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Negotiation As A Cost Reduction Tools In Materials Purchases
CHAPTER ONE -- [Total Page(s) 4]
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CHAPTER ONE
INTROUDUCTION
1.1 BACKGROUND OF THE STUDY
It is natural for any company that engages in buying and selling to use negotiation techniques in its buying strategies.
Negotiation
is an important aspect of purchasing and supply. Negotiation in
purchasing is the process, which provide a legitimate and ethical means
for the buyer and the seller through give and take, or eliminate
unjustified or unnecessary increment n cost.
It should not be
construed as a means of stripping the trend or a fair profit or an
opportunity for extracting unreasonable concession. In reliability the
most successful negotiations are those which produce result to satisfy
both side and which to provide the framework long-term mutually
beneficial relationship. In my own understanding Negotiation is nothing
but an act and science for arriving at common understanding through
bargaining on the essential of contract in purchasing context.
Negotiation technique varies from one company to another depending on the type and policy of that company.
In most companies and organizations today materials are consideration as vital tools to the success operations.
The
purchasing of materials take a lion share of the financial budget in a
trading period almost 75% of the Asaba textile mill total expenditure
goes on material procurement. This makes prompt negotiation a function
of purchasing. This project work is a case study of Asaba tex Nigeria
limited. I have chosen Asaba for two reasons.
First, it is a
manifesting company and they have acquired a lot of knowledge about
purchasing function secondly, so that I can critically examine how they
carryout local and international negotiation practices in the company
and its effect on profitability.
(ii) HISTORICAL BACKGROUND
Asaba
Textile mile was income prorated on June 18th 1964. The name of the
company at that time was Midwest textile mile limited and was the brain
child of the partnership of the Midwestern region government and
continue card and company ltd of Hamburg, western Germany with 90% and
10% share holding respectively. The authorized and fully paid capital of
the company is N2.5m.
Location. Asaba textile mile is situated at
Asaba on the west bank of the legendary Rive Nigeria. The choice of the
form as location of the mill was on double influenced by the fact of the
being new river water is crucial to mills therefore this proximity to
the river is a good insurance since public water supply is erratic.
Locating the mill at Asaba.
Also ensured proximity to the bustling town of Onitsha just across the river.
Onitsha has about the largest industrial market in the country.
Raw
materials and spare parts for the mile machinery are usually available
there. Quite importantly too, there is a large market for the dispose of
finished textile product. Though incorporated in 1964, production did
not start until 2nd October 1965.
Incidentally the disastrous Nigeria
civil war started barely a year after this and the company was heavily
damaged as a result of the ravages a cropping blow I its infancy. The
period during which it had operated before the war broke out was far too
short to establish a convenient system of production so that in reality
it was faced with having to make a fresh start in 1970 when the war
ended.
Saddled with burden of damaged infrastructure, shortage of
water, capital and the resultant low out put, the company plodded on for
thirteen years after that with little to show for the share holders
aspirations.
In those times production level was at an all – time low
of about 4000 metres daily, and to survive we had to lean heavily on
the Bendel state Government congresses. With the inception a new brand
of directors under V. Okia – Anie however, administrative and
operational strategy was over handed, a new energy injured, many
forereaching decisions taken in chiding the agonizing one of pruning
staff strength by 50% to reduce overheads.
Immediately production
level increased from dismal ranges of 4000 meters daily, giving the
company the impetus to short repaying most of their loans and
subventions.
On 7th April 1987 a new board of directors under the
chairmanship of it, COLEBOMA (rto) was sworn in to run the company. The
high production level has been maintained so that today the mile Tums
out between 10,000 – 12,000 meter daily. The buoyancy resulting from the
production level has made it possible for the new board to reabsorb 140
previously rethreaded workers. The company looks at the further with
great expectation hope and determination to keep the customers
satisfied.
PRODUCTION PROCESSES
The mill is equipped with
facilities for a full production circler. This means that the mill is
capable of taking all production steps necessary to:
(1) Spin raw cotton limit into yarn
(2) We have the yarn to produce grey baft.
(3) And consequently bleach engrave and print the grey baft into the finished product we see in the market.
There
are four departments that handle start the production of those fine
quality prints that the company is increasingly being noted for. The
departments are.
(A) Wearing:- In this department, the
yarn that has been turned out by the spinning department is woven into
grey baft by our export team of weavers the machine with which this
process is carried out is know as pirn chancing hoom, of which the mill
presently has over five hundred.
(B) Engracing:
Engracing the designs that have been chosen for particular prints into
the grey baft is carried out by this department.
(C)
This is done by the use of copper rollers and screens though the company
turns out its own design, the customers can as well bring forward their
own specifications for engraving.
Finishing: This department
processes the cloth with chemicals dyeing, printing and finishing and
then making it into the attractive quality production level is
encouraging and the incessant demand for the company’s product is an
attestation to their high quality. This is a far – cry from the period
of how production before 1983 when as we had said production as how as
4,000 meters daily and the company had to spend heavily on government
publication Today we an able to say that things have definitely taken a
tune for the better and we would like you to depart of that
rejuvenation.
CHAPTER ONE -- [Total Page(s) 4]
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ABSRACT - [ Total Page(s): 1 ]This research work on negotiation as a cost reduction tools on materials purchases a case study of Asaba Tex Nig. Ltd. The scope of this research work covers every activity which has to do with negotiation problems, background to the subject matter, rationale for the study and the limitations of the study. The research reviews the related literature about the topic under discussion by gathering from distinguished authors and scholars, facts and opinions the finding of this study through the admi ... Continue reading---
