Negotiation as a cost reducing technique in material procurement in nigeria breweries enugu plant

Project Abstract

This research project focuses on the utilization of negotiation as a cost-reducing technique in material procurement at the Nigerian Breweries Enugu plant. The study aims to explore how effective negotiation strategies can lead to cost savings in the procurement process, ultimately improving the overall financial performance of the organization. The research will involve a detailed analysis of the current procurement practices at the Enugu plant, identifying areas where negotiation can be implemented to drive down costs without compromising quality. The study will employ a mixed-methods approach, combining both qualitative and quantitative research methods. Qualitative data will be gathered through interviews with procurement staff and management to understand the current procurement process and any existing negotiation practices. Quantitative data will be collected through a review of financial records to determine the impact of negotiation on material procurement costs over a specified period. The research will also involve a review of existing literature on negotiation strategies in procurement, focusing on best practices and successful case studies in the industry. This theoretical framework will provide a foundation for developing effective negotiation strategies tailored to the specific needs of the Nigerian Breweries Enugu plant. Furthermore, the study will identify potential challenges and barriers to effective negotiation in material procurement, such as supplier relationships, market dynamics, and internal alignment within the organization. By addressing these challenges proactively, the research aims to provide practical recommendations for improving negotiation outcomes and reducing procurement costs. Overall, this research project seeks to demonstrate the importance of negotiation as a cost-reducing technique in material procurement at the Nigerian Breweries Enugu plant. By enhancing the negotiation skills of procurement staff and implementing effective strategies, the organization can achieve significant cost savings, improve operational efficiency, and maintain a competitive edge in the market. The findings of this study will contribute to the body of knowledge on procurement practices in the brewing industry and offer valuable insights for other organizations looking to optimize their procurement processes through negotiation.

Project Overview

<p> </p><p>Negotiation as a cost deduction technique in material procurement is for efficiency of any business, and also contingent upon obtaining the right materials and have it available in the right quantity from the right source, at the right price, delivered at the right place at the right time, whereby failure to any of these adds to costs and decreases the profit level of any organization. There has been procurement fraud because of the idea of speed money in the mind of some of the procurement managers or officials who buy materials or items for the organization. Lack of transparency has lead to excess spending, increasing cost of production, losing a lot of money through the inflating of prices, over invoicing and overpayment of materials procured. High cost incurred in material procurement is as a result of procurement manager not doing his home work well that is by planning his objectives and strategy before hand and he enters the session without a positive attitude of success. Lack of knowledge and not been conversant to some guide when negotiating by the procurement manager in respect to issue such as, when to negotiate, the agenda, negotiation technique and behaviour, some attribute of a good negotiator, the team leader to negotiate term of payment not stipulated and followed add to the cost of production. These could also lead to high cost of finished products and make it not to compete well with its competitors in the market, and calls for extra expenses on promotions and advert, renovation and so forth, just to improve sales in order to make profit or keeps the organization living. Hence procurement being a process whereby all classes of resources such as materials, facilities, people required to render services are obtained procurement covers a wider range of supply activities than buying alone. Negotiation as cost reduction technique in materials procurement is embarked on to solve some of the problem earlier mentioned. Negotiation is a very vital and essential technique in every organization in both private and public sector to reduce high cost incurred in material procurement, the role in negotiation and all that it takes to negotiate effectively. The impact expected at the end of these is to minimise cost and maximise profit of the organization, and also to ensure that the end products stand in the competitive market, to satisfy the taste of consumers and promote the standard of living economy and the society at large.</p><p><strong>Statement of the Problem</strong></p><p>In both the private and public sectors, between 50% and 80% of their total expenditure is spent on acquiring either materials or services, procurement is thus the biggest item of expenditure of an organization. Excessive costs are incurred when enquiring these materials in private sector about 60% to 75% of company’s procurement (purchases) of materials examples raw material is done by the company agent or foreign officials of the company based abroad , who usually charge certain percentages for their work which could lead to additional cost of production, over-invoicing and over payment.</p> <br><p></p>