2 Conclusion 54
REFERENCES 56
QUESTIONNAIRE 57
CHAPTER ONE
1.0 INTRODUCTION
Purchasing as a subject and as a business function has really come along way. In the past when material, component part energy etc were abundant and available at ridiculously low price, purchasing was not given proper chance to operate that is why procurement was looked upon as having unimportant function.
However now that material is in short supply there is generally on existence of what is called galloping inflation.
These result to high price of material or unfriendly supply market. It will be very unreasonable for any business firms and indeed government to ignore purchasing function.
With these reason purchasing tends to play an important role in any business organization whether profit or non profit oriented. In a nutshell, the project is about the need for a company to involve international procurement.
To a layman purchasing means the process of buying raw material, component part and service. But in a broader sense procurement can be defined as the purchasing of the high quality of goods at the right price from the right sources and delivered in good condition to the right location and when required.
Procurement these days for organization especially profit oriented company has become very difficult because of the international operation involved. The company has to buy international to make its product. This nowadays firms in African countries or content can now produce their material requirement and service from few distance sources in American continent.
The researcher case study of Global Soap and Detergent Limited Ilorin will at the long run benefit in the are of appraisal made by the researchers on how foreign buying activities are accomplished. At the end of the research work, recommendation to solve the problem can be employed by the company to improve its purchasing performance especially in the area of international buying.
To the reader, especially non professional colleagues knowledge concerning foreign purchasing would be gained and various reason for foreign buying would also be gain.
To the professional colleagues, how international buying is practically carried out in a company would be learnt in addition to the theoretical knowledge gained in the classroom.
Finally, the society as a whole has its share or benefit to be achieved from the project.
1.1 OBJECTIVE OF STUDY
The research work is of importance to the researcher because if forms part of the requirement for the award of Higher
National Diploma in Purchasing and Supply in the Department of Purchasing and Supply Institute of Finance and Management
Studies Kwara Poly.
The research study will attempt to inform the organization under the study on the roles and immense contribution of international buying.
However, at the end of the research work, it would help to convince the management of Global Soap and Detergent Limited llorin, that Purchasing contribution is essential the overall corporate the organization lack of this may cause total collapse of the company corporate plan.
1.2 STATEMENT OF THE PROBLEM
The research study deal with international procurement and its justification in a company. An international buying involves more complex procedure relating to local buying. There is tendency for some problem to arise during the practice. Among some problem encounter by the company are how to locate foreign supplier, how to get traveling document, licensed, importation duties. More so, fluctuation in exchange rates, instability in rate of exchange is one of the problems frustrating the industry in which the cost important becomes higher.
Lastly, the distance between one nation and another may so great that it makes the cost of transportation high.
1.3 SCOPE AND LIMITATION OF THE STUDY
This research works will cover buying for organization. Thus its scope will be based only on international buying aspect.
Also, the study will be restricted to the chosen company Global Soap and Detergent Ilorin by analyzing the various procedures involved in international procurement. The study will start right from origin of needs and ends with clearing of the goods at what or port of entry.
They researcher faced some problems in the course of carrying out the research work, which range from financial problem and time factors. The researcher was also denied some accessibility to copies of various document use in the organization when sourcing abroad for security purpose. Also the attitudes of the respondent create much problem. Most of them schedule a time in which they will never be around whenever you are there.
Lastly, the organization lack purchasing library in which
secondary data can be yet for the researcher.
⦁ Theoretical Scope: this refers to the area to be covered during the period of research work. The area to be discussed shall be limited to purchasing and supply.
⦁ Geographical Scope: The researcher shall offer useful suggestions where necessary so that the organization could be able to advice much for progress and make valuable contribution to see the economic depression of this great nation.
⦁ Industrial Scope: The researcher will focus more attention on the purchasing department with particular reference of Global Soap and Detergent Industry as regard their activities.
⦁ Time Scope: This is where the researcher would use his time to spend for collecting data from the organization in order to get facts from them.
1.5 SIGNIFICANCE OF THE STUDY
If international buying is effectively and efficiently carried out, it is possible to derive vital in gain from it. Global Soap and Detergent llorin derives the following important from overseas buying.
1. Better quantity material: Material of best quality are got from overseas due to their technological advancement.
2. Increase in prefer to buy foreign goods because it is mostly cheaper when compared to local source because of lower wage, longer runs, better product, better plant and some other important which might at long run reduced the amount to be paid for the gods. In this wise, this tends to increase the profitability of the company used as a case study, Global Soap and Detergent Ilorin.
3. Better quality material spark parts, component are got from international market.
1.6 HISTORICAL BACKGROUND OF GLOBAL SOAP AND
DETERGENT INDUSTRIES LIMITED COMPANY PROFILE AND CITATION
INTRODUCTION
Global Soap and Detergent Industry Limited is a member of the Doyin Group of Companies and the first indigenous company licensed to manufacture soap and detergent in Nigeria. It was in corporate on 8th October, 1984 with head office at Lagos and the factoring situated at Amuda Aluko way llorin, Kwara State.
OWNERSHIP AND MANAGEMENT
The company is operated managed and directed by full blooded Nigerians. Owned by courageous and experienced industrial 1st prince (Dr) Samuel Adedoyin who led for many years been championing indigenous technology, backward integration and the use of local raw material in Nigeria.
Global Soap and Detergent Industry was established in response to the call of the Kwara State Government in industrializing Kwara State. Price Adedoyin is the chairman and managing director. The affairs of the company are managed under the Leadership of Mrs. Omolola Olobayo, the Executive Director. Member of the management team also include a list of manager with Engr T. N Njoku as the general manager.
The company operates the following department: personal and administration, technical, production, accounts, sale, marketing, audit, purchasing laboratory/quality control raw materials silicate, sulphonation and distribution department.
FACTORIES
The company has greatly contributed to the growth of the Nigeria economy through industrialization. Despite the economy downturn, the company has metamorphosed from its one detergent factory and a pioneer staff strength of 40th in 1985 to the present conglomerate of seven factories with a staff strength of over 1000.
THE DETERGENT PLANT
The detergent plant is a Sabiz Italian plant. In 1993 it was up graded to a 10 ton per hour capacity. The product are mainly detergents and the following one the brands presently being produced: flash blue detergent (200gm) bold detergent (10kg, 5kg,lkg, poly and sack) wash (10kg, 5kg, 2kg,lkg poly and sack) and super deal (200gm).
SULPHONATION PLANT
This is a 10 ton per hour plant commissioned in 1994 upgraded to 1.6 ton per hour. The main product is sulphonic acid which is a raw material used for the production of detergent powder and detergent bar.
SOAP PLANT
This soap comprises 1.0 per hour each of toilet soap and laundry soap. The plants were commissioned in 1990. The product are Hielean bar soap (600gm), Bold tablets (110gm) Bold tablets (200gm) vogue toilet soap (95gm) grand tablets (150gm) vogue quest soap (30gm) med soap antiseptic soap (25gm).
GLYCERINE PLANT
The glycerin plant uses lye which is a by product of soap
production as a raw material to produce glycerire. The plant is a 0.1 ton per hour capacity and was commissioned in 1992.
DETERGENT BAR PLANT
The detergent bar plant which has a capacity of 1.0 ton per day commissioned in 1994. The product is bold detergent bar (400gm).
SILICATE PLANT
This furnace produces sodium silicate which is a raw material for the production of detergent, soap and detergent bar. The plant which is a 10.0 ton per day was commissioned in 1993 two similar furnace are sited in Lagos.
SCOURING POWDER PLANT
This is 1.0 ton per plant within the detergent plant, it was commissioned in 1989 and produces Hiclearn scouring powder (600gm). Ninety nine percent of the raw material used to produced scouring powder are obtained from Kwara State.
SALES AND MARKETING
The company’s range of product has confirmed to enjoy good patronage from Nigerians due to the consistently high quality, it is on record that global soap and detergent industries is the first company to have received the NIS certification mark for quality within its first 3 years of operation. The company’s products which have NIS certification mark for quality are flash blue detergent, super deal blue detergent, wash rite blue, detergent and vogue toilet soap.
As a way of researching the nooks and crannies of the country the company has 22 sales deports located all over the federation viz Aba, Abeokuta, Benin, Enugn, Gombe, Ibadan, liorin, llupeju Lagos, Marinland, Jimeta, Jos, Kaduna, Kano, Maiduguri, Gusau, Katsina, Ondo, Onitsha, Sokoto, Uyo, Minna and Ado Ekiti. In addition, their product have been introduced to countries within the ECOWAS sub-region as a way of earning foreign exchange for the country. This is achieved through direct consumer contract opening of depots and encouraging distributors.
1.6 DEFINITION OF TERMS
C.I.F: This simply means Cost Insurance Freight which indicate that the seller is responsible for the goods until they get to the port of destination and the selling price includes ocean freight and insurance up to that point.
Duty: Payment made to the government either for import or export.
C and F: Cost and Freight This is similar to C.I.F except that buyer has to pay for insurance charges.
Bill of Lading: This is a document similar to delivery note used in shipping. The sender retains one copy is held by the master of ship and note also for consignee.
Port of Entry: This is importer! buyer country part i.e through which consignment will entre its country of destination.
E.T.D Estimated Time of Department: This is a note send to the importer stating the time the vessel leaves the port of exporter.
E.T.A Estimated time of Arrival: It is a note send to the importer given him the time consignment will arrive at his country port.
CRF Clean Report of Finding: Pre-shipment inspection of goods to be shipped to Nigeria must be ensured that they are of correct quality and that only normal contract material importer are shipped.
Carrier: This is a company offering the service of transporting good from one area to another.
F.O.B Free on Board: This is a contract in which good are delivery t the ship (no board).
Consignment Note: A note accompanying consignment of goods indicating quantity, description, number of package in the consignment.
Consignee: The person or company to whom goods are addressed or sent.
Commercial Invoice: The invoice is often employed as basis for custom clearance at the port importation.
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