The importance of purchasing function in the organization is also
underlined by the increased amount of resources invested by companies in
the purchasing process and as well as by the time allocated to
strategic purchasing. It is already acknowledged that the goods and
services purchased by companies have a key influence on costs,
productivity and quality level. Therefore, the sources of supply and the
amount of time and money invested in the purchasing process have a
capital influence on firms’ performance. One of the most important
elements of the purchasing function is the selection of suppliers. The
goal of supplier selection and evaluation is to reduce the risks
involved in transactions and to maximize the total value for the buying
firm. Successful supplier selection processes are dependent on a series
of strategic variables like the choice between domestic and
international sourcing, type and the intensity of the relationship with
the suppliers, the number of suppliers from which to source (single or
multiple sourcing) and finally but not the least important, the type of
the products supplied. Throughout time, many researchers have identified
numerous criteria for supplier selection and assessment such as net
price, quality, delivery, supplier reputation, capacity, communication
systems, services or geographic location. All these criteria represent
critical issues in the supplier assessment procedures in view of the
fact that they measure the performance of suppliers.
The main purpose
of this research is to provide empirical evidence of the procedures and
criteria used by small and medium-sized Doyin Investment Company when
selecting international suppliers. In addition, the paper aims to
investigate the types of relationships developed by Doyin Investment
Company buying companies with their foreign partners as well as
supplier-base structure options and types of products purchased from
international suppliers.
1.2 STATEMENT OF RESEARCH PROBLEM
The present study has also
several limitations, which will be further described. The first limit of
the paper comes from its scope. According to Talluri & Sarkis
(2002), the business processes of the purchasing function within
organizations include supplier evaluation and selection, negotiation of
supply contracts, monitoring supplier performance and creating an
interface between company and its suppliers. Therefore, inside the core
process of sourcing, the study narrows its scope by analyzing only the
supplier evaluation and selection process.
Secondly, the research will be limited to analyze the small and medium-sized manufacturing companies operating within Nigeria.
The
main business sectors evaluated will be manufacturing of food products
and beverages because the examined business categories are not
comparable due to a range of legal and technical aspects.
1.3 OBJECTIVES OF THE RESEARCH
The
thesis is based on the following hypothesis: “SMEs in a small country
such as Denmark are highly import intensive and source not nly from
regional suppliers, but also from suppliers far across the globe (Overby
& Servais, 2005) â€. As a result of the amplified interest in
purchasing internationally, it becomes important to assess the sourcing
practices among small and medium enterprises. In the context, the
research question of the study will be:
- What are the most
important selection criteria that Doyin Investment Company Ilorin
consider when choosing their foreign suppliers?
With the purpose of answering the research question, the following research objectives will be addressed:
1. To identify the challenges to international purchasing along with the main strategic options available for purchasers.
According
to this objective, the paper aims to investigate the drivers and
barriers to purchasing from foreign countries. Furthermore, the
strategic factors behind the sourcing process such as supplier-base
structure, buyer-supplier relationships and types of products supplied
will be explored in order to understand the tactical decisions related
to purchasing.
2. To analyze the supplier selection process and
to identify the most important selection criteria in the international
context.
In regards to supplier selection criteria, the aim of the
study would be to describe the process of supplier selection by
highlighting the most critical supplier selection criteria considered by
companies when acquiring their products from international countries.
3.
To investigate the international purchase behaviour of Doyin
Investment Company Ilorin and to find to find out what are the selection
criteria that drive them in choosing their foreign suppliers.
The empirical objective of the study has the role to analyze the
international purchasing practices developed by Doyin Investment Company
Ilorin. Moreover, the influence of strategic options on selection
criteria will be tested in order to understand the selection decisions
according to different purchasing situations.
