MAKE OR BUY DECISION AS AN IMPORTANT TOOLS FOR PROFITABILITY IN MANUFACTURING ORGANIZATION (A CASE STUDY OF GLOBAL SOAP DETERGENT INDUSTRY LIMITED, ILORIN)

CHAPTER ONE

1.1  INTRODUCTION

The decision to
either make or buy material required for production processes and other purpose
is very paramount most especially   in
manufacturing companies such as global soap and detergent industry limited . Many organizations
consider it profit ability o manufacture (make) the material required in he
house, if here are enough facilities to embark 
on such, while the decision to make materials in house is considered
wrong by some organization due to their lack of enabling facilities or simply
says they are not aware of the benefits there in.

The decision has
regard to make or buy should not be handling with levity. These is so because,
failure to make appropriate decision here is the beginning of failure.  Many organizations are facing problems today
just because they take the decision that is most profitable for their concern.   However this decision often seems to be taken
as required by design, production and purchasing department.

In considering these
decisions it is worth not things than 50% of company’s annual budget spends by
the purchasing department, and millions of naira is   lost
annually as a result of purchased items. 
It would therefore be more economical to decide whether to make or buy
material required.

(A) Cost
:- the cost associated with manufacturing needs materials in house and the
current cost f purchase, if material must be bought, it determine which one is
cost effective.

(B) Availability
of product capacity:- the firm should
consider whether there is enough person machinery and technical know how that
would be place then, the firm ma embark on “make” decision  and if otherwise, it has to locate right
source a supply  form who to buy.

1.2   STATEMENT
OF PROBLEMS 

The common
problem that faces many organization including global soap and detergent
industries limited Ilorin.  Toda is how
to make appropriate decisions concerning whether to make or buy materials
required in organizations out of the race, while some fail to record substantial
profit in their business endeavors.

          The
inability for their inability for their organization may lead to production
stoppage if the required materials are not in a place at the right time or it
may lead to loss of profit as a result of excess investment on inventory.

          All
these problem needs to be systematically investigated. To know the possible
causes so that lasting solution may be prefer.

1.3  
RATIONAL FOR THE STUDY.       

The research study
is directed toward the practical approaches of make or buys decision as an
important tools for profitability in global soap & detergent industries
limited Ilorin.

          This
study is aimed at giving the global soap and detergent industries limited an insight into the
essential steps to making or buying and how best the company profit could be
maximized.

The evaluation
of making or buying of items used in global soap and detergent industries
constitute a purpose of this study. The interests of the research in the
manufacturing sector lies in the fact that make or buy decision constitute the
most important part of current asset of manufacturing firms.

1.4   SCOPE OF THE STUDY

The scopes of
this research works in centered on make or buy decision as important tools for
profitability in manufacturing industry limited.

In carrying out
he research, the research in make of buy decision. It will also review briefly
the factor to be considered in make or buy decision. It will also review who
determine what to make or buy and the effect of these decision on each department
in the organization.

          The
research can cover the advantage and disadvantage of make or buys decision in
an organization and weather the quality or product rises and falls with make or
buy decision at global soap & detergent industries limited, .

          Therefore,
the suggestion and recommendation made as a result of this study will be
of    benefit to management to the limited
mentioned above on make or buy decision.

1.5   LIMITATION
AND CONSTRAINT

          During
the process of the research works encounter numerous problems among which are:-

·       
Finance

·       
Time

·       
Attitude of
respondents.

This research
work was faced with so many obstacles and problem it was difficult to obtain
the co-operation of personnel in charge of vital document containing information
about the topic.  There was the need to
travel o collect information or the other, 
and in most cases, here will be no tangible result, the researcher only
being asked  ask o come back.

Another problem faced
by the research was finance. The researcher often found it highly impossible to
travel to the firm location.

The research
also found out that it is not easy to combine the normal class lecture with
written of these project work management invariably become a watchword for the
researcher.

1.6   HISTORICAL
BACKGROUND OF THE ORGANIZATION 

The global soap
& detergent industries limited is a member of the Doyin group of companies,
and the firs worthy indigenous soap and detergent   manufacturing company in Nigeria.  It was incorporated on 8^th October
1984 with hand in and factory situated
along Asa-dam road, Ilorin Kwara state capital, the company is operated,
managed and directed by full blooded Nigeria.

Own by
courageous and experienced industrialist Prince (Dr) Samuel Adedoyin who has
for many years been championing indigenous technology background integration and
use of Local raw materials in Nigeria Global soap and detergent Industries was
established in response to the call of the Kwara State Government and indigene
of the State to join hands with the state government in industrialization .

  
      Despite the economic downturn
at time the factory metamorphosed tremendously from its one Detergent factory
and a pioneer staff strength of 40 in1985 to a conglomerate  of (7) seven factories in 1994 with a strong
belief in self reliance and resourcefulness, sourcing about 40% of its raw
materials locally.

This is one way by which Global
Soap and Detergent Industries has contributing significantly to the country’s
economic rehabilitation and industrial revolution.

The company has consistently paired up with
existing multi national detergent manufacturing company in competition toward
enhancing the growth of the Nigerian economy operating through the under
mentioned plants.

            Besides the infrastructural
enhancement of Kwara state, Global soap $ Detergent industries limited
existence has provide handsome business and employment opportunities for
thousand of Nigerian such as suppliers, manufacturers, contractors,
transporters, and distributors e.t.c.

            The
company is blessed with most modern technology available and the plants are
ably manned by qualified personnel.

            Presently, the company has an
entirely indigenous labor strength 1,000 (one thousand) workers in different
grades. The company gives priority to industrial safety and good keeping. Hence
solid wastes are periodically lifted by sanitary inspectors from the Kwara
state environment protection agency (KWEPA), thus generating revenue to the state
government.

The
company’s range of product has continued to enjoy good patronage from Nigerian
due to their consistently high quality. It was recorded that global soap and
detergent industries is the first company to have received the certification
mark for quality within its first 3 years of operation. 

As
a way of reaching the nooks of cram my of the country, the company has 17 sales
depots scattered all over the federation such as Aba, Abeokuta, Benin, Enugu,
Gombe, Ibadan, Ilorin, Ilupeju , Jimeta, Jos, Kaduna, Kano, Maiduguri, Ondo,
Onitsha, Sokoto, and Uyo. In addition, necessary machinery has been put in
place and negotiations have also reached as advanced stage to introduce the
company’s products to countries within the ECOWAS. Sub-region as a way of
mobilizing foreign exchange into the country.

1.7    DEFINITION OF TERMS

1. Make: – It is used to act
of producing certain things.

2. Buy:-Is an idea of
getting one’s need in return for the money paid or getting by a price.

3. Understanding: – Not
giving pleasure or satisfaction from need or desire.

4. Supplier:-One whose
responsibility is to supply or make available material for further usage either
for production or normal consumption.

5. Capacity: – Ability to
contain, hold or get hold of something.

6. Production:-It is the
process of producing or making an item.

7. Stabilize: – To make
steady or allow to be normal.

8. Delivery: – It the act of
delivery goods where they are needed or required.

9. Standard:– Quality
description of an item.

10. Investigation:-
It is an act of carefully linking in to or through inquiry which must have been
raised.

11. Specialization:-To
make or ensure that each performs an aspect where in he/she could be better
which leads invariably to perfection.

12. Sub-contracting:-
It is a situation where in part of the job is let out another contractor to
perform.

13. Quality:
– Is anything that conforms with one’s predetermine standard.

14. Specification:
– Is a definite description of what is wanted.