EFFECT OF PURCHASING AND SUPPLY ACTIVITIES IN CONSTRUCTION INDUSTRY
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EFFECT OF PURCHASING AND SUPPLY ACTIVITIES IN CONSTRUCTION INDUSTRY
ABSTRACT
This project work was titled “The Effect of Purchasing and Supply Activities in the Construction Industry.” Its primary goal is to determine whether purchasing and supply activities have an impact on the construction sector as well as another department within the business. The management of purchasing and supplies is clearly a critical function in the industry.
The value of the products and services determines the procedure that the procurement department will use to generate a purchase order. A systematic questionnaire was created,
and industry personnel comprehend the items in the questionnaire, which were designed to elicit responses with options such as age, gender, qualification, Yes/No, very satisfactory, not satisfactory, and so on.
The poll revealed that purchasing departments have a friendly policy towards other departments in the industry. The analysis reveals that the company employs the highest level in the industry.
The report consequently proposes, among other things, that purchasing officials be involved in the decision-making process, particularly on purchase-related issues.
Chapter one
INTRODUCTION
1.1 Background for the Study
Purchasing departments are essential to any industry’s existence and success. Due to the high level of competitiveness in the building industry, purchasing departments have recently improved operator efforts.
The purchasing department handles procurement, which may appear to be a ‘hidden’ role in many organisations. In truth, procurement is a highly crucial position; every sector need inputs in order to function.
This could be physical input, such as raw materials, or engine components for a car. As a result, the purpose of this study is to determine the impact of the purchasing department on the industry.
Purchasing departments can acquire products, supplies, equipment, and services in a variety of ways. Purchases are made at different times and for different reasons. The
Materials and quantities purchased for immediate use are not intended for later use or stockpiling. In continuous-run manufacturing, the ordering process and quantities necessary are determined by the anticipated production schedule.
Some items have a longer shelf life than others, and some hold more value in stock than others. Furthermore, the purchase of labour and service differs from that of goods and equipment, necessitating the use of distinct conditions and timeframes.
Purchasing and supply activities entail acquiring necessary materials, supplies, equipment, and services in the appropriate quantity, quality, price, time, and from the suitable vendor or provider. Purchasing refers to the process of buying.
In a larger sense, purchasing entails evaluating needs, selecting a supplier, calculating the appropriate price, condition, and conditions, issuing an order or contract, and following up to ensure cargo or service delivery, among other things.
1.2 Statement of Problem
An inherent problem associated with the construction industry’s purchasing and supply department is the cost benefit ratio of such a department when compared to funds expanding in the establishment of a purchasing
and supply department as an unnecessary expenditure that only increases costs and ignores the need for purchasing activities, viewing it as a clerical function.
This is a dangerous position because it allows for fraudulent practices function and obligation. A third and most important issue is how the firm would have performed if it did not have a purchase and supply department; that is, an industry with a purchase and supply department is better positioned than a similar firm in the industry.
The primary concerns are thus investigated on the need purchasing department and assess whether it is economically justifiable the existence of the department:
Justifying the cost needed to set up and critically assess the cost needed to manage the department and decide whether such an industry that has a purchasing and supply department has a comparative advantage in terms of optimum profit realisation over companies in the industry
1.3 Research Questions.
In light of the subject under study, the research proposed the following research questions.
1. How do purchase and supply activity effect the building sector positively?
2. Do the industry’s purchasing and supply departments have any policies in place?
3. Does Harland Construction Company Ltd efficiently employ its purchase and supply activities unit in the industry?
1.4 Research Hypotheses.
To validate this study, the following hypotheses were developed during the research process.
Hypothesis One.
HO: There is no considerable impact of purchasing and supply activities in the industry.
Hi, there is a big effect on purchasing and supply activities in the sector.
Hypothesis Two
HO: There are no positive policies between the purchasing department of the industry and the other departments.
Hello: There are beneficial policies between the purchasing department and the other departments in the industry.
Hypothesis Three
HO: Harland Construction Company does not use the purchase and supply unit properly to acquire materials.
Hello: Harland Construction Company makes efficient use of its purchasing and supply unit to bring in materials.
1.5 Study Purpose
Purchasing and supply operations were previously viewed as a routine, a clerical function, and a semi-function that is not particularly important, but it is concerned with procurement and spending money, specifically purchasing commodities and component parts for the construction sector.
1. To determine whether purchasing and supply operations affect the building sector.
2. Determine if purchasing and supply activities affect other departments in the industry.
3. To demonstrate how Harland Construction Company procured industry-specific materials through purchasing and supply activities.
1.6 Scope of Study
This study examines the impact of purchasing and supply activities in the construction industry, with a focus on Harland Construction Nigeria Ltd, Auchi. In light of this, the study will focus on the benefits of establishing and maintaining a purchasing and supply activities department in a major industry.
The region covered, among other things, to demonstrate why a purchasing department exists in an industry.
1. Objective and analysis of purchase and supply activities, including the function of a purchasing department.
2. Organisation of purchase procedures
3. Purchasing Request and Quotation
4. Relationship between purchasing and other departments.
1.7 Significance of the Study
Industries participate in commercial activities with the goal of maximising profit realisation. To do this, businesses must charge appropriate prices for their products in order to attract and keep repeat buyers, as they thrive on repeat purchases.
In the construction industry, profit is sought by adding value to materials obtained prior to marketing the product. Purchasing plays an important role in lowering the initial cost of materials required for fabrication (add value), as it is clear that efficient purchasing machines are essential to the pursuit of profit maximisation.
The purchasing department is very important because purchasing and supply activities look at end-to-end procurement policies and strategies that develop in conjunction with technology to meet the increasing activities required to keep the industry constantly supplied with needed materials, sub-assemblies, and component parts necessary for it to engage in managerial activities.
1.8 Limitations of the Study
There is no doubt that one will encounter numerous limits while preparing an urgent write-up of this investigation. One evident disadvantage of this type of study is the financial issue, the distribution of questionnaires, poor response to questions, and the delay in returning questionnaires.
1. Finance: This was a huge issue during the process of developing this project. Expenses include questionnaire development, distribution, source of resources, and project type and binding.
2. Questionnaire Issuance: This is about truth. It was difficult to convince industry professionals to respond honestly and fairly to the questions, and recipients provided inadequate reply to the questions asked, causing an issue with the research effort.
3. Delay in Questionnaire Return: If a questionnaire is not returned on time, the study activity will be delayed.
1.9 Operation Definition of Terms
· Purchasing: Obtaining equipment, materials, supplies, and services at the correct time, price, from the right source, and delivery to the right location. (Idogho and Agbaza, 2009).
Igbafe and Aluyor (2008) define suppliers as individuals or companies who supply goods or services to manufacturers.
· Quality: In purchasing, quality refers to an item’s fitness for its intended use. Hence, quality here comprises the capacity and desire of the supplier to achieve one criteria (Hassan, 2009).
Industry refers to the economic activity of processing raw materials and manufacturing commodities in factories (Romney, 2008).
· Requisition: This form is used when a department or store need specific items. It is typically generated in duplicate, with one copy delivered to the purchasing department as authorization to purchase and the other retained by the originating department for reference and follow-up (Obomeghie and Ugbana, 2011).
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