USE OF NON PROFESSIONAL BUYERS IN THE PROCUREMENT OF GOODS AND SERVICE PROBLEMS AND SOLUTIONS

USE OF NON-PROFESSIONAL BUYERS IN THE PROCUREMENT OF GOODS AND SERVICE PROBLEMS AND SOLUTIONS

ABSTRACT

This research investigates the use of non-professional buyers in the procurement of goods and service problems and solutions using Paterson Zochonis Industry Plc. (PZ) as a case study. Adopting a field survey research design, the study utilizes a close-ended questionnaire to gather primary data from a sample of 387 respondents, including contractors, suppliers, procurement managers, and internal auditors. The research employs a combination of descriptive statistics, t-tests, and Pearson Product Moment Correlation for data analysis.  The findings reveal major challenges faced by non-professional buyers, emphasizing their difficulties in comprehending complex procurement procedures, identifying reliable suppliers, negotiating favorable terms, and ensuring compliance with legal requirements. The majority of respondents agreed with these challenges, emphasizing the pressing need for targeted training and support to enhance the capabilities of non-professional buyers in navigating the intricacies of the procurement process. Furthermore, the study explores the impact of non-professional buyers on the efficiency and effectiveness of the procurement process. Positive correlations were identified between the involvement of non-professional buyers and enhanced transparency, innovation, alignment with organizational needs, diverse supplier options, and increased competition among vendors. These correlations underscore the strategic integration of diverse perspectives to enrich the procurement process. The research also uncovers potential risks associated with non-professional buyers, including non-compliance with regulations, suboptimal decision-making, supplier fraud, and process delays. These risks necessitate proactive measures such as robust oversight mechanisms, ongoing education, and clear protocols to mitigate potential pitfalls. The findings advocate for a holistic approach to incorporating non-professional buyers into procurement processes. Practical recommendations are provided for procurement officers, suppliers, non-buyers, policymakers, and researchers to address challenges, enhance collaboration, mitigate risks, and promote an inclusive and efficient procurement framework.

CHAPTER ONE

GENERAL INTRODUCTION

1.1 Background Information

Any organization whether private or public needs efficient management for its survival and success. Therefore efficient management is quite necessary especially as technology is changing, changes in taste and population, and inflation abound.  All these factors are increasing geometrically as against scarce resources. Efficient management requires the coordination of all the functional units of any organization towards the realization of its goals, hence purchasing and supply are inclusive.

However, for you to have efficient purchasing is in part achieved when the buyer purchases the required quality and quantity of raw materials, supplies part tooling, equipment, etc, at the right time, from the right source, to the right place, and at the right price. This can be achieved when the right person must have passed through some steps in obtaining the required professional. This qualification can either be HND, NIPSM, CIPSM, etc. With this background in the purchasing profession, the person will know the importance of this noble discipline and the dignity of efficient buying. The ethical conduct of his profession must be at his fingertips. He must have a name to protect knowing fully well that non-performance of his duty will weigh down on him and his noble profession in general. A professional must be conversant with the dynamism of events both in his field and in his related fields. He must know or must have had the type of training required to meet the growing demand of his discipline.

However, this research will attempt to look into the “use of non-professional buyers in the procurement of goods and services, the problems and solutions”. It will make a comparative study on Paterson Zochonis Industry Plc. (PZ). The topic is in keeping with the Civil Service Reformation decree of 1988, which stipulates that everybody must practice what he read.

1.1 Brief history of Paterson Zochonis Industry Plc.

Paterson Zochonis Industry Plc. (PZ) is a manufacturing company with three (3) factories in Nigeria one is located at Umungasi Aba North in Abia State while the other two are both in Lagos State at Illupeju and Ikorodu respectively. Two friends namely Peter a British man and Zochonis a Greek man established this company in 1884, it was incorporated in Nigeria on the 4^th day of December 1948 under the name P.B. Nicholas and Company Ltd. Its name was changed to Alagbon Industry Limited in 1953 and to associated industry limited in 1960.

The company later became a public company in 1972 and was granted a listing on the Nigeria Stock Exchange. The name was changed to Paterson Zochonis Industry Limited on the 24^th day of November 1976 in compliance with the Companies and Allied Matters Act of 1990. It adopted its present name as Paterson and Zochonis Industry Plc. On 22^nd November 1990. On the 25^th day of June 2001, Paterson Zochonis Industry Plc. Groove Properties Limited Ekopak Nigeria Plc emerged.

The principal activities of the group are to manufacture and sale of a wide range of consumer products and home appliances which are leading brand names throughout the country in cosmetics, refrigeration, detergent, soap, freezers, air conditioner, plastic container, and components. The company is made up of five (5) departments’ namely the administrative department, quality control department, and production department which constitute the production processing unit and the finishing unit. Lastly is the engineering department which comprises of engineering processing unit, engineering services, factory electrical unit, and engineering finishing unit. PZ has grown both financially and in staff strength. It has assets of over ten billion (10 billion) as its running capital. This company creates employment opportunities for Nigerians.

1.2 Statement of the Problem         

The basic and critical problems of research are seldom the problems that appear on the surface. It is therefore necessary to probe beneath the surface, to find out the nature and gravity of the problems. This is vital and must be done correctly to guide the researcher on what aspect to channel his research work. Any mistake at the first step will lead to committing a first-degree error, that is, selecting the wrong problem will result in subsequent mistakes and errors.

Among the problems are:

1. A lot of private and public establishments are yet to recognize the relevance of this noble profession.
2. Lack of strict adherence to purchasing rules and ethics.
3. The problems of conflicting interests of the chief executive and other functional units to the purchasing practice; hence, culminating into what is described as “Purchasing syndrome”.
4. Non-existence of an independent purchasing department to undertake purchasing functions.
5. Lack of trained and professionally qualified purchasing personnel.
6. Lack of recognition of the importance of efficient purchasing practice to profitability.

Efforts will be made to establish these problems to find solutions to them in our present economic environment.

1.3 Objectives of the Study

The general objective of this research is to assess the use of non-professional buyers in the procurement of goods and service problems and solutions. The specific objectives are;

1. To identify the specific problems and challenges that arise when non-professional buyers are involved in the procurement of goods and services.
2. To assess the impact of non-professional buyers on the efficiency and effectiveness of the procurement process.
3. To analyze the risks associated with non-professional buyers in procurement and develop strategies to mitigate these risks.

1.4 Research Questions

The following research questions are formulated to guide the fulfillment of the research objectives:

1. What are the key challenges faced in the procurement of goods and services when non-professional buyers are involved?
2. How does the involvement of non-professional buyers impact the efficiency and effectiveness of the procurement process?
3. What are the potential risks associated with non-professional buyers in procurement?
   • Research Hypotheses

The following research hypotheses are formulated to guide the research objectives:

Hypothesis one

Null Hypothesis (H0): There is no relationship between the involvement of non-professional buyers in procurement and transparency in the procurement process

Alternative Hypothesis (H1): The involvement of non-professional buyers in procurement is positively correlated with transparency in the procurement process.

Hypothesis Two

Null Hypothesis (H0): The use of non-professional buyers has no significant effect on the challenges faced in the procurement process

Alternative Hypothesis (H1): The use of non-professional buyers has a significant effect on the challenges faced in the procurement process

• Significance of the study

The importance of this study is given credence In Rockly’s words (1983) which states that “in a profession such as purchasing and stores management much of expertise, the professionalism and the benefit of the function live in the quality of men doing the job”.

However, it is essential for principles, their applications, and techniques that are devised from them to be written down and made available for all to consult and study.

In a nutshell, this study will help to expose the student who is preparing to enter into the field, the challenges he is likely to face and what will be his contribution.

It will go a long way to correcting the impression people have about the purchasing profession. It will equally help PZ Plc to utilize the services of purchasing professionals to benefit from their contributions to profitability.

1.7 Scope and Limitations

This research topic centers on the use of non-professional buyers in the procurement of goods and services by manufacturing companies in Nigeria. It is a comparative study and it is hoped that information will be obtained from PZ Industry Plc in Aba Abia State. Based on the findings, it will be possible to generalize the findings to other similar industries.

In carrying out this study, the researcher encountered some constraints that made it impossible for her to cover such areas one may expect to emphasize. This is so because the researcher had some constraints as:

1. Financial constraints
2. The research was limited to be completed within a stipulated time and as such, he could not have enough time to touch all the areas one may think necessary.
3. The research was unable to examine all the variables of purchasing and supply in the manufacturing industries, thus limiting the study only to PZ Plc Aba Abia state.
4. The profession being a new discipline, the research had the problem of obtaining adequate literature to make references.
5. The researcher sometimes is faced with a non-cooperating attitude of some staff at the place where she collected her data.
6. There were problems of bureaucracy.

1.8 Definition of Terms

1. PROFESSION- Profession is used in this study as an occupational group which can only be entered by those who have qualified by a training which includes a high education and a special test administered by members of that group.
2. UNIFORMED BUYERS- Those who are buyers by opportunity.
3. PURCHASING ETHICS– A moral conduct guiding a purchasing profession which all members must abide by.
4. PROCUREMENT– The act of buying goods and services necessary for the continued working of an organization.
5. SOURCING– The process of searching for a reliable supplier that can meet the requirements of the buyer.
6. EXPEDITING– This is the process of following up on an order to ensure on-time delivery.
7. INFORMED PROFESSIONALS– Those classes of buyers who are trained in the field of purchasing and supply management.
8. RIGHT QUANTITY– The amount that will satisfy a need most efficiently and economically.
9. RIGHT QUALITY- The degree or grade of excellence which is appropriate for a particular purpose.
10. ORGANISATION- It is the combination of people or individual efforts, working together in pursuit of a certain common purpose called organizational goals.
11. SPECIFICATION– Description of any object, material, or process in sufficient detail to enable its manufacture and further identical reproduction.
12. PURCHASING- Buying materials from the market.
13. SPECIALISATION- To become an expert in a particular area of work, study, or business.