THE IMPORTANCE FOR CREATION AND DEVELOPMENT OF GOOD SUPPLER RELATIONSHIP IN A COMPETITIVE MARKET

CHAPTER ONE

INTRODUCTION

BACKGROUND OF THE STUDY

In selecting sources of supply, purchasing makes decisions that influence not only the firm economic success, but the livehood of the suppiers and the efficiency of the entire economy. The purchase decision directly influences the financial situation of the supplying from and ultimately the economic welfare of employees and their families. Sourcing in finding suppliers who are willing and able to provide consistently quality, service, (delivery) at a competitive price.

We can not be talking about price and other things without source . In some cases, an extensive search, may be required to find one satisfactory supplier or even develop a source where none has previously been sourcing therefore may comprise the identification or development of suitable sources of supply, systematic investigation and comparison of such sources, the source decision and a plain for continuous relationship.

Good supplier is one who is at all time honest and fair in his dealing with their customers his own employees and himself, who has adequate plant facilities, and so to be able to provide materials which meet the purchasers spcificationsion the quantities  required and at the time promised, whose financial position is sound, whose prices are reasonable both, to the buyer and to  himself, whose management policies are progressive who is an alert to the need for continued.

Improvement in both his products and manufacturing processes, whose ethical behaviours are sound and who realize that in the last analysis his own interests are best served when he best serves his customers.

STATEMENT OF PROBLEM

For sometime now, evidence have shown that the company is facing some problems like.

1.    There is no cordial relationship between the buyer and the suppliers.

2.    The company has not be able to meat increasing demand of their customers in terms in terms of (product)

3.    The company need to look at the factors affecting the establishment of good buyer/ supplier relationships.

4.    The organizational structure of the company is not examined.

5.    The company need to inspect any product supplied to them to know the ones to accept and the ones to reject.

PURPOSE OF THE STUDY

       The aim of this study is to look at the following problems like:-

1.    To investigate the relationship or the reason for the non cordially.

2.    To know  the reason why the company has not been able to meet increasing demand of their customers in terms of product.

3.    To take a critical look at the factors affecting the establishment of good buyer/ supplier relationship.

4.    To examine the organizational structure .

5.    To inspect the products been supplied properly to know when to accept and when to reject.

RESEARCH QUESTIONS

       In an attempt to find solutions to the problem of creation and development of good supplies relationship in a competitive market the researcher sought answers to the following questions:-

1.    How is your relationship with your suppliers?

2.    Has there been an accession where you visit your suppliers plant to offer practical help in production of  your product?

3.    Do you receive help from your suppliers in relation to the acquisition of good and services.

4.    What sourcing technique does your company operate?  

5.    Does the company rejects the suppliers product for a reason of sub-standard?

STATEMENT OF HYPOTHESIS

       In conclucing this research, the following hypothesis will be tested.

1.    Ho – Good relationship with supplier does not improve companys purchasing efficiency.

       Hi- Good relationship with supper improve company’s purchasing efficiency.

2.    Ho- In selecting suppliers, reliability are not considered.

       Hi- In selecting suppliers reliability need to be considered.

SIGNIFICANCE OF STUDY

The researcher intends to examine how suppliers are selected, source, evaluated and developed. It is also essential to know the process involved in the creation and development of good supplier/ buyer relationship and where problem are experienced.

To the researcher, the research really help me as an individual to research and in the same time inpart knowledge about this particular study and my course as well, so with the knowledge. If an in the field now, I will be able to defend myself.

Secondly, the research is for the partial fulfillments of the condition for the award of Higher National Diploma (HND) in purchasing and supply department.

To other students,  my fellow students I know this research work will really serves them as a data bank in terms of research.

To the firm. I beloved that the study will help the company / firm to identity its draw backs and how to alleviate them.

To all industries, this study will also help various industries to know their weak point and also know how to tackle them, specially the industries that are facing some of problems solved above.

 SCOPE OF THE STUDY

The study was initially designed for development of good supplier relationship, getting suppliers who will produce the things the purchasers wants to the delivery schedule required by providing technical assistance and advice. In order hand, all things be equal this particular area also focus on various department like store department, production department. Finance department sales/ maketing department etc. Since the study is all about good suppliers relationship that is getting all the items the company wants at the scheduled time that is to say it reference to the following department mentioned above.

Store department:- In this area, the store manger or the store officer need to know the stock level at any point in time to know when to order and when not to order.

Production department:- Here, it is the work of the production manager or the production officer to know the material needed in terms of production and inform the store earlier before it is too late.

 LIMITATION OF THE STUDY

Limitation of the study is the element of short comings one often encountter when trying to get necessary information and materials for successful completion of any research work. The study deals with the importance for creation and development of good supplier relationship in a competitive market with case study of Aba Textile mills limited Aba (ATML).

In the content of this research therefore, the following limitation or problems were encountered.

TIME CONSTRAINT:- The limit that was allowed for thecompletion of this particular research work, was not sufficient enough for a thorough work to be carried out on his particular topic interest considering the length and depth of activites involved in the topic.

FINANCIAL CONSTRAINTS:- Due to the financial contraintThe researcher is unable to travel to many places of interest in order to gather comparable data for information for his research project.

ORGANIZATIONAL BUREAUCRATIC RED TAPE;-

The efforts to collect all the needed data information from the management and staff of textile mills limited Aba was not easy because of their official protocols and organizational bureaucracy. The inability of the management and the non availability of professional qualified staff who would provide the information necessary for the study.

Also some customers and dealer who out of fear or mere ignorance refused to provide answer to certain relevant question on the questionnaire administered to them.    

DEFINITION OF TERMS

For better understanding of the work, the following definition were presented so that the reader might gain more insight into the meaning of terms as the were used in the study.

1.    sourcing:- Find supplier who are willing and able to provide consistently quality, service, (delivery) at a competitive price.

2.    Best source:- Making a choice from a member of equally eligible sources.

3.    Good supplier:- One who is at all time honest and fair in his dealing with the customs, in his own employees and himself, who has adequate plan facilities and know how so as to be able to provide materials which meet the purchaser specification  in the quantities required and at the time promised.

4.    Development of good supplier relationship:-

       A planned process of getting supplier who will produce the things the purchaser wants, to the purchased quality standards in the quantities and the delivery schedule required, by providing technical assistances and advice.

5.    Vendor rating:- The term vender rating is some times used for the systematic assessment of actual performance by suppliers.

6.    Creation:- The act of a process of making something that is new or of cause something to exist that did not exist before.

7.    Specification:- It is a definitive description of what is wanted, also a description of any object, material or process in sufficient detail to enable its manufacture and further identifical reproduction.

8.    Standard:- A description of an acceptable level of quality design and composition of a particular item that has evolved through the study and experience of organization.

9.    Standardization:- Defined as agreement on definite size, design, quality and the like.

10.  Simplification: The reduction of unnecessary variety.

11.  Quality:- The totality of features and characteristics of a product or a  service that bears on the ability to satisfy a stated or implied needs.

12.  Reliability:- The probability of a product performing without failure with in a specified period of time.

13.  Performance:- The primary function of the product or service.

14.  Quality Assurance:- All activities and functions concerned with the attainment of quality.

15.  Quality Control:- The operational  techniques and activates that are used to fulfill requirements for quality.

16.  Right quantity:- It refers to the value or amount of material, the can be most economically purchased at a particular time.

17.  Negotiation:- It is a conferring discussing or bargaining to reach agreement in business transaction.

18.  Procurement:- Is a process or concept encompass a wide rage of supply activites than those induced in the purchasing functions and it typical includes a broadened view of the traditional buying role, with more buyer participation in related materials  activities.

19.  Supply Chain Management:- Described as the management of all activities, information, knowledge and financial resources associated with the flow and transformation of goods and serviced up from the raw materials suppliers component suppliers and other supplier in such a way that the expectation of the end users of the company are being met.  

20.  Sub-Contracting:- Is   the process of subletting the part or component of the main contract or job to a second contractor who has the facility or capacity to accomplish the work on time and in assurance with specification.

21.  Ethics:- As a science of conduct. Conduct here means conscious and purposeful action or action directed to an end.

22.  Expediting:- The application of pressure on a supplier to get it either to meet the original delivery promise to deliver ahead of schedule or to speed up delivery of a delayed order.

23.  Purchasing Parlance:- This is the same things as saying that, in the purchasing cycle or purchasing field or purchasing profession.

24.  Sourcing Techniques:- These are the techniques a company make use of after successful selecting good supplies the company by would have to decide on the techniques to adopt so as to meet her raw materials and component part needs.

25.  V.P.P-Vendor Partnership programmer:-

       This is essentially a long term strategy involving a joint agreement with a selected number of suppliers.