The study was carried out at Uganda Baati with the purpose of examining the challenges encountered in the purchasing of raw materials in manufacturing firms. The specific objectives of the study were; to identify the key categories of material purchased, to identify the source of raw materials, to determine the challenges facing the purchasing of raw materials and to assess how the challenges faced affect the performance of the organization.

The study used a descriptive survey design where both quantitative and qualitative methods of data collection were used. The study used questionnaire method to collect data from 40 as the sample size having management/staff and end users. Data was analysed using descriptive methods such as percentages.

The study found out that there are different types of materials used and purchased such as recycled (scrap) steel, iron ore and metallurgical coal. The study also found out that Uganda Baati buys its raw materials both locally and internationally. The major challenges facing the purchasing of raw materials include inadequate provision of good quality manpower, ordering costs, holding costs or carrying costs, obsolescence, deterioration, stock out and long lead time. The study also found out that in order to minimize on the challenges; total ordering costs should be reduced, targeting material price materials with good quality and purchasing should be targeted to be a profit oriented.

The study concluded that Uganda Baati has used varied key materials in her operations that need to be well managed. Uganda Baati secures it’s raw materials from different sources that are both local and international. The situation being experienced in the practice of raw material/inventory management today is to say the least, disheartening; given the poor level of computerization, the degree of inability in the use of models for inventory decision making, the involvement of illiterates and non experts in the management of raw materials and inventory; the prospects for improvement are evident.

The study recommended that the organization should be registered to allow for the grouping of all be reporting were purchasing or stores will be reporting to different person other than the material manager.

CHAPTER ONE

1.0 Introduction

The purpose of the study was to examine the challenges encountered in the purchasing of raw materials in manufacturing firms. This chapter presents the background to the study, problem statement, purpose of the study, specific objectives, research questions, scope of the study and significance of the study.

1.1 Background to the study

Purchasing is the act of buying the goods and services that a company needs to operate and/or manufacture products. Many people are ignorant of what purchasing is all about. “Purchasing” is the term used in industries, commerce, public corporations to denote the act of and the financial responsibility for procuring material, supplies and services. It simply describes the process of buying. However in a broader sense, the term involves determining the needs, selecting the supplier, arriving at a proper price, terms and conditions, issuing the contract or order, and following up to ensure proper delivery. It focus is to purchase or obtain materials in the right quantity, in the right quality, at the right price, at the right time, and from the right supplier and delivering to the right place.

Considering the increasing significance of purchasing role and with the idea that this function has the ability to influence corporate profitability favorably, the way purchasing function develops within organizations over time has been a topic of great interest. The evolution of the purchasing function is well acknowledged in the literature. Departing from the passive, re-active clerical viewpoint of the 70’s, the purchasing function has the ability to develop itself in a strategic pro-active function contributing, as much as other business functions, to the creation of sustainable competitive advantages (Versendaal et al, 2005). Cavinato and Freeman (1990) in their studies declared that in today’s changing and dynamic global markets, organizations stressing on the high quality production must focus their purchasing and supply on planning, development and operation. They realized that purchasing groups of many organizations have been slowly developed without a specific plan in response.

The importance of raw material to efficient operation of a manufacturing organisation cannot be over emphasized; in that the availability of the raw material in the right quality and quantity will determine to a reasonable extent; the availability, quality and quantity of the resultant output. Raw material management is critical to the overall performance of any manufacturing concern. Beside demand and other forces like competitor’s actions and general price index; raw material situation in terms of efficient management and effective planning determines the activity level, the turn-over and the ultimate profit in a given company. The determination of economic order quantity (EOQ), re-order level and minimum/maximum stock levels is important in raw material management in any manufacturing outfit.

The material function is assumed to be organised and operated on an integrated basis and is also presumed to be responsible for material forecasting, planning, inventory control, scrap control and disposal; providing management information regarding purchases and inventories within the framework of the financial policies and norms. A glance at these functions will reveal the intricacies involved in maintaining balanced policies on raw material management.

Global markets are expanding beyond borders and re-defining the way demand and supplies are managed. Global companies are driven by markets across continents. In order to keep the cost of manufacturing down, they are forced to keep looking to set up production centers where cost of raw materials and labor is cheap. Sourcing of raw materials and vendors to supply the right quality, quantity and at right price calls for dynamic procurement strategy spanning across firms.

Material management being the coordination of efforts (planning, controlling, organising, directing) towards achieving efficiency in the procurement, transportation, stocking and utilization of inputs of a manufacturing organisation is therefore central to production activities and management. Effective and efficient functioning of the material management has direct bearing on the total performance of the organisation. The management of raw material in a manufacturing organization therefore deserves attention and critical study in order to achieve uninterrupted production runs and enhanced performance in operations (Khalid, 2008). Besides, holding the right stock level could improve the level of available working capital that could be profitably employed in other areas.

Uganda Baati Limited is a member of the Safal Group of companies. The Safal Group is the largest steel roofing company in Africa. The group has metal coating lines in Kenya, Tanzania, Uganda & South Africa, including colour coating lines in Kenya & South Africa. Safal is the first organization in Africa to have set up the Aluminium-Zinc coating technology. Founded in 1964 – Uganda Baati was the first company in the East African region to set up an ultra-modern Continuous Galvanizing line. With branches in Tororo and Arua, Showrooms in Mbarara and Gulu, Uganda Baati is the country’s leading manufacturer and supplier of roofing sheets and has the widest range of roofing products in galvanized, aluminium-zinc coated and pre-painted material. Uganda Baati is a specialist in providing customized roofing solutions.

Uganda Baati range of roofing sheets include: Lifestile, Romantile, Versatile, Covermax, Maxcover, Classicor, Tekdek, Newlok, Saflok700 and DumuZas. In addition to providing the best roofing solutions for the nation, Uganda Baati seeks to contribute to the sustainable development of the community that surrounds it by being socially responsible mainly through the Chandaria Medical Clinic which is operated by the company.

1.2 Problem statement

Purchasing function is responsible for determining the organization’s requirements, selecting of optimal source of supply, ensuring a fair and reasonable price (for both the purchasing organization and the supplier), and establishing and maintaining mutually beneficial relationships with the most desirable suppliers. In other words, purchasing departments determine what to buy, where to buy it, how much to pay, and ensure its availability by managing the contract and maintaining strong relationships with suppliers. Its focus is to purchase or obtain materials in theright quantity, in the right quality, at the right price, at the right time, and from the right supplier and delivering to the right place. Despite these efforts of purchasing functions, Uganda Baati limited still faces challenges in the purchasing of its material. Thus need to examine the challenges encountered in the purchasing of raw materials in manufacturing firms in order to come up with best strategies to improve the purchasing function of raw materials in manufacturing firms in Uganda.

1.3 Purpose of the study

The study aimed at examining the challenges encountered in the purchasing of raw materials in manufacturing firms. A case study of Uganda Baati Limited

1.4 Specific objective of the study

To identify the key categories of material purchased
To identify the source of raw materials for Uganda Baati Limited
To determine the challenges facing the purchasing of raw materials in Uganda Baati Limited
To assess how the challenges faced affect the performance of the organization.

1.5 Research questions

What are the key categories of material purchased?
What is the source of raw materials for Uganda Baati Limited?
Whatchallenges face the purchasing of raw materials in Uganda Baati Limited?
How do the challenges faced affect the performance of the organization?

1.6 Scope of the study

1.6.1 Content scope

The study examined the challenges encountered in the purchasing of raw materials in manufacturing firms. Specific emphasis was put on identifying the key categories of material purchased, the source of raw materials, the challenges facing the purchasing of raw materials and how the challenges faced affect the performance of the organization.

1.6.2 Geographical scope

The study was carried out at Uganda Baati which is the country’s leading manufacturer and supplier of roofing sheets and has the widest range of roofing products in galvanized, aluminium-zinc coated and pre-painted material. Uganda Baati is a specialist in providing customized roofing solutions.

1.6.3 Time scope

The study was carried for a period between March and August, 2017. The study depended on the organizational data for the past 4 years (2012-2016) and was got from journals, reports and websites of the organization.

1.7 Significance of the study

The primary significance of this study is for partial fulfillment of the requirements for the award ofBachelor Degree in Procurement and Logistics Management.

The findings will guide industrial purchasing to effective and efficient negotiation toenable them to obtain the “best buy which is the ultimate goal of the purchasing function.

Further researchers will also benefit from the findings of this study since it will provide additional knowledge to the already existing literature on purchasing. The findings and gaps of this study may act as ground for further research.

The findings of the study will be relevant to the management of Uganda Baati (strategic and operational plans) in that it will give the milestones towards integrating purchasing functions as a strategy for growth and performance.

CHAPTER TWO

LITERATURE REVIEW

2.0 Introduction

This concern a review of literature studies related to the problem. The review was done to give more light on various aspects of the problem. The research was based on references from the previous researchers, text journal, reports and other findings to ascertain whether the causes of the problem are the same.

2.1 Purchasing of Raw Materials in manufacturing organizations

Raw materials are component parts of the stock of inventories carried by a manufacturing firm ata given time. Every organisation has inventories of some type and the economics and techniquesof inventory management are critical for efficient operation, profitability and survival; especiallyin a highly competitive environment (Kros, Falasca& Nadler, 2006).

Cavinato and Freeman (1990) in theirstudies declared that in today’s changing and dynamic global markets, organizations stressing on the high qualityproduction must focus their purchasing and supply on planning, development and operation. They realized thatpurchasing groups of many organizations have been slowly developed without a specific plan in response.In response to today’s unprecedented economic uncertainty, supply managers have adopted a “wait-and see” attitude. Many are wary of spending their company’s most valued asset: cash. And since inventory is cash’sevil stepchild, companies continue to aggressively reduce inventory levels. In fact, current inventory managementpractices have regressed beyond “Lean” and are anorexic. As a result, popular Christmas gifts, such as electronicsand appliances, may be in short supply.

The Institute of Supply Management’s Purchasing Managers Index (PMI) tells a strange and interesting storyabout today’s supply chain management. The data suggest that today’s organizations have deliberately whittledtheir inventories down to dangerously low levels.

At its surface, uncertainty is straight forward to manage. Factory physics, the science of manufacturing,teaches us that manufacturers have three buffers to manage variability in their businesses: capacity, time andinventory. It is clear when looking at the PMI that most companies are using only one of these buffers: time. ISMreports a long trend of contracting inventories with little or no noticeable increase or investment in capacity.

As a result, lead times for supplies gradually (and now dramatically) increased in the face of a steady trend ofincreased demand (new orders). The recent and striking increase in lead time is a reflection that much excesscapacity is being put to use, leaving time as the only remaining buffer. Lead times have ballooned from 10 to 12days to 53 days.

The importance of purchasing in any firm is largely determined the four factors: availability of materials, absolute dollar volume of purchases, percent of product cost represented by materials, and the types of materialspurchased. Purchasing must concern itself with whether or not the materials used by the firm are readily availablein a competitive market or whether some are bought in volatile markets that are subject to shortages and priceinstability. If the latter condition prevails, creative analysis by top-level purchasing professionals is required.

If a firm spends a large percentage of its available capital on materials, the sheer magnitude of expense means thatefficient purchasing can produce a significant savings. Even small unit savings add up quickly when purchased inlarge volumes. When a firm’s materials costs are 40 percent or more of its product cost (or its total operatingbudget), small reductions in material costs can increase profit margins significantly. In this situation, efficientpurchasing and purchasing management again can make or break a business.Perhaps the most important of the four factors is the amount of control purchasing and supply personnel actuallyhave over materials availability, quality, costs, and services. Large companies tend to use a wide range ofmaterials, yielding a greater chance that price and service arrangements can be influenced significantly by creativepurchasing performance. Some firms, on the other hand, use a fairly small number of standard production andsupply materials, from which even the most seasoned purchasing personnel produce little profit, despite creativemanagement, pricing, and supplier selection activities.

Evaluating suppliers is one of the most critical functions of a purchasing manager, buyer, or purchasing agent.Many firms now run on a lean manufacturing schedule and use just-in-time inventories so any delays in thesupply chain can shut down production and cost the firm its customers and reputation. Purchasing professionals use many resources to find out all they can about potential suppliers. The Internet has become an effective tool insearching catalogs, trade journals, and industry and company publications, and directories. Purchasing professionals will attend meetings, trade shows, and conferences to learn of new industry trends and make contacts with suppliers. Purchasing managers, agents, and buyers will usually interview prospective suppliers andvisit their plants and distribution centers to asses their capabilities. It is important to make certain that the supplieris capable of delivering the desired goods or services on time, in the correct quantities without sacrificing quality.Once all of the necessary information on suppliers is gathered, orders are placed and contracts are awarded tothose suppliers who meet the purchaser’s needs. Most of the transaction process is now automated using electronic purchasing systems that link the supplier and firms together through the Internet.

Purchasing professionals can gain instant access to the specifications for thousands of commodities, inventory records, and their customers’ purchase records to avoid overpaying for goods and to avoid shortages of populargoods or surpluses of goods that do not sell as well. These systems permit faster selection, customization, andordering of products, and they allow buyers to concentrate on the qualitative and analytical aspects of the job. Long-term contracts are an important strategy of purchasing professionals because it allows purchasers toconsolidate their supply bases around fewer suppliers. In today’s global economy purchasing managers, buyers, and purchasing agents should expect to deal with foreign suppliers which may require travel to other countriesand to be familiar with other cultures and languages.

2.2 Challenges facing purchasing of raw materials

There are critical problems associated with raw material management in manufacturing organizations today. These are rarely given adequate attentions due to inability of people involved to trace the problems to raw material management.

The inefficient use of production time, labour and other resources due to delays or incessantshort down and interruptions during production have become inherent part of operations inmany manufacturing organization. This often led to inability to meet customers’order and eventual loss of market shares. Low capacity utilization and loss of revenue asconsequence of these problems led to closure of many manufacturing firms in the country.

The poor liquidity position of many manufacturing concerns is a matter ofconcern to many shareholders and stakeholders alike. To hold too much stock than necessarywill lead to capital lock-up in inventory of raw materials. The materials held idle in storeshave values attached to them; and the likelihood is that the organization will never regain themoney in them if they become obsolete and useless.

In many manufacturing concerns, there is inadequate provision of good qualitymanpower in stock maintenance and material management. This is indeed, a serious issuesince employees are those charged with the responsibility of monitoring progress andreporting impending insufficiency. They are to ensure that stocks are properly kept andprotected against fire and other disaster or loss. The “people” are to ensure efficient use ofwarehouse facilities and space; keep proper and adequate records (Akindipe, 2005).

According to Peurifoy (2000), the purchase cost of an item is the purchase price from an external source including transportation and freight costs. For construction materials, it is common to receive discount for bulk purchases, the unit purchase cost declines as quantity increases .These reductions may reflect manufactures marketing policies, economies of scale in the material production, or scale economies in transportation. There are also advantages in having homogeneous material. .For example a bulk order to insure the same color or size of items such as bricks may be desirable. Accordingly, it is usually desirable to make a limited of large purchases for materials. Cordell

In some cases, organizations may consolidate small orders from a number of different projects to capture such bulk discounts; this is basic saving to be derived from a central purchasing office.

Cordell (2006) noted that proposes that the cost of materials is based n bargaining leverage, quantities and delivery time” Cordell continues that organization with potential for long term purchase volume can command better bargaining leverage. While orders in large quantities may result in lower unit prices, they may also increase holding costs and thus cause problems in cash flow. Requirements of short delivery time also adversely affect unit prices. Furthermore, design characteristics which include items of odd sizes r shape should be a void. Since such items normally are not available in the standard stockpile, purchasing them causes higher prices.

Order costs include expenses of making requisitions, analyzing alternatives, writing purchase orders, receiving materials, checking on orders, and m maintaining records of the entire process. Order costs usually only a small portion of total costs for material management in construction projects, although may require substantial time.

Tersine (2002), say that the holding costs or carrying costs are primarily the result of capital costs, handling, storage, obsolescence, shrinkage and deterioration. Capital costs results from the opportunity cost or financial expenses of capital tied up in inventory. Once payment for goods is made, borrowing costs are incurred or capital must be inverted from other productive uses.

Consequently, a capital carrying cost is incurred equal to the value of the inventory during a period multiplied by the interest rate obtainable or paid during that period.He notes that capital costs only accumulate when payment for materials actually occurs; many organizations attempt to delay payments as long as possible to minimize such costs. Handling and storage represent the movement and protection charges incurred for materials. Storage costs also include the disruption caused to other project activities by inventories of materials that get in the way.

Lange, (2006), adds that obsolescence is the risk that an item will lose value because of changes in specification shrinkages are the decrease in inventory over time due to theft or lose.

Deterioration reflects a change in material quality due to age or environmental degradation. Many of these holding costs components are difficult to predict in advance; a project manager knows only that there is some chance that specific categories of cost will occur. In addition to these major categories of costs, there may be ancillary costs of insurance, taxes (many states treat inventories as Taxable property), or additional fire hazards. As a general rule, holding costs will typically represent 20 to 40% of the average inventory value over the course of a year, thus if the average material inventory on a project is xx million over a year, the holding costs might be expected to be xxx 200,000 to s400,000.

According to Laugero (2002) the unavailability cost is incurred when a desired material is not available at the desired time. In manufacturing industries, this cost is often called the stock- out or depletion cost. Shortages many delay work, thereby wasting labor resources or delaying the completion of the entire project. Again, it may be difficult to forecast in advance exactly when an item may be required or when a shipment will be received. While the project schedule gives one estimate, deviations from the schedule may occur during construction. Moreover, the cost associated with a shortage may also be difficult to assess, if the material used for one activity is not available, it may be possible to assign workers to other activities and, depending upon which activities are critical, the project may be delayed.

Laugero (2002) asserts that to illustrate the type of trade-offs encountered in material management, a particular item has to be ordered for a project amount of time required for processing the order and shipping the item is uncertain. Consequently, the project manager must decide how much lead time to provide in ordering the item. Ordering early and thereby providing a long lead time will increase the chance that the item is available when needed, but it increases the cost of inventory and the chance of spoilage on site. It also adds that, in more realistic situation, the manager would also contend with the uncertainty of exactly when the item might be required. Even if the item is schedule for use on a particular date, the work progress might vary so that the desired date would differ. In many cases, greater than expected work progress may result in on savings because materials for future activities are unavailable.

2.3 How the challenges faced affect the performance of the organization

It is clear that since purchasing is responsible for controlling a dominant share of the company’s revenuedollars, it directly impacts profitability and the financial success of the overall business enterprise. As apurchasing people, simply maintaining adequate sources of supply is not enough. Making sure that suppliers arethe “right” suppliers, selling at the “right” price—and then seeing that they keep serving well, are importantactivities.

Let’s look at purchasing’s impact on profitability. For easier understanding let’s assume the purchasing profitratio is based on an average company with a 7 percent profit before tax. A $1 reduction in the cost of purchasedgoods produces a profit of $1, or a 1-1 ratio, whereas it takes $14 of sales to produce the same amount of profit! Adollar saved in purchasing equals the profit from $14 of sales: so, the profit leverage of the material cost reductiondollar is 14 times that of the sales dollar. The purchasing profit ratio can be computed for any company bydividing its annual sales volume by profit before tax.

Questions & Considerations: Purchasing claims to be a profit-productive profession. Fine! But, where’s theprofit? As an example, a broom previously costing $8 is now bought for $7.00. A dollar is saved. We can agree onthat, but where is that saved dollar? It’s not itemized on the profit and loss statement, balance sheet, or “wheregot-where-gone” cash flow comparison. Unfortunately, traditional accounting systems don’t always take intoaccount purchasing’s contribution.

So, again, where is the dollar savings? We know the savings for buying brooms has to be in the budget ofthe using department, but the issue isn’t solely about the budget for brooms. In 2002, the gross domestic product (GDP) for the U.S. was $10.45 trillion. That year the collective spending of about $6 trillion by American buyersmeans that during any working day, over $25 billion was spent throughout the U.S and the real question is, “Howwell was that money spent?”

Let’s look at purchasing’s impact on profit in further detail. Let’s assume the profit ratio depicts a typicalperformance for a healthy $20 million sales company. Purchases, in this case 53% of sales, are equal to $10.6million, and are part of company costs. Next let say starting with a 2.5% savings reduces purchases to $10.3million, which causes a chain reaction as it flows through the cost accounting system; first by reducing total costthat increases profit, and then profit margin, and ultimately return-on-investment (ROI).

The return on invested capital for the company has increased from 10.5 to 13.6, which is a 28% improvementbecause of purchasing’s profit contribution. In addition, lower material prices will reduce inventory value, orassets. So, the final result is an even higher investment turnover than shown. This is a measure of purchasing’seffect on the total company results.

Despite that the situation in developing countries is slightly different from that of the rest of the world, particularly the advanced economies where business organisations are IT compliance; within adifferent socio-cultural and more literate environment, the same suggestions could beapplicable in similar circumstances.

Manufacturing organisations should always determine the minimumlevel of stock to carry. This is to ensure that stock-out or sudden unavailability is forestalled.With the removal of stock-out, other banes such as loss of production time, low capacityutilization, and inability to meet production targets will be removed.

That manufacturing organisations make raw material plans and schedules such that arrival ofraw material and other inventories is programmed to ensure that there is no delay betweenrequisition time and the time of supply. This will prevent production operations from beingdisrupted and as such low capacity utilization and inability to meet production targets will beaddressed.

All slow-moving stock items should be identified; their time of need noted to ensure that themaintenance of such item stops immediately. All obsolete items should be sold to recoupcapital lock up in them. Acquisition of obsolete items could be removed by being aware oftrends in the technological and business environments. Over-stocking could be forestalled byhaving clear definition of maximum stock level. An adherence to recommendations on slowmovingstock, obsolete items and over-stocking would ensure that tied-up fund that could beuseful as working capital is available. In this way, liquidity positions of manufacturingorganisations will be better.

Employment of stack illiterates as store workers should be stopped as it results in problemssuch as misplacement and dislocation of vital documents, files and stock items. In areaswhere higher stock management education is not required, (like stock keeping and records) employee should be given adequate orientation and training. There should also be trainingand retraining of employees to ensure that they are kept abreast of developments in the field.The use of electronic data processing devices will go a long way in removing the problemof inability to use inventory models. Lack of knowledge of the use of quantitative values toproduce information is the major hindrance in model application by store personnel.

Here are four ways purchasing managers can aim to ensure appropriate supply levels regardless of the near-termeconomic outcome:Aligning the sales and operations stakeholders requires that purchasing managers negotiate effectivecombinations of service levels (i.e., lead times) and price with suppliers to meet the actual demand.Purchasing managers that provide order commitments, regardless of how large, will provide suppliers with theconfidence to invest in inventory and/or capacity.Purchasing managers should insist, in return for minimum order commitments, on a guarantee on service levels.

Purchasing managers should share their more “optimistic” demand plans with strategic suppliers and negotiateprice and service level terms in advance of an increase in demand.When the dust settles, purchasing departments that overcome uncertainty and make bold commitments to theirsuppliers will reap the benefits of predictable service levels and pricing. As economist Frank Knight highlights inhis report, “Risk, Uncertainty and Profit,” “Profit is the lure that insures improvement, and this lure must besufficient to make men overcome obstructions and take risks.”

CHAPTER THREE

METHODOLOGY

3.0 Introduction

This chapter presents the research design, area of the study, study population, sample size, sample techniques, the data collection instruments, the procedures of data collection, ethical considerations, and data analysis.

3.1 Research Design

Thornhillet. al (2003) defined a research design as a general plan on how the researcher plans to answer the research question. The research design was descriptive research design. It is deemed as the best approach with regard to collection of facts as they are on the ground without any manipulation of the variables under study. It concurs with Kombo, (2006) when he argued that a descriptive study design could be used when the emphasis is determination of the extent to which a problem is influenced by the variables under study. According to Baron (2011), qualitative research design helps to capture qualitative data, based on qualitative aspects that may not be quantified. It aids in discovering the motives and desires or what people think and how they feel about a given subject or situation. This method involves an unstructured approach to inquiry and allows flexibility in all aspects of the research process. It is more appropriate to explore the nature of a problem, issue or phenomenon without quantifying it. While quantitative research is the systematic empirical investigation of observable phenomena via statistical, mathematical or computational techniques (Mugenda & Mugenda, 2003). According to Silverrman (2001), quantification gives greater confidence in the accuracy of conclusions derived from qualitative data; and it gives the reader a chance to think through the data on their own to cap on the researcher’s findings. The research used this method because it produces information only on the particular cases studied.

3.2 Area of study

3.3 Population of the Study

According to Baron, (2011), this constitutes people-individuals, organizations, groups, communities or other units that provide information or to collect information about for the study. This included 80 employees in different departments.

3.4 The Sample Size

The sample refers to a few items selected from the universe or population for study purposes, (Baron, 2011). The study used a total of 40 employees and customers and was regarded representative of the study population and to provide a manageable volume of data.

Table 3.1: Sample size

Category	Population	Sample size
Top manager	8	5
Staff members	47	25
Non-staff members	25	10
Total	80	40

3.5 Sampling Procedures

According to Baron (2011), this is a definite plan determined before data collection for obtaining a sample from a given population. It involves three decisions: who to be sampled, how many people to sample, and how to obtain the sample. Two sampling techniques were used as follows;

Purposive Sampling: According to Baron (2011), this involves deliberate selection of particular units of the population for constituting a representative sample. It involves convenience and judgemental sampling. Judgmental sampling or purposive sampling – The researcher chose the sample based on who she thought was appropriate for the study. Convenience sampling arises where the population elements are selected for inclusion in the sample based on the ease of access. Judgemental sampling is when the researcher uses personal judgment to select the items to include in the sample and helps to develop hypotheses.

3.6 Data source

The data collected was primary and secondary in nature.

3.6.1 Primary sources

Primary data was collected from respondents through interview sessions.

3.6.2 Secondary sources

The secondary data was collected from Library, research reports, journals, articles inform of literature review which provided information related to the study.

3.7 Data Collection Instruments

The study involved the following instruments;

3.7.1 Questionnaires

The research instruments used included structured questionnaires with pre-coded answers administered to the respondents. The instruments were pre- tested and discussed with the supervisors to ensure their reliability and validity. The questionnaires had both open and closed ended questions. The questions were constructed in simple English that can easily be interpreted. The questionnaire method of data collection was used because of being cheap and that the method collects responses with minimum errors and high level of confidentiality

3.8 Procedures of Data Collection

Before data collection, the researcher ensured the approval of the research instruments especially the interview guide; obtained the introductory letter from the university; introduced herself to the authorities, sought participants’ consent and made appointments when to meet them for interviews and data collection and the data collected was analysed.

3.9 Quality Control

The quality of the research design was done by considering the validity of the study, reliability of the data and instruments of data collection as well as the generalization ability of the study are described below.

3.9.1 Validity of research instruments

The researcher administered the interview guides on a small group of respondents to examine the effectiveness, relevance and appropriateness of the language to be used. The questions were posed using pilot testing methods to test for validity. Adjustments and corrections were made by the supervisor before the research instruments were finally administered to the rest of the respondents.

3.9.2 Reliability of the Study

The aim of any research is to use a given procedure and reach a conclusion that was applicable in any given environment (Lehmann, 2009). The primary objective should be that if a later investigation followed exactly the same procedures as described by an earlier investigator and conducted the same study all over again; this later investigator should be able to arrive at the same results and conclusions. Thus the study considered to be highly reliable. However, due to the very nature of human beings 100% reliability could not be considered for this study, as individual perceptions were central in this study. In other words because we are different as individuals and that our individual wants and preferences are different, future investigations may not produce exactly the same results as reported in this thesis. When conducting research, the researcher tried to act as neutral as possible in order to avoid being bias. The researcher was also conscious about the type of questions to ask.

3.10 Data Processing, Presentation and Analysis

The data was qualitatively analysed. It involved identifying the major themes arising from the respondents’ answers; assigning codes to these themes; classification of the major responses under the main theme; and integrating the responses into the report in a descriptive and analytical manner. Quantitative data was analyzed to give percentages, and statistical figures.

3.11 Ethical Considerations

The researcher collected data upon seeking respondents’ consent after revealing the type of information needed and the purpose to avoid potential concealment of vital information.

The researcher also maintained confidentiality of respondents’ information; and reported the true findings of the study without any bias.

3.12 Limitations of the study

The study involved the following constraints;

The time allowed to do this research was not enough to allow exhaustive study and obtain all the essential information for much more suitable conclusions. The problem was minimized by putting much effort on this research so as to meet the deadline.

The Research was limited by financial resources such as the transport costs and stationery to carry out her research effectively. In an effort to mitigate this shortcoming, the researcher sourced for funds from a few sponsors.

CHAPTER FOUR

PRESENTATION, ANALYSIS AND INTERPRETATION OF FINDINGS

4.0 Introduction

This chapter consists of the presentation, discussion and analysis of the findings from the study. It provides results which were analyzed from raw data collected in the field. It is in two categories; the first one represents the demographic characteristics of the respondents while the other category represents the responses of the questions that were asked concerning research objectives. The analysis was done and findings were represented in form of tables, graphs and pie-charts.

4.1 Overview of the Study

The study was carried out at Uganda Baati. Questionnaires were designed to obtain data from a sample size of 40 selected respondents.

4.1.1 Response Rate

A sample of 40 respondents was selected using purposive sampling methods. Questionnaires, and interview guides were administered by the researcher to respondents for data collection.

4.2 Demographic Characteristics of the Respondents

The background characteristics compiled show the gender, age, the education level and period of work. This data was analyzed and is presented hereafter in table 4.1 and figure 4.1;

Figure 4.1: Showing gender of the respondents

Source: Primary Data

From figure 4.1 above, it’s indicated, majority of respondents (53%) were males and the females were only 47% of the total respondents. This implies that men were found to be active in the study under investigation. However, both ideas were relevant for the study. This indicates that the institution employees more males than females in procurement and stores department.

Table 4.1: Age, education level and period of work of Respondents n=40

Age	Frequency	Percentage
18-30years	8	20
31-40years	16	40
41-50years	10	25
50 and above	6	15
Level of education
O’ level	0	0
A’ level	6	15
Certificate/Diploma	12	30
Degree	22	55
Postgraduate	0	0
Period of work
Less than 1year	10	25
1-3years	12	30
4years and above	18	45

Source: Primary Data

Table 4.1 shows that, the majority (40%) of the respondents were predominantly between the ages of 31 and 40 years. A significant percentage (25%) of the respondents was in the age bracket of 41 and 50years. The remaining 20% of the respondents were in the age bracket of 18 and 30years and another 15% of them were in the age group of 50 and above. 31-40years had the highest number because these are the most active age group hence they are actively involved in management in the organizations, therefore they had rich experiences and could also appreciate the importance of the study.

Furthermore, the table above shows that most of the interviewed respondents (55%) were of degree holders, 30% were of Certificate/Diploma and only 15% of the study respondents were of A’ level while none of the respondents had a postgraduate nor of O’ level therefore, provided information based on the academic knowledge, skills and experience they have gain in management. This shows that company employees are qualified and competent to execute their duties and also appreciated the study under investigation.

Findings in table above revealed that majority (45%) of respondents have worked at organization between 4years and above, followed by 1-3 years with 30% and less than 1year with (25%). This implies that the majority of the employee are experienced in the activities of the firm and they act as the role models for the newly recruited staff members with regard to study.

4.3. OBJECTIVE ONE: Key categories of materials purchased

Efficient use of natural resources is critical to sustainability. Uganda Baati uses advanced technologies and techniques to increases production yield rates, reduce its energy requirements and facilitate the use of by-products. Study respondents were required to indicate the key categories of materials used by the organization. Results were obtained and are presented below;

Table 4.2: Key categories of materials purchased

Statements

Strongly disagree

Disagree

Not sure

Agree

Strongly agree

Total

Iron ore

(42.5%)

(25%)

(0%)

(35%)

(22.5%)

(100%)

Metallurgical coal

(12.5%)

(17.5%)

(0%)

(42.5%)

(27.5%)

(100%)

Recycled (scrap) steel

(12.5%)

(22.5%)

(0%)

(42.5%)

(22.5%)

(100%)

Source: Primary Data

From Table above, findings show that fewer respondents (42.5%) opposed iron ore compared to those who concurred (57.5%) while only 7.5% were not sure. This implies that, iron ore is one of the major materials purchased by Uganda Baati.

Similarly, fewer respondents (30%) opposed the metallurgical coal as a major materials purchased by Uganda Baati compared to those who concurred (62.5%) while only 7.5% were not sure. This implies that, Uganda Baati purchases metallurgical coal. Iron ore and metallurgical coal are used mainly in the blast furnace process of iron making. For this process, coking oral is turned into coke, an almost pure for of carbon, which is used as the main fuel and reductant in a blast furnace.

In addition, fewer respondents (35%) opposed the statement that outsourcing has helped this organization to expand into other markets compared to those who concurred (50%). This implies that in most cases, outsourcing has helped this organization to expand into other markets.

Based on the findings in respect to this objective, it is hereby concluded that Uganda Baati uses varied materials that are crucial in their performance.

4.4 OBJECTIVE TWO: Sources of raw materials in Uganda Baati

To obtain the data required for this objective, respondents were asked to check for whether they understood the term purchasing, whether market survey is done before negotiation, who makes the purchasing decision and what are the sources of raw materials. Different responses were obtained and are presented below;

4.4.1 Do you understand the term Purchasing

Respondents when asked whether they understand the term purchasing. Responses as presented below;

Table 4.3: Understanding the term Purchasing

Option	Frequency	Percentage (%)
Yes	38	95
No	02	5
Total	40	100

Source: primary data

Table above shows that, 95% of the respondents said yes they understood the term purchasing, while 5% of the respondents indicated no. This implies that most respondents were knew the term purchasing and hence their response can be relied on since they knew what they were involved in.

4.4.2 Whether the organization carries out market survey before negotiation for purchasing

With respect to whether the organization carries out market survey, the following findings were obtained;

Table 4.4: Market survey before Negotiation

Option	Frequency	Percentage (%)
Yes	40	100
No	0	0
Total	40	100

Source: Primary Data

Findings in table above shows that most respondents (100%) indicated that yes the company always carries out market survey before negotiation for purchasing while none of the respondents indicated no.

4.4.3 Who make the purchasing decision?

In respect with the above, the following responses were obtained;

Table 4.5: Who make purchasing decision

Option	Frequency	Percentage (%)
Purchasing manager	31	77.5%
Material manager	7	17.5%
Accountant	2	5
Total	40	100

Source: Primary Data

Results in table above indicate that 77.5% of the respondents indicated that purchasing manager always makes the purchasing decision, 17.5% of the respondents said material manager and 5% of them said accountant. This implies that purchasing managers at Uganda Baati are in charge of purchasing but the fact that there others namely; material manager and accountant perhaps indicate decisions are made by across-functional team.

4.4.4 Where does your company get its raw materials?

When it comes to source of materials, the responses were interesting and shown in table below;

Table 4.6: How company get it’s raw materials

Option	Frequency	Percentage (%)
Locally	6	15
Internationally	22	55
Both	12	30
Total	40	100

Source: Primary Data

Results as shown above indicate that majority of the respondents (55%) indicated that the organization always gets its raw materials internationally, followed by 30% who indicated both locally and internationally and only 15% of the respondents indicated locally. It is therefore concluded that Uganda Baati gets/secures its raw materials from different sources that are both local and international.

In summary, the implementation of purchasing policies has been evidenced in the acquisition of goods and services by standardizing documents involved in purchasing, standardizing methods and procedures in purchasing, setting up institutions to regulate and oversee implementation of which mainly involve setting up institutions to regulate and oversee implementation.

4.5 OBJECTIVE THREE: Challenges facing the purchasing of raw materials

The objective sought to identify challenges facing the purchasing of raw materials in Uganda Baati. Results obtained are presented below in table 4.7;

Table 4.7. Challenges facing the purchasing of raw materials

Statements		Frequency (n = 40)	Percentage (%)
Inadequate provision of good quality manpower	Agreed	25	62.5
	Not sure	6	15
	Disagreed	9	22.5
Ordering costs	Agreed	26	65
	Not sure	8	20
	Disagreed	6	15
Holding costs or carrying costs	Agreed	30	75
	Not sure	4	10
	Disagreed	6	15
Obsolescence	Agreed	36	90
	Not sure	4	10
	Disagreed	0	0
Deterioration	Agreed	33	82.5
	Not sure	04	10
	Disagreed	03	7.5
Stock- out or depletion cost	Agreed	35	87.5
	Not sure	2	5
	Disagreed	3	7.5
Long lead-time increases cost of inventory	Agreed	36	90
	Not sure	2	5
	Disagreed	2	5

Source: Primary Data

According to the table 4.7 above, it can be deducted that Uganda Baati encounters a wide range (i.e. many challenges in the process of purchasing raw materials; most of the respondents (62.5%) of the respondents agreed with inadequate provision of good quality manpower, 22.5% of them disagreed and only 15% of them were not sure. This implies that inadequate provision of good quality manpower has affected the performance of purchasing department in the organization.

Similarly, 65% of the respondents agreed with ordering costs, 15% of the respondents disagreed, 20% of the respondents were not sure. This implies that higher ordering costs also reduce the performance of purchasing department in the organization and therefore was a serious challenge faced.

Furthermore, results indicates that, most of the respondents (75%) of them agreed with holding costs or carrying costs, 15% of them disagree, 10% of the study respondents were not sure. This implies that majority of the respondents agreed that holding costs or carrying costs affect the purchasing process of raw materials in Uganda Baati.

Respondents (90%) agreed with obsolescence, none of them disagreed and only 10% of them were not sure. This implies that obsolescence has also affected the purchasing process of raw materials in Uganda Baati.

The table above shows that most of the respondents (82.5%) agreed with deterioration, 7.5% of them disagree while only 10% of them were not sure. This implies that majority of the respondents agreed with the statement in question. This is because deterioration has affected the purchasing process of raw materials in Uganda Baati.

Table above show that majority of study respondents (87.5%) agreed with stock- out or depletion cost, 7.5% of them disagreed while 5% of them were not sure. This implies that Uganda Baati has faced a challenge of stock- out or depletion cost.

Findings also indicate that majority of the respondents (90%) agreed with long lead-time increases cost of inventory, 5% of the study respondents disagreed, also 5% of the respondents were not sure. This implies that Uganda Baati faces a challenge of long lead-time which increases cost of inventory.

In summary, it can be deducted that Uganda Baati encounters a wide range (i.e. many challenges in the process of purchasing raw materials that include; the inefficient use of production time, labour and other resources due to delays or incessant short down and interruptions during production have become inherent part of operations in many manufacturing organization. Also, the poor liquidity position of many manufacturing concerns is a matter of concern to many shareholders and stakeholders alike and there is inadequate provision of good quality manpower in stock maintenance and material management.

4.6. OBJECTIVE FOUR: how the challenges faced affect the performance of the organization

The objective sought to identify how the challenges faced affect the performance of the organization. Different responses are presented in table 4.8 below;

Table 4.8: How the challenges faced affect the performance of the organization

Statements

Strongly disagree

Disagree

Not sure

Agree

Strongly agree

Total

Purchasing claims to be a profit-productive profession

(0%)

(2.5%)

(97.5%)

(100%)

Purchasing is responsible for controlling share of the company’s revenue

(0%)

(12.5%)

(30%)

(37.5%)

(20%)

(100%)

Reducing total cost that increases profit

(0%)

(2.5%)

(97.5%)

(100%)

Reducing total cost increases profit margin

(0%)

(25%)

(75%)

(100%)

Reducing total cost increases ultimately return-on-investment (ROI)

(2.5%)

(0%)

(47.5%)

(50%)

(100%)

Lower material prices will reduce inventory value, or assets

(0%)

(2.5%)

(97.5%)

(100%)

Source: Primary Data

From Table 4.8 above, reveals that the challenges faced affect the performance in many ways and aspects for example findings show that no respondents opposed the statement that purchasing claims to be a profit-productive profession compared to those who concurred (97.5% strongly agreed and 2.5% of them agreed) while no respondent were not sure.

Fewer respondents (12.5%) opposed the statement that Purchasing is responsible for controlling share of the company’s revenue compared to those who concurred (57.5%) while only 30% were not sure. This implies that, at Uganda Baati poor purchasing has affected the company’s revenue.

No respondents opposed the statement that Reducing total cost that increases profit compared to those who concurred (97.5%) who strongly agreed and the remaining 2.5% of the respondents agreed. This implies that, Uganda Baati has endeavoured to reduce it’s total operation cost in order to increase profits.

Fewer respondents (2.5%) opposed the statement that Reducing total cost increases ultimately return-on-investment (ROI) compared to those who concurred (97.5%) while no respondents were not sure.

Fewer respondents (2.5%) opposed the statement that Lower material prices will reduce inventory value, or assets compare to those who concurred (85%) while only 12.5% were not sure.

In summary, findings reveals that the challenges faced affect the performance in many ways and aspects for example Uganda Baati should always determine the minimum level of stock to carry. This is to ensure that stock-out or sudden unavailability is forestalled. With the removal of stock-out, other banes such as loss of production time, low capacity utilization, and inability to meet production targets will be removed.

CHAPTER FIVE

DISCUSSION OF FINDINGS, SUMMARY, CONCLUSIONS AND RECOMMENDATIONS

5.0 Introduction

The purpose of the study was to examine the challenges encountered in the purchasing of raw materials in manufacturing firms. The data was collected and analyzed using descriptive methods such as percentages and results were presented in chapter 4. This chapter finding therefore presents the discussion of the study in sub-sections on the basis of the specific objectives set to achieve as analyzed in chapter four, Summary of findings, conclusions, and recommendations are also brought out in this chapter

5.1 Discussion of findings

5.1.1 Key categories of materials purchased

Findings revealed that different types of materials are used and purchased such as recycled nap) steel, iron ore and metallurgical coal. Recycled steel (sometimes called scrap steel) is one of the most important raw materials. It comes from demolished structures and end life vehicles and machinery as well as from the yield losses in the steelmaking process.

These findings are in line with Khalid (2008) who observed that today, it is estimated that the global steel industry’ uses on average 2 billion tonnes of iron ore, 1 billion tones of metallurgical coal and 520 million tones of recycled steel to produce 1.6 billion tonnes of crude steel, a year.

5.1.2 Sources of raw material

Findings indicated that Uganda Baati buys its raw materials both locally and internationally. The company always carries out market survey before negotiation for purchasing and the purchasing manager etc always makes the purchasing decision though the involvement of the purchasing managers is more visible by most respondents.

This is in line with Cavinato and Freeman (1990) who declared that in today’s changing and dynamic global markets, organizations stressing on the high quality production must focus their purchasing and supply on planning, development and operation. They realized that purchasing groups of many organizations have been slowly developed without a specific plan in response.

5.1.3 Challenges facing the purchasing of raw materials

Findings revealed that the major challenges facing the purchasing of raw materials include inadequate provision of good quality manpower, ordering costs, holding costs or carrying costs, obsolescence, deterioration, stock- out or depletion cost and long lead-time increases cost of inventory. This implied that the organization has several challenges that it faces in line with purchasing function.

This is in line agreements with (Versendaal et al, 2005) who argued that it is clear that since purchasing is responsible for controlling a dominant share of the company’s revenue dollars, it directly impacts profitability and the financial success of the overall business enterprise. As a purchasing people, simply maintaining adequate sources of supply is not enough. Making sure that suppliers are the “right” suppliers, selling at the “right” price and then seeing that they keep serving well, are important activities.

5.1.4 How the challenges faced affect the performance of the organization

Findings indicated that for the organization to minimize on the challenges it faces to improve performance, the following should be considered; purchasing claims to be a profit-productive profession, purchasing is responsible for controlling share of the company’s revenue, reducing total cost that increases profit, reducing total cost increases profit margin, reducing total cost increases ultimately return-on-investment (ROI) and lower material prices will reduce inventory value, or assets. This agrees with Akindipe (2005) who stated that Here are four ways purchasing managers can aim to ensure appropriate supply levels regardless of the near-term economic outcome: Aligning the sales and operations stakeholders requires that purchasing managers negotiate effective combinations of service levels (i.e., lead times) and price with suppliers to meet the actual demand. Purchasing managers that provide order commitments, regardless of how large, will provide suppliers with the confidence to invest in inventory and/or capacity. Purchasing managers should insist, in return for minimum order commitments, on a guarantee on service levels.

5.2 Summary of Findings

Findings revealed that different types of materials are used and purchased such as recycled (scrap) steel, iron ore and metallurgical coal.

5.3 Conclusion

Uganda Baati has used varied key materials in her operations that need to be well managed. Uganda Baati secures it’s raw materials from different sources that are both local and international. Although the situation being experienced in the practice of raw material/inventory management today is to say the least, disheartening; given the poor level of computerization, the degree of inability in the use of models for inventory decision making, the involvement of illiterates and non experts in the management of raw materials and inventory; the prospects for improvement are evident.

This however, is hinged on the preparedness of managers of manufacturing organisations to be responsive to suggestions from within the business and the academic communities and take steps towards achieving efficiency in the practice of raw material management. Having this done, the prevailing problems of incessant stoppage of production, low level of capacity utilization, inability to meet production targets, poor liquidity and other identified problems will be addressed.

5.4 Recommendations

The organization should be registered to allow for the grouping of all be reporting were purchasing or stores will be reporting to different person other than the material manager.

They should also introduce the methods of pricing purchasing

The company should improve it’s purchasing department so that they can consider the necessity to adopt efficient methods of solving the problems of negotiation in purchasing function and other problems that may arise in the organization.

The company should increase their negotiation process in order to meet up with the demand of the organization to avoid stoppage during production and other things in the company

5.5 Areas for further studies

The study recommends that further studies should be carried out on;

The effect of accountability on effective purchasing in an organization
The role of ICT adoption on operational efficiency
Major causes of the purchasing challenges.

REFERENCES

Akindipe, S. O. (2005). Raw materials management and inventory control in manufacturing organization. Unpublished Masters Thesis, University of Ado-Ekiti, Nigeria.

Cavinato, I., and Freeman, G. (1990). Concepts and applications of inventory management in northern Greece. International Journal of Production Economics, (35), 149-52.

Cordell, J. (2006). Alternative Quality Improvement Practices and Organization Performance,” Journal of Operations Management, (12:1), 1994, pp. 27-44.

Khalid, S. (2008). Trend forecasting for stability in supply chains. Journal of Business Research (61), 1113–1124.

Kros, J. F., Falasca, M. & Nadler, S. S. (2006). Impact of just-in-time inventory systems on OEM suppliers. Industrial Management & Data Systems, 106(2), 224-241.

Lain, G., & Stuart, M. (2008). The audit process, principles ,practice and cases, 4th ed, south western publishers.

Lange, O. (2006). Total Cost of Ownership: A Key Concept in Strategic Cost Management,” The Journal of Business Logistics, (19:1), 1998, pp. 85-102.

Laugero, F. (2002). Scientific inventory control. London: Bottleworth Ltd.

Lenders R,M and Fearon E.H (1989). Purchasing and materials management . fifth edition. Macmillan publishers.

Lunnae, K. (2011) Purchasing Professional.4th edition, prentice hall publishers

Lysons, K. (1996). Purchasing policy, fourth edition, prentice hall.

Meggion and Boydell (1978). A Managers Guide to Coaching. BACIE publishers

Mohanty, R. P. (1985). Inventory problems under multiple constraints: some studies. Engineering Costs and Production Economics, ( 9), 355-92.67.

Peter Bailey, David Jessop, David Farmers and David Jones (1977). Purchasing Principle and Management., prentice hall publishers

Peurifoy, R. (2000). An applied model for improving inventory management in ERP system, Logistics Information Management, 16(2), 114-124.

PPOA(2009), General procurement manual, governmental publications.

Rajeev, N. (2008). Inventory management in small and medium enterprises: A study of machine tool enterprises in Bangalore. Management Research News, 31( 9), 659-669.

Salemi N.A.(1997), Management principles and practice simplified, first edition , Saleemi publishers.

Tersine, S. (2002). Techniques for Analyzing Industries and Competitors, Free Press, New York, NY.

Townsend, R. (1992). Material management in the NHS logistics: Purchasing & supply management: Journal of the Institute of Purchasing & Supply Management, 1(3), 13-24.

Versendaal, N., Nasiri, G. R., Davoudpour, H. & Karimi, B. (2005). The impact of integrated analysis on supply chain management: A coordinated approach for inventory control policy. Supply Chain Management: An International Journal, 15(4), 277 – 289.

APPENDICES

APPENDIX I: QUESTIONNAIRES FOR MANAGEMENT AND STAFF

Dear respondent,

My name is TASHOBYA.K. ROSSETTE and I am carrying out a study on “challenges encountered in the purchasing of raw materials in manufacturing firms, a case study of Uganda Baati Limited”. The study is for academic purposes and is carried out as a partial requirement for the award of Bachelor’s degree in Procurement and Logistics Management.

You have been selected to provide vital information that will facilitate the study. Your response will be treated with utmost confidentiality. Thank you very much for your valuable time.

Section A: Background information about the respondent

Gender of the respondent

Male Female

Age bracket of respondent in years

18 –30 31-40 41-50 Over 50

Highest level of education attained by respondent

“O” Level “A” Level Certificate/Diploma

Degree Postgraduate

For how long have you been working in this organization?

Less than 1 Year 1-3 Years 4 Years and above

SECTION B: SOURCE OF RAW MATERIALS

Do you understand the term purchasing?

Yes No

Does you organization carry out market survey before negotiation for purchasing?

Yes No

Where does your company get its raw materials?

Locally Internationally

Both

Who make the purchasing decision?

Purchasing Manager Material manager

Account

Others specify ……………………….

SECTION C: CHALLENGES FACING THE PURCHASING OF RAW MATERIALS

Which of the following challenges are facing the purchasing of raw materials? Use strongly Agree (SA), agree (A), Not Sure (NS), Disagree (D).

Challenges	SA	A	NS	D	SD
The inefficient use of production time, labour and other resources
Holding too much stock than necessary will lead to capital lock-up
Inadequate provision of good quality manpower in stock maintenance and material management
Ordering costs
Holding costs or carrying costs
Obsolescence
Deterioration
Stock- out or depletion cost
Long lead-time increases cost of inventory
Others specify……………………………………

SECTION D: EFFECTIVENESS OF PURCHASING ON PROFITABILITY

In section, show your level of agreement on the effectiveness of purchasing on profitability? Use strongly Agree (SA), agree (A), Not Sure (NS), Disagree (D).

Statement	SA	A	NS	D	SD
Purchasing claims to be a profit-productive profession
Purchasing is responsible for controlling share of the company’s revenue
Reducing total cost that increases profit
Reducing total cost increases profit margin
Reducing total cost increases ultimately return-on-investment (ROI)
Lower material prices will reduce inventory value, or assets
Higher investment turnover
Planned purchasing prevents production operations from being disrupted
Others specify……………………………………

THANK YOU FOR YOUR TIME