1.0 Introduction
1.1 Background of the Study
In the recent part, emphasis was only on the balance sheet report without cognizance of other factor that made up the inflow and outflow of resource that sustain the body mechanism of a given firm. With recent emphasis on cost control in the face of the rising cost of input resource and subsequent spill over of high cost of output.
It is very essential to discuss the role and function of purchasing and supply management toward the profitability of a local government. After the civil war the attendant boom in production resulting from the growth of private sector enterprises from Europe and American began to awaken other management input for eventual profit . The reason is based on the sophistical resource put in by these multinational into the mechanism of our business sector. One of these resources is purchasing and supply management.
It is imperative to note that the concept of purchasing has been broadened since the turn of the century and it include all those business activities relevant to the securing of material supplier and equipment as well as services needed by business and industries.
The evolution of right material has brought purchasing principle and management and its effect on shortage, high price of commodities and the allied improvisation have cause the problem of the material and services to intrude into broad room of many local government large or small, public or private and even government agencies.
Therefore purchasing is referred to as the department which is concerned with the process of defining the local government need, selecting supplier, agreeing term placing order and receiving goods and function which is oriented to providing complete supply function services for user within the local government . purchasing mission is to be selected of material or services agreement of price and acquisition item.
A well organized purchasing is one of the criteria of a company to minimize cost at the same time increase profit . The function of purchasing and supply management toward ensuring rapid growth of a local government profitability cannot be over-emphasized. It has been sample and proved that a nonprofessional in the field of purchasing easily view purchasing function as more obtaining requisition, negotiation and placing order without the knowledge that purchasing goes beyond this area of activities.
The activities of purchasing and supply management have the primary purpose apart from procurement of right quality from the right source at the right price , they distributed these material or resource to the user department with the required determination . taking procurement ,decision making or buy decision bidding, vendor selection, negotiation, re-negotiation, awarding of contract, contracting order processing, expediting, taking delivery, material handling, storage and distribution within the local government.
Purchasing department saves cost while other functional department within the local government accumulate cost and this make it to contribute immensely toward the profitability of a local government. It is from this perceptive that research reviewed the function to profitability.
According to A. M. UZOR (2003), purchasing function is to see that material and services are provide at the lowest cost, which is compatible with suitable quantity and safety. From his definition, purchasing can be seen as cost conscious department that recognizes the distinction between price and value and the aim to secure value of money. Examples purchasing department initiates value of analysis, exercise with designers and user to reduce cost by modifying component or substituting materials without detriment to the end user producer.
Purchasing also aim in making sure that the materials procured are of the right quantity, in the right quality, from the right source and at the right price using the right time , delivered to the right destination , purchasing function exist in a local government as a means to an end and provide service to user department by making good and services available as when required to meet local government operation need.
ALJIAN G. W. (1973:13) defined business as straining for profit by adding values . This mean that profit occur when value is added to raw material by turning it into a product. Value is added when a fabricated part is improved or incorporated into a major assemble for final use. Taking “cotton” as an example, it is harvested from farm and end up as a printed cloth. In order word, it has undergone many processes each of which costs something to perform and each of which add value.
(Aijian G. W 1973) from this statement, it is clear that purchasing function is a profit center and a focal point for substantial cost saving. For a company to succeed or to achieve its desired objectives the material section of the local government should be highly trained and knowledge in the field of purchasing and other material related function in order to harness effective and efficient profitability to their local government . in view of numerous challenges of the profession requires a caliber of person that can exercise prudence sound judgment for any naira spent at any given point in time, in order to minimize cost and increase profit.
Sincerely speaking, these cannot be achieved if the buyer is not a professional buyer that should adhere strictly to the ethics of purchasing profession and techniques of purchasing practice. Quite unlike untrained buyer, a trained and professional purchasing executive is aware that he is bound by the ethics of purchasing profession.
1.2 Statement of the Problem
It has been noted earlier that purchasing erupted because of the harsh sword of capitalism, which is a system, divided into exploiter and exploited in which the exploiters (the capitalism) owned the means of production.
Capitalism turns the heart against man, destroys man humanity and promotes man's inhumanity, hardship, social irresponsibility, poverty and constant unhappiness to the citizen. It also brings inflation depression, unemployment and various forms of economic and social insecurity for the greater majority of the populace.
The government in defense, say resource is not adequate to meet their demand, the citizen spine that it is due to mal- administration.
Therefore, it is a bid to examine the economic development effect of the purchasing in line with the prevalent problem that this being carried out with Mbano local government area as a study area.
1.3 Objectives of the Study
- To examine the adequacy of the resource with the reach of purchasing to achieve economic development
- To examine the social- economic effect of purchasing sponsored project as compared to government sponsored project
- To critically study the level of government assistance, threat to purchasing existence.
- To examine the effect of remedial action already taken by purchasing to ensure their survival and continued economic development as well as recommended measures were necessary.
1.4 Research Question
The following research questions have been developed for the study:
- Has the remedial action already taken by the purchasing been able to encourage the growth?
- How has the government activities been able to encourage or threaten the existence of purchasing in Mbano local government?
- What is the level of impact by the citizen as a result of project embarked by purchasing as compared to those sponsored by the government?
- Is the resource available to the disposal of purchasing, adequate to encourage economic development in Mbano local government area?
1.5 Significance of the Study
The study will portray the available and alternative source of resources open to purchasing societies in Mbano local government area, particular and other places in general.
The political class, the student and the entire citizen are bound to benefit from the finding of the study especially now that unemployment is the other of the day and they can contribute resources to gainfully employ themselves.
1.6 Scope of the Study
The research work will be restricted to the role of purchasing and economic development.
It cover such area , the role of awarding of contracts, contracting order processing, expediting, material handling, storage and distribution.
Hence, the scope of the research work is restricted to economic development within the local government.
1.7 Limitation of the Study
Cost:
The researcher would extend the survey to other area at the empirical level, but limitation here includes cost of transportation to source for materials and the cost of typesetting the complete work.
Attitude:
Since questionnaire method of data collection is relied upon a major source of data collection, and in view of an average Nigeria. Negative attitude towards questionnaire matters, the ills of the method constitute serious in limitation of the study.
1.8 Definition of Terms
Consumer Purchasing:
These are organization intended to support the economy of member, household through the acquisition of merchandise from wholesales and for sales to member at a fair price.
Producers Purchasing:
These are association of person who engage in production of industrial commodities, either with the use of machine or by employing worker for the production of goods and services of various kind
Marketing Purchasing:
These are association of farmer union to produce marketing agricultural.
Input Service Purchasing:
These societies exist to supply its member with seasonal input at reasonable price.
Transport Purchasing:
These are purchasing that engage in transport business, external transportation of their good for marketing and sometime they carried out some activities for non-member for a discount price.
