The Impact Of Material Sourcing In Enhancing The Organizational Profitability

INTRODUCTION

Material Sourcing is a set of tangible physical attributes assembly in an identifiable form. That is given the rapid changes in taste, technology and competition, organization will not rely solely on its existing supplier but look forward to get better sources of materials.

An organization can use three ways to minimize cost of sourcing materials, by interviewing her customers, by negotiation with the suppliers, by sourcing for better materials, we mean original material that can go into production and come out with quality product; and in the study, we will be concentrating on material sourcing as a way of increasing an organization’s profitability.

As a matter of fact, sourcing for the right material is like human being whose life span has to be treated to keep it working in order to add value, profit to the organization in the view that organization will not die subsequently. The death of organization lays on the fact that proper material are not acquired.

In the light of the above, it is necessary for organization will adopt the system of sourcing for materials to develop and grow their profitability, to achieve this successfully, sourcing strategies are required to be adopted, these are right material, right price, right negotiation, right place, right qualities, right quantities, right sources, right time etc.

In a nutshell, the study will dwell mainly on the impact of material sourcing to maximize organization profitability. 

Statement of the Problem

Most organization especially production oriented organization like Nigeria Breweries spent about 60% to 70% of its annual expenditure on the acquisition of raw materials. Some of the major problems confronting any manufacturing industries are: high cost of materials will affect profit margin of the organization and also incompetence of supplies, if the suppliers are not competent in making right qualities supply will become problem to organization in profitability area.

SUMMARY

In the course of this research work, the researcher come up with a number of findings as it affect sourcing of raw material and its impact in an organization with particular reference to Nigeria Breweries Plc, Kakuri Kaduna.

One of the objectives of the research work, was to study how sourcing for raw materials is carried out particularly in Nigeria Breweries and whether it has any effect on the profitability of the company under study considering the government calling for the locally raw materials.

In the course of finding out the impact that material sourcing has in a processing industry particular reference to Nigeria Breweries, various areas related to the subject matter covered some literatures regarding sourcing, sourcing process, source of information, sourcing policy etc were renewed.

Though this research work, it has been discovered that the company is making high profit for the use of locally sourcing material. This shows that the organization is satisfied with the contribution of locally sourcing to its growth by making available at the right time and right quality, raw materials availability is the basis for a sustained industries growth in any nation.

It was also ascertained that the company maintain a very cordial relationship with their suppliers through payment of invoice bills and provision for their incent over while lead to better understanding through personnel observations and from interviews conducted.