ASSESSMENT OF PURCHASING ACTIVITIES AND ITS IMPACTS ON

THE OVER ALL OPERATIONAL PERFORMANCE IN THE CASE OF

ADWA TEXTILE COMPANY

AKSUM UNIVERSITY

COLLEGE OF BUSINESS AND ECONOMICS

DEPARTMENT OF LOGISTIC AND SUPPLY CHAIN MANAGEMENT

A research Report submitted to

logistics department in Partial Fulfillment of the Requirement
for B.A Degree in logistics and supply chain management

PREPARED BY: KOANG CHAN KHOR

ADVISOR: BIRHANU JENENEW

JUNE 2016

AKSUM, ETHIOPIA

ACKNOWLEDGEMENT
First I would like to appreciate my advisor Birhanu Jenenew for the way in which
he advice me and indicate me to know the research in a good way. I appreciate
him for the way in which he always likes to share his knowledge with others. I
appreciate him too for the well advising which he gives us in the research work
etc. Secondly, I appreciate the Adwa textile company for the way in which they
receive us in the time of data collection and the source, which I have got from
them. Lastly, I would thank the research work.

Abstract
Purchasing is the buying of raw materials, semi-finished materials, equipments
and finished materials or goods as well as services at the right quality, right
quantity, right price, and right time right place from the right suppliers. This study
was conducted in Adwa Textile Company. So this study was designed for the
assessment of purchasing activities and how the company would exercise those
activities in its operations. Thus, the interview and questionnaires were given to
an individual person within the company. The purchasing department as well as
other departments which have direct or indirect relation with it could answer the
questionnaires. The key aspect of this study has been focused on the
consideration of purchasing activities. Those activities have more contribution to
the company operation and its performance.

TABLE OF CONTENTS PAGE

 No
Acknowledgement………………………………………………………………………………..I

Abstract………………………………………………………………………………………………..II

Table of content………………………………………………………………………………………………….III

List of table………………………………………………..............................................................V

CHAPTER ONE

1. Introduction……………………………………………………………………………………..1
1.1 Background of the study…………………………………………………………………………………1

1.2 Statement of the problem………………………………………………………………………………2

1.3 Objectives of the study…………………………………………………………………………………..3

1.3.1 General objective…………………………………………………………………………………………3

1.3.2 Specific objective…………………………………………………………………………………………3

1.5 Significant of the study……………………………………………………………………………………3

1.6 Scope of the study………………………………………………………………………………………….4

1.7 Limitation of the study……………………………………………………………………….4

CHAPTER TWO
2. Literature review………………………………………………………………………………………………5

2.1 Purchasing activities……………………………………………………………………………………….5

2.1.1 Objectives of purchasing……………………………………………………………………………7

2.1.2 Importance of purchasing………………………………………………………………………….9

2.1.3 Purchasing parameters………………………………………………………………………………10

2.2 General purchasing procedures…………………………………………………………………….13

2.3 Purchasing and Suppliers………………………………………………………………………………14

CHAPTER THREE
3. Research methodology…………………………………………………………………………………15

3.1.1 Sampling technique……………………………………………………………………………………16

3.2 Method of data collection…………………………………………………………………………….16

3.3 Data analysis and validity……………………………………………………………………………..17

3. 4 Organizational background………………………………………………………………………….18

CHPTER Four
4. Data Presentation, Analysis and Interpretation………………………………………………20

CHAPTER five
5. Conclusion and Recommendation…………………………………………………………………..32

Summary………………………………………………………………………………….32
5.1 Conclusion…………………………………………………………………………............................33

5.2 Recommendation…………………………………………………………………………………………34

References………………………………………………………………………………..35

Appendix……………………………………………………………………………………36

LIST OF THE TABL PAGE

4.1 General background of the respondents………………………………………………………21

4.2 Respondents opinion towards the damage of the materials…………………………22

4.3 Respondents opinion towards the effective and efficient performance of
purchasing activities…………………………………………………………………………………………..23

4.4 Respondents opinion towards inter departmental coordination during the

time of purchasing the materials………………………………………………………………………..24

4.5 Respondents opinion towards the parameters during the purchase of the
materials…………………………………………………………………………………………………………….25

4.6 Respondents opinion towards the existence of purchasing related

problems…………………………………………………………………………………………………………….26

4.7 Respondents opinion towards the existence of the shortage of raw

materials…………………………………………………………………………………………………………….27

4.8 Respondents opinion towards the types of bidding that the company could
follow…………………………………………………………………………………………………………………28

4.9 Respondents opinion towards the source of getting the raw

materials…………………………………………………………………………………………………………….29

4.10 Respondents opinion towards the impacts of purchasing regarding to human

resources……………………………………………………………………………………………………………29

4.11 Respondents opinion towards the purchasing of the materials

frequently…………………………………………………………………………………………………………..30

4.12 Respondents opinion towards the purchase by the concerned

bodies…………………………………………………………………………………………………………………31

CHAPTER ONE
Introduction

1.1 Background of the study

Purchasing is an important to any kind of organization as well as in any activities
which have been exercised by human beings. It’s one of the basic functions which
were very common to all organizations. It was the key factors which increase the
profit, productivity and quantity “David N.Burt, Prentice Hall, Englewood Cliff, N.J
1984”.It was common to all types of the business operations “ Fearon, Harold E,
Donald, Dobler, Kenneth, H.killen :Purchasing hand book, Mc Graw Hill Ny 1992”.

Any human activities, organizations and companies were performed and become
successful very well due to the implementation as well as an improvement of
purchasing activities. All companies, Industries and others organizations would
purchase the raw materials at the right quality, right quantity, right price and right
time from the right suppliers for their operations “Leeder, Michiel R, and Harold
E.Fearon: Purchasing book, Irwin, Homewood 1993”.

They would have materials, equipments and they could get these all things due to
the contribution of purchasing by selecting the source of suppliers at the time in
which the materials were purchased. Therefore, the business, industries and
companies always purchase the hundred or thousand of equipments as well as
materials for the aid or for the purpose of achieving their objectives
“Management of materials 7th edition John Welley and sons NY 1994”.

The purchasing would direct and indicate the organizations to follow the right
ways for the time in which they purchase the materials and preparing themselves
for objectives achievement. Therefore, the basic objectives of any industry or
company was the development and manufacturing of the products which could
be sold in the market and bring the profits. This way could led the company or
industry to purchase the raw materials, semi-finished materials and processing of
those materials in to out puts or finished products. Those objectives were
accomplished by appropriate blending and improvement of purchasing activities.
The five MS such as machines, manpower, materials, money and management
could also combine themselves with purchasing by measuring the possibilities in
the company operations for increasing the productivity. So materials today are
the life blood of any company industry. An availability of raw materials which
have been purchased at the right quality, right quantity, right price, right sources,
right time and right place from acceptable suppliers would facilitate the
operational performance of the company and safe it away from the shortage of
materials.

1.2 Statement of the problem

In most developing countries like Ethiopia, the agricultural sector’s product share
is largest portion of total production but other industries {manufacturing and
service} are few and are not so productive to the maximum possible efficiency.
This is because of the efficiency in different of such industries are maximize. In
addressing efficiency among other is purchasing department plays a greater role.
However, the majority of the organizations do not give due to consideration
purchasing function and department. The Ethiopia procurement law is still at an
infant stage; in recent years the federal government have take measures to revise
the existing laws so as to growth and expansion of the quantity , quality of
provision of public service. Each year, significant portion of public money is
allocated as a result of construction of public work supply of goods and provision
of service {http, www.chilot, public procurement.com} the business process
reengineering carried out by Alex p.l.c on procurement and property
administration reveal that there are various instance of item purchasing do not
match with item request {wrong quality} purchasing are excessively delay {wrong
time}, the purchasing process takes too long resulting in additional cost due to
inflation supplier stock out items. user department work hinder, item become
obsolete and accessories is not be available any movement further it is becoming
obstacle for The attainment of the company’s goal. {Visit. Company’s or survived`}
this paper intends clearly identify the course of the efficient purchasing
performing.

1.3 Objectives of the study

1.3.1 General objective

The general objective of this study was concerned about the assessment of
purchasing activities and its impacts on the overall operational performance in
Adwa textile company.

1.3.2 Specific objectives

The specific objectives under this study within the company were related to the
ways in which the researcher would look and identified the following specific
objectives. These specific objectives were:

 Exploring the purchasing activities which have been exercised in the

company.
 Identify the way in which the company could purchase the raw materials
and how to use those materials for their own.
 Identified the purchasing activities in its relation to the fulfillment of the
company requirement for materials and their use.
 Assessing the ways in which the company could practice the purchasing
parameters such as the right quality, right quantity, right price, right time
and right place from the right suppliers.
 Exploring the ways in which the company purchases the raw materials and
the right specification as well the quality that the company would get from
those materials, which

1.4 Significant of the study

The study under this was the significant for the title, which is focuses on the
assessment of purchasing activities and the impacts, which could hinder the
operations of the company. ALMEDA textile Share Company as a leading
manufacturer in Tigray, Ethiopia at the horn of Africa. Those significant and
important are the contribution methods of finding the important way of
significant study could encourage the researcher and know the limitations or
drawback of the current way of company activities in purchasing. It would be
consider as the way of knowing the method or process about the company
activities and the importance in its activities by researcher. The study would give
the hope to the researcher by knowing the things, which could affect the
company by now or in the future. It would increase the researcher knowledge by
acquiring or enquiring the difference information in such an area of the study as
well as the fulfillment of those all things.

1.5 Scope of the study

This study was concentrated to some specific enterprise that is Adwa textile
company. It was located in northern Ethiopia in central zone in Tigray region it
found Adwa, it located in earthen Adwa. it deal with only the assessment of
purchasing activities and its impacts on the overall operational performance due
to the way of knowing the development and the expansion of the company
expert in its improvement with purchasing activities. The scope of the study could
explore and give the detail about the expansion as well as the coverage areas of
the study.

1.6 Limitation of the study

This limitation would give some limits to an effort of this study. There were some
limitations, which hinder the study and take it for grantee as perfect. The first
limitation was the time and costs. The time, which was allocated, for data
collection was sufficient or enough to gather all the necessary information at the
requiring depth time to incorporate the detail of investigation on purchasing
activities. The cost is also an important limitation, which hinders the study and
limit only in one part. The second one is an absence of previous researcher work
on the purchasing relating areas which were the major obstacles. The researcher
would make the comparison for these all limitations and those limitations would
suspend and hinder the sufficient or enough information. Relating topics have
some difficulties for researcher and some time the relating topics would often
help as the starting point for the researcher. The existence of such of all things
would increase the difficulties.
 CHAPTER TWO
2 literature review

2.1 Purchasing activities

Purchasing is refers to the developing the sources for suppliers, finalizing the
price, placing the order, obtaining the materials at the right time, contribution to
the standardization, value analysis and effective for disposal of surplus or scraps.
Purchasing also is then function of buying machinery, tools, general supply and
raw materials which were required by organization “ A.K Datta in 2004:Materials
management 2nd edition, Nen Delhiprertic Hail of india put ltd”. Based on these
definitions, purchasing consume a substantial portion of finance in the company
that use the working capital and cash. Therefore, a purchaser would be highly
responsible person who deals with wise various sales men and act as a public
relation of the company. He or she could make the company image by his or her
excellent relation with suppliers. Any purchasing activities start with the
recognition of need. For many items of the company inventory, the purchasing
department would anticipates the need when a production plans were drown up
with the frame work of materials budget “ K.K AhuJa in, production management,
Nazi printer in 1998”.It could plan for the acquisition of materials in advance and
determine the order quality in consultation with the inventory controller. This
ensures the regular supplying of materials. In many cases, purchasing department
has an alternative to develop the source of supplying and arrange the potential
substitution when the materials required were emanated either from the user
departments, materials planning or store department and ensure it’s timely of
supply. The company could avoid the payment of uneconomical price by
developing the detail specification and adequate description in a necessary ways.

These adequate securities of detail specification and description would require

atacticful handling of materials. So in the avoiding of latter friction, a security of
adequate description and specification would promote the harmony which make
the purchasing jobs easier “Baily Octer, purchasing system and record 3 rd edition
Aseshor crower published company ltd 1991”.The next step is the selection of the
right source of supply which is easier side than what is often doing for
improvement and allow an extraneous consideration. For the entering in to
contract with certain prices, there are some major functions for the selections of
source suppliers such as timely deliver, quality, assurance, reliability,
creditability...Etc are all important consideration for purchaser. According to the
policy of the organization at any time, the purchaser could have sacrificed the
cost of one item at the costs of others. It should not be suppose however, the
purchaser order was pleased and accepted by the vendors. The responsibility of
the purchasing department would end and increased if the follow up of order was
necessary or not. Otherwise it would help the responsibility for a failure of deliver
for the right quantity at the right time and the right place “A.K Data 2004: 7-9”.

The scarcity of raw materials has practically put the people in purchasing
department in a very tight position. The purchasing could be in a better position if
the designers take a little pain to consult the purchasing personal about the
technological capabilities of the vendors. It has observed that the drawing was
sent to purchasing department for the component with a high degree of closed
tolerance.

But we should ensure that the high degree of tolerance was really needed
because of close tolerance not only to make the procurement difficult but to
contribute for the high price. The main outset of the company cash was gone in
materials for purchase. Thus, the purchasing people would take a great
responsibility for the overall organization objectives and policies. The empower
and improvement of purchasing management result for the help of
standardization, value analysis, materials substitution, transport saving and costs
reduction by packaging the modification scrap reclamation. All of these things
would have contribution for the profitability of the company or organization.
  Transportation
 Planning,
difficulty,
 Negotiation,
 Inflection,
 Coordination,
 Lack of system,
 Selection,
 Shortage of training
 Communicatio
and development
n analysis
from the people,
 Credit quiz,
 Complicated design,
High
productivity Effective
profitability
Manageme
nt

2.1.1 Objectives of purchasing

The objective of purchasing is the conduction of purchase function by minimizing
or eliminates the disruption with in the production that result from the lack of any
materials “David farmer and Afian Van Well, Gower hand book of Purchasing 2 nd
edition Vermont pub.ltd.1995”.Therefore, this objective would be achieved with
the minimum investment in reserve in inventories. It also maintains an adequate
standard of the quality for items that could be purchased. The objectives were
lower ultimate cost rather than the lowest cost initial cost. Another objective of
purchasing is the avoidance of duplication, wastes and obsolescence with the
respective of various items which were purchased. The mission of purchasing
within the organization is the effective commitment to the company fund and
operational performance. It objective would encourage an economic success of
the business organizations and companies’ .The sound procurement by itself is
the proper management of the materials with investment. In other hand, the
objective of purchasing is not only to procure the raw materials at the lowest
price but to reduce the cost of final products “N.k Nair, purchasing and materials
management new Delhirikas Publishing houst 2003”.

So for the company to ensure these objectives, a large number of parameters

such as the right price, right quality, right quantity, right contractual terms, right
time right source, right materials, right place, right mode of transportation and
right attitude could be considered jointly. The objective of purchasing is to
procure the goods which were the best suitable and the best quality that avoid
the duplication of wastes as well as obsolescence within the respective to the
various items which were purchased. It maintains the competitive position of the
company, develop good relationship with suppliers, and develop an internal
relationship that led to the understanding of each other and harmony among the
various organizational units within the company “K.K A H U J 1998:359-360”.

2.1.2 Importance of purchasing

Purchasing management is the best that would keep reflects the role of
purchasing in the corporate operation within the organization. Therefore, today
there is the trend towards introducing of materials management within the
companies or in industries. It’s an able by saying that purchasing would anticipate
the future more than what we are felling for warrantee. Purchasing could still
more clearly in identifying for its functions in most business organizations. The
term “management” could suggest that, purchasing decision would involve the
weighting of the alternatives and possibilities. Much of these alternatives could
involve the influence of other functions of the purchasing decision. Therefore, no
organization could operate without materials, supplies and
equipments”P.Goparlkrishans and M.Sundoresn,Materials management an
integrated approach New Delhi Tata M.C Graw hill 1998”.The efficiency of any
business activities is the present of having the materials, supplies and
equipments which are available in proper quantity with the proper quality at the
proper place and time. Purchasing is the managerial activities that gone beyond
the simple act of buying and it includes the planning of policy activities which
covers the wide range of relating activities such as research, development, proper
selection of materials and source from which those materials would buy.

It follows up the ensuring of proper deliver of materials from the suppliers by

checking of those materials to ensure both quality and quantity compliance from
the order development of proper procedures. So that the true picture of the
department is the carrying of establishment policies. The coordination of
purchasing department with other internal divisions was concerned as a traffic
receiving of store keeping and accounting so as by facilitating the smooth
operations “K.K Abuja 1998:359-360”.

2.1.3 Purchasing parameters

There are some parameters which could be considered jointly for their
contribution in the purchasing activities. They are parameters and they could be
considering in another way as key principles of purchasing. These parameters
were examined one by one for the following order. These are:

1 Right quality
The right quality was refers to the suitability or durability of an item for any
purpose. The right quality is depending on the durability of an item and the time
in which an item could be spent for its purpose. The quality is the dimensional
limit, composition performance and durability of the materials. The quality of
difference commodities was difference from the metals which means that, quality
is the composition or grade. For machine components, it’s the grade of the
materials, various dimensions and tolerance. For an automobile, it’s the grade of
the materials use in economical running, durability and so on. Quality could be
measured by the physical test, chemical analysis dimensional measurement and
the performance depending on the commodities.

2 Right quantities
In the case of recurring or receiving the items, the right quantities would be
considered. The right quantity is refers to the right amount of the items which
were needed and purchased by the company with the minimum total cost. For
special purpose, the quantities were required in order to carry out the job. An
excess purchase for latter would result in blocking of money on the items which
might not be used for an indefinite time and have possibilities deterioration.

3 Right prices
The right price is refers to an actual price or the real price of an item. It was a
price which gives the satisfaction for both sellers and buyers. The right price is the
one which bring the best ultimate value. The right price did not means the lowest
price but it’s the price which could be determined in the combination of the other
factors such as quality, ultimate life, deliver time after sale service and etc.But
there were some factors which affect the price such as quality, quantities
required, urgency of requirement, demand and supply of materials in the market
whether there is a room for competition or not, whether there the requirement is
standard or not and whether the requirement is respective or not.

4 Right sources
The right source would possess the necessary of financial resources. The company
or an organization could handle the commitment including the procurement of
raw materials which were difficult to obtain in the technical ability including an
inspection and quality control method. In order to supply the requiring quantities
in the present or future and the quality of good at satisfactory price, the firm
would locate within a few miles of the buyers plant. This way would avoid the
deliver delay and high transportation charges, it facilitates the personal contact
between the buyers and suppliers, it enables better after sale service and the firm
could also be free from the sticks as well as slow.

5 Right times
The right time is refers to an actual or the real time for the reaching of items in
the place they are required. The right time is also means, the time when the
stocks would reach the minimum level. The responsibility of adhering to this is
shared by both stocks control and the purchase selection. The stocks control
would send the requisition sufficient in the time for the purchase section in order
to obtain the materials when the stocks recharge the minimum level and also
indicated when the materials were required. The purchase section would avoid
the delay and finalizing the order which indicate the delivery of date on the
purchase order. It also sees the way that the materials would arrive according to
the delivery date by an efficient follow up action. It arranges the delivery much
earlier than the requiring delivery time. The form means, over stocking and
blocking the money while the latter means loss of production “N.Knaire, 2003:
205-207”.

2.2 General purchasing procedures

The purchasing department would buy many difference types of materials and
services. The procedures which could be used in the completing of the total
transaction are very normally among the difference types of purchasers. The
general cycle for activating in purchasing is the mostly could operate the
materials and suppliers in fairly standard. The following steps were constituted
for the typical purchasing cycle. These are:

 Recognize, determine and describe the need,

 Transmit the need,
 Investigate the quality,
 Prepare and issue the purchase order,
 Follow up the order,
 Inspect and receive the materials,
 Audit the invoice,
 Close the order...etc
The purchasing department is usually notifying the need by one of the following
two methods. The first one is the standard of purchase requisition which is an
internal document in the contrast with purchase order which is basically an
external document. The second one is the materials requirement planning. Based
on the inspection and receiving, it would be conducted soon after the receiving of
invoice by permitting the accounting department to make the promotion for the
payment and obtain the applicable for cash discount “Donald Dobler and D.N
Burot 6th edition 1996 : 62-73”.

2.3 Purchasing and suppliers relation

One of the major assignments of purchaser was that, the purchaser could make
the relation whether the current relationship for suppliers is satisfactory one or
not. The relationship is highly complex and difference. The people who are inside
the purchasing organization would have difference parties in the positions
“Harold E.Fearon [PHD] 9th edition: 247”.

The purchasing relation with suppliers is depending on the contract for the buying
of needs “Donald W.Dobler and Burt 6th edition: 508-510”.

CHAPTER THREE

3.1 research methodology

This method of study would be carrying out depending on the types of the
sample, which could make the work of research in an easy way. Under this
methodology, the difference type of sampling methods could be used to
carry out the sample in organization where the case studies on it. The
sampling type, which could be taken as the tool for exploring and
measuring the size of sample in the company, was the simple random
sampling. There were some sampling methods, which could be used in
sampling study such as systematic, and cluster sampling methods. The
sampling was based on the selection of an individual from the difference
departments within the company. Therefore, the sampling size, which
presents or stands for the total population of the company, is 5217 people
or w workers. This total sample size was divided in difference sections
because the employees or workers were assigned in difference working
positions.
So with in this sampling population size, 4810 are permanent workers
employees and 407 are temporary workers. And 30% are purchasing and
production employees or workers who fulfill the questionnaires which have
been distributed to them by researcher in the company. These 30% people
were the respondents for the questionnaires and they fulfill all 30
questionnaires about the detail of purchasing activities as well as its
impacts which could hinder the operations and its performance. These 30
questionnaires were fulfilled by 30 people working in purchasing and
others.

Those questionnaires were distributed and returned at all. Some other

departments all so would contribute by giving the detail knowledge about
the company activities related to the concentration areas of the study.
Those departments are, store, production, as well as purchasing
department.
3.1.1 Sampling technique

The sampling technique would also use as a random to acquire or collect

the primary data in order to get the total sampling size of the population
for the following sample which has been conducted in the company. It’s the
technical way which was included in sampling method. The technique could
 be considered as the way of formulating the technique if you determine the
sample size of the population.
3.2 Method of data collection
The data would be collected from an individual personal who provide the
required information needed by researcher within the company. This process of
data collection was primary data collection by gathering the sources from
difference individual who give the responses to the questionnaires and individual
who were interviewed by researcher. Those personal were from the difference
departments such as engineering, purchasing, operation as well as marketing in
the company.

Those all departments have relations with each other and corporate their
activities within the company.

As a result, the method of data collection under this study was the primary source
of data collection by collecting them from the people who were interviewed and
questionnaires which were distributed to them by researcher. And the second
method of data collection under this study was the secondary soure of data
collection which was collected from the difference references, books, magazines
and journals. It was the purchasing department and some other departments
which would clearly provide exact information which was needed for the
conduction of this study. According to data gathered, the questionnaires would
be contributed for the selection of an individual from the difference departments
such as store, production and technical department.

The primary data was depending on the interviewed of an individual and the
questionnaires which have been distributed to the respondents within the
company. Some time, the data could be secondary if they were collected from the
books, references, journals and magazines. Therefore, the methods of data
collection under this study were primary and secondary sources of data. The
researcher should collect the sources from these two ways of data collection
methods.
In generally, the method of data collection was both primary data collection from
an individual interviewed and questionnaires which were distributed to the
respondents in the company and the secondary data collection were from the
books, references, journals and magazine

3.3 Data analysis and validity

The data analysis and validity was concentrated on the cause as well as the effect
between the two. The data analysis and validity have relation which could be
identified in their cause and effect. So the validity of the data was depending on
the right or correct respondents. After the data which would be analyzed and give
the correct effectiveness result which the researcher need, the data become data
analyzed and validity because it provides the full or correct information. The data
which were analyzed for its validity and provide the right data or correct data
which give the detailed information could determine the cause and the effect
from the relation between the variables. Therefore, data analysis would arrange
the validity of data which could maintain the detailed information after it was
analyzed. The data analysis could have great task for evaluating the data and
come up with correct result. It could also make the relation, and this relation was
contributed for the cause as well as an effect between these variable

3.4 ORGANIZATIONAL BACKGROUND

The Adwa textile company was established in 1990 G.C the brand new
establishment rising out of the ancient land of Tigray ALMEDA textile share
company as leading textile manufacturer in Tigray, Ethiopia at the horn of Africa
ALMEDA textile is the non-governmental entity invested by endowment fund for
rehabilitation of Tigray [EFFORT] which is the total investment of 94.22 million us
dollar and sixty percent of total investment of Altex goes to all the brand new the
most advance textile equipment which give fully guarantee to quality and
efficient. ALMEDA textile products are always market in variety price and punctual
in delivery time there are yarns NE6-NE60 all cotton p/c blended sheeting, pop
line, twill, drill fabrics, canvas and terry towel with total capacity of 700 tones of
yarns 24 million square meter of gray fabrics and 36 million square meters of
finished fabric per year with 1300 work force in addition the entity has reasonable
capacity to product and design sketches ordered by customers. The company is
located around 7 kilometer from Adwa, from Addis Ababa is 1006 kilometer, from
Mekelle is 233 kilometer, and from ASEB is 236 kilometer. The company starting
the operation in 1999G.C a hub per excellent in the textile and garment field in
general in Ethiopia in particular.

CHAPTER FOUR
Data presentation, Analysis and Interpretation
This section was largely deals with the data analysis, presentation, and
interpretation for the data, which were collected through the method of primary
data collection. The data which been collected from an individual respondent
through self-personal questionnaires were presented, analysis and interpreted
carefully. The information, which was obtained through these methods of
questionnaires and personal interview, has been corporate together to give
presentation, data analysis as well as an interpretation. Here under this, the
questionnaire were distributed to an individual respondents who could give the
response for questionnaires, which has given to them in the company as the
primary way of data collection. Therefore, the respondent would give the correct
result for questionnaires, which were distributed to them, and the data here were
analysis, presented and interpreted. Under this study, 30% questionnaires were
distributed to respondents and returned.

The respondents were asked in order to assess the purchasing activities and its
impacts on the overall operational performance in Adwa textile. Company and the
purchasing department as well as others departments which have a relation with
purchasing directly or indirectly were asked about the purchasing activities. The
general manager of the purchasing or procurement department head in the
company was interviewed about the purchasing activities and its impact on the
overall operational performance of the company at the time of data collection.
The responses of all individual respondents give the same result about the
purchasing activities of the company. The purpose of analyzing of these
questionnaires was that, from 1.1 and 1.2 were analyzed or combined together.
Therefore, let we see the general backgrounds and the characteristics of
respondents before we proceed to other questionnaires which were analyzed.

Here, the analyzed questionnaires were presented and analyzed by using the
following tables.

Table 5.1
The general background of the individual respondents

No Item No of respondent Rate%

1 Gender
Male 23 77
Female 7 23
Total 30 100
No Item No of respondent Rate%
2 Age
18-25 8 27
25-35 20 67
Above 35 2 6
Total 30 100
Source; owned questioner (2008/2016)

In the case of gender respondents, it implied that out of the total respondents
which were 77% were male where as 23% were female respondents. Therefore,
most of the respondents who had been collected were male. Regarding to gender
respondents it was implied that among the total numbers of the company
workers or employees who occupied the largest coverage were male whereas the
female occupy the smallest coverage within the company. So that the company
did not give more emphasis opportunity for the female as we compared to the
male in the above table of gender respondents.

Regarding to the case of ages respondents, 27% were between the ages of 18-25
years. 67% respondents were between 25-35 ages and 6 % respondents were
above 35 ages in the company. From this table above, the half respondents who
cover the largest or who occupy the largest coverage in the company were above
25-35 years. This implies that the employees of the Middle Ages who are their
ages were found about the ages 25-35 years and early under age group who were
important for the company better operation of its function.

Table 5.2 Respondents opinion toward the damage of materials in the company
No Respondents
Item Types No Rate%
3 Is there is any damaged of Yes 21 70
materials in your No 9 30
company/organization?
Total 30 100
Source; owned questioner (2008/2016)

In the case of above this table, the respondents which is 70% implied that there
where materials which had been damaged in the company. The reasons of
materials damage were stated by respondents such as road transportation as
well as other modes of transport if the materials were loaded in huge amount
while the distance which had been coverage and traveled were long from one
place to another. Due to that case, the materials would not reach at all and some
of them could damage for that reason.

The materials would damage because of lack of proper materials handling and the
lack of good ware housing to store the materials at the time they were brought
from another place. The storing of materials in open stores also would contribute
to the damage of materials if the raw materials as well as other materials were
bought and simple store in the open place while they were not keep and check
properly at any time. Lack of insecticides and storage or warehouse as well as bad
handling of materials in the storage areas were also one factor for the damage of
materials.
The lack of providing of proper space for the storage of materials which was
related to the storing of materials in the warehousing were crowded and
occupied by materials without any space between them would damage the
materials.

The replacement of working process is also one reason for damage of materials.
The remaining which is 30% was implied that there was no materials damaged in
the company and they did not mention the reasons in which the materials were
not damaged in the company.

Table 5.3 Respondents opinions towards effectively and efficiently

performance of purchasing activities

No Item Respondent
Type No Rate%
4 Did the company perform the Yes 24 80
purchasing activities effectively or No 6 20
efficiently?
Total 30 100
Source; owned questioner (2008/2016)

Regarding to this table above of the respondents item 4, 80% is implied that The
Company could perform the purchasing activities effectively and efficiently. And
they were state that the company produces out puts effectively and
efficiently .Due to the case in which the company produces the out puts
effectively and efficiently, it satisfied many customers for what they wants or
needs.

The remaining respondent which is 20% were implied that the company did not
perform the purchasing activities effectively and efficiently due to the case of raw
materials delayed for the production purpose, poor quality of raw materials which
were purchased as well as the lack of well qualified of employees in the company.
This was implied that the company performs the purchasing activities effectively
and efficiently, which mean that the company could use its raw materials
effectively in order to generate the out puts which attract the customers for the
fulfilling of intended purpose .the Company could use the raw materials
effectively, which mean that it produces more out puts by using the minimums in
puts which performs the purchasing activities which was the major benefits of the
company. Therefore, the company always performs the purchasing activities
effectively and efficiently.

Table 5.4 Respondents opinion towards interdepartmental coordination during

the time of purchasing the materials

No Item Respondent
Type No Rate%
5 Did your company have a Yes 30 100
habit of discussing any
case with difference No -
departments while are
performing the purchasing
activities?
Total 30 100
Source; owned questioner [2008/2016]

The coordination of difference departments could be seen in the above table.

Regarding to this, the respondents are 100% and they implied that the company
could perform its purchasing activities within the coordination of difference
functional departments within the company. In the addition to the above result
which was obtained from the questionnaires, the result of interview for the
general manager of the company was also implied t of that the existence or the
coordination of difference departments during the purchasing activities was the
most important for the company they operations as well as its performance. An
individuals from difference departments such as production, engineering,
marketing, finance, purchasing and technique were perform the purchasing
activities by having a coordination among each other’s and exchange the relevant
or an important information within the company. In the case of interview result
regarding the responsibilities of purchasing department may also include the
selection of sources or the best source of suppliers, approval of payment and
evaluation of rating suppliers, placement of purchase order and follow up the
maintenance of smooth relationship with suppliers. The department head of
purchasing or procurement was implied that the main responsible body of the
company to select the best source of supply is the purchasing and some time if
the complex items were purchased, the cross functional departments such as
engineering, operation, finance, marketing, purchasing and techniques were
participated in discussing the issue of purchasing of materials among each other
with in the company.

Table 5.5 Respondent opinion towards the parameters during the purchase of
materials

No Item Respondent
Type No Rata%
6 Did your company tried Yes 28 93
to purchase the
materials by considering
No 2 7
the each purchasing
parameters [the right
quality, right price, right
quantity, right time, right
place and right source
from the right
suppliers]?
Total 30 100
Source; owned questioner [2008/2016]

Here, it could be stated in the table above, the respondent who said yes are
93%.This implied that the company was considering and taking the purchasing
parameters during its purchasing activities at the right quality, right quantity, right
price, right place, right time and right source from the right suppliers within the
company. So the general manager of the company, the purchasing department
and other departments were play in significant role in achieving of these
parameters during the purchasing of materials. Regarding to this table above, the
respondents who are 8% implied that the company did not consider the
purchasing parameters during the purchase of materials due to improper and
impractical follow these parameters. Largely the company was implied and stated
that the purchasing parameters were more considered for any time in which the
materials could be purchased. According to this, the company was tried to
purchase the materials by considering the purchasing parameters. Therefore, the
company could operate its production at the right quality which means that the
company could purchase the raw materials at intended purpose. The company
also set the right price which was balance for the customers. The company could
use the right suppliers who have good capacity and reliability to deliver the
materials at the right time.

Table 5.6 Respondent opinion toward the existence of purchasing related

problems in its activities

No Item Respondent
Type No Rate%7
7 Did the company have Yes 16 53
problems related to the No 14 47
purchasing activities?
Total 30 100
Source; owned questioner [2008/2016]

As it was indicated in the table above, the respondents who are 53% should
implied that there were problems within the company regarding to purchasing
activities where as the remaining 47% were stated that the company was free
from purchasing related problems. Some of the problems related to the
purchasing activities were the absence or lack of supplier’s relationship with in
the country to buy some materials from them when they were needed
immediately and information gaps within the company which help to solicit the
foreign suppliers. The time of purchasing the materials if they were delayed and
exceed their ordering time was also the one factor because the materials could
not be received at their ordering time. According to these respondents, the
company has problems related to the purchasing activities

Table 5.7 Respondents opinion toward the existence of the shortage of materials
in the company

No Item Respondent
Type No Rate%
8 Did the Yes 18 50
company
face the
No 12 50
shortage of
raw
materials?
Total 30 100
Source; owned questioner [2008/2016]

As it was indicated in the above table, number of respondents which is 60% were
implied that the company did not face the shortage of raw materials because if
there was a shortage of raw materials, the company should face an interruption
which led its operation to fail. Therefore, the company should always take care
for the raw materials at any time. The company should not face the shortage of
raw materials and it was operated as well as it performs well due to the present
of raw materials without shortage. The raw materials were available at any time
and there was no shortage which the company could expect.

According to this table above, 40% respondents were implied that there is the
shortage of raw materials if the raw materials which have been ordered to
purchase were delayed from the suppliers and the long distance in which the
materials could spent for some days and again the purchaser are not sufficiency
or to perform on time.

Table 5.8 Respondent opinion towards the types of bidding system that the
company could follow

No Item Respondent
Type No Rate%
9 What type Open
of bidding
system that Close
the 30 100
Both
company
could use in
purchasing
activities?
Total 30 100
Source; owned questioner [2008/2016]

According to the respondents of this table above, 100% is implied that the
company could use both open and closed bidding system. This was stated that in
the above table, the company could use the above two bidding system in order to
get the raw materials for its operations. Depending on the two types of bidding
system in which the company could follow, the number of competitors in the
open bidding was unlimited where as the number of competitors in the closed
bidding system was limited but the company could follow these two types of
bidding system.

Table 5.9 Respondents opinion towards the source of getting the raw materials
No Item Respondent
Type No Rate%
10 Where do you Domestic
get the raw Foreign
30 100
materials? Both
 Total 30 100
Source; owned questioner [2008/2016]

According to this table above, 100% respondents were implied that the company
could use to purchase the raw materials in both domestic and foreign. The
materials which were found within the country could be purchased domestically.
If the materials or raw materials were not available domestically, the
company could purchase the raw materials from foreign countries. The foreign
purchase is the source of getting the raw materials. Some of the raw materials
which have been purchased and obtained from the foreign purchase were
stationary materials as well as electronic materials such as computers. Therefore,
the company could get the raw materials both domestics and foreign.

Table 5.10 Respondent opinion towards the impacts of purchasing regarding to

human resources

No Item Respondent
Type No Rate%
11 Where are Lack of
the qualification,
30 100
impacts of lack of
purchasin experience,
g low number
regarding of
to human purchasers
resources? who have a
knowledge
about the
purchasing
activities
Total 30 100

Source; owned questioner[2008/2016]

According to this table above,100%respondents were implied that the
impacts of purchasing regarding to human resources were related to the
lack of qualification, lack of experience, low number of purchasers who
have knowledge about the purchasing activities as well as the improper
ways of follow the purchasing procedures within the company were the
most significant problems.

It was also implied that the purchasers who have been employed in the company
could not have experience to accomplish the purchasers activities in a very good
manner or well manner. The purchasers were not qualified well to purchase the
intended raw materials which were needed by the company.

Table 5.11 Respondents opinion towards the purchasing of the materials

frequently

No Item Respondent
Type No Rate%
12 Can you frequently Weekly
purchase the materials? Monthly
Yearly 30 100
Not fixed

Total 30 100
Source; owned questioner [2008/2016]

In the case of table above, 100% respondents were implied that the company
could always purchase the materials which have been needed at any time. The
company could implement the purchasing of materials at any time. The materials
were purchased for any time and the company produces the intended
improvement in its operations. It was also implied that the company purchasing
of materials was not fixed. It purchases the materials for all periods which were
mentioned above in order to operates and achieve the desired objectives.
Table 5.12 Respondents opinion towards the purchase procedures by concerned bodies

No Item Respondent
Type No Rate%
13 Do the
concern Yes 30 100
bodies
No -
assess the
purchasing
activities?

Total 30 100
Source; owned questioner[2008/2016]

According to the table which has been shown above, 100% respondents were
state and implied that the concern bodies of the company could always assess the
purchasing activities which are very important for the company operations
capacity. The concern bodies that assess the purchasing activities were the
management group whose include the general manager, finance, human
resources, purchasing manager and others from the interdependent difference
departments within the company.

The concern bodies were used to assess the purchasing activities which are very
important for the company to operate and produce the out puts for well capacity.
 CHAPTER five
Conclusion and Recommendation
Here under this section the presented, analyzed, and interpreted data was
summarized below by using the high lighting before the conclusion and
recommendation. The conclusion was made based on the major finding process
and finally, the recommendation was given based on the problems which have
been I identified by researcher. The suggestions of the respondents for the
coordination with the objectives of the study were that:

 They provide the researcher about the detail information and know the
ways in which the effective and efficient purchasing activities were
performed in the company.
 Identified the purchasing related problems or impacts and find the possible
solutions for those problems.
 Evaluating the effectiveness of purchasing activities in the operations and
its performance.
Summary
As it has been seen from the result which was obtained from 100% respondents
were implied that the concern bodies of the company were always assessing the
purchasing activities. These concern bodies could include the manager of the
company, engineering, finance, human resources, marketing and purchasing
manager.

The result of respondents which is 80% were implied stated that the materials
damage could always occurs and present in the company due to the above
reasons which were mentioned.

It was shown in the result of respondents, 80% were implied that the company
performs the purchasing activities effectively and efficiently where as 20%
respondents were implied that the company did not performs the purchasing
activities effectively and efficiently.
As it was shown from respondents, 100% were implied that the company
performs the purchasing activities by having a coordination and discuses all things
with difference departments as well as they share the information.

Here it was also shown that 93% respondents were implied that the company
could always consider the purchasing parameters.

It could be seen here, 53% respondents were said that the company faces the
problems related to purchasing activities due to the absence or lack of supplier’s
relationship, the time of purchasing the materials if they were delayed and
information gap are some related problems of purchasing.

So it has been shown that 50% respondents were implied that the company did
not face the shortage of raw materials where as 50% respondents said that the
company faces the shortage of raw materials.

Conclusion
Here from the result of finding it could be state and conclude that the company
was performed the purchasing activities within its operations effectively as well as
efficiently. The purchasing activities could bring the company in the reality in its
operations and perform in very well manner. The company share and perform the
purchasing activities by coordinated the functional difference departments and
share the relevant or the most important information related to the operations as
well as how the company would perform in a very well manner. It was also
conclude that the company could perform and implement the purchasing
activities.

Therefore, the company was in the better position in the operation capacity and
performs its activities in a very well manner. It was conclude that the company
performs without much more impacts in the purchasing activities for the
operations and consider the purchasing parameters at the time it has been
purchased the materials by having a contact relationship with either domestic or
foreign suppliers to get the materials for its operation. The company could select
the best source of suppliers who were selected by purchasing department. It was
conclude that the company did not face any shortage of raw materials. So the raw
materials are available at any time for its operations. The researcher based on the
respondents and interviewers was concluding that the company did not face the
shortage of raw materials. It was also conclude that the company employees have
lack of qualified personal, low number of purchasers who have knowledge about
the purchasing activities as well as improper ways of follow the purchasing
procedures were the impacts of purchasing related to human resources.

Therefore, the company should develop the systematic way of working together
in all activities and having a good habit by discussing all thing which could be
shared as well as which could be cooperated by all functional departments for the
purchasing of materials. So that the company could follow the purchasing
activities without any impacts and operate very well in its operations.

Recommendation
Under this, the researcher could come and identified that the company was good
and appreciable due to the purchasing activities, which they have been follow.
The company also could be appreciated for their operation, which was performed
without much more impacts or without interruptions. The researcher was
recommend that the company could wisely use the raw materials in the
operations and perform in a very well capacity by considering the purchasing
parameters.

The company always should establish the smooth relations with suppliers by
decreasing the delay of raw materials. The researcher was also recommend that
the company was already and employ the workers who were in better
qualification for experience as well as it give the training that increase the
capacity of the workers. The company could buy up the capacity for its operations
by performing in very well manner in the process of producing the final products.
Therefore, the company was appreciated for its purchasing activities that it
follows and the operation, which was performed without impacts.
 References
1. A.K Dalta (2004) Materials management 2nd edition nen Delhilprertic Hail of
India pub ltd.
2. Baily Octer (1991) Purchasing system ad record 3rd edition Aseshore crower
published company ltd.
3. David N.Burt, Prentice-Hall, Englewood Cliffs, N.J: Purchasing and supply
management (1984).
4. Fearon Harold E.Donald W.Dobler, Kenneth H.killen: Purchasing hand book
MC Graw Hill, NY, (1992).
5. D.W Dobler and Burot (1996) purchasing and Supply management text case
6th edition new work mc grew hill.
6. Daivid Farmer and Afian van well (1995) Gower hand book of Purchasing 2 nd
edition Venmont Pub.ltd.
7. Robert, Norman: managing Inventory for cost reduction, Prentic Hall,
Englewood, N.J, Cliff, (1992).
8. K.K Ahuja (1998) Production management, Nazi printer ltd.
9. Leender, michiel and Harold E.Fearon: Purchasing and materials
management, Irwin, Home wood, IL (1993).
10.P.Goparlkrishans and M.Sundoresn (1998) Materials management of an
integrated approach New Delhi Tata M.C Graw hil.
11.N.K Nair (2003) Purchasing and materials management New Delhe riskas
publishing houst.
12.R.D Agrawal (1982) Organizational management 2nd edition

Appendix
 Aksum University

College of Business and Economics

Department of Logistics and Supply Chain Management

Senior assay of questionnaires for the assessment of Purchasing activities and
its impacts on the overall operational performance in the case of Adwa Textile
Company…

This questionnaire is the partial fulfillment of my [BA]

Dear respondent! I request you politely to respond or to give respond for my

questionnaires here below. In the way of fulfilling these questionnaires, please
put the tick mark for all items in the boxes, which are providing below and give
full information in the spaces which were prepared below.

Thank you very much for your corporation as well as your coordination!

1. Personal information

2. Gender Male Female

3. Ages of respondent

18-25 25-35 Above 35

4. Occupations …………………………………………………………………………………………………

5. What is the qualification of Purchasing or Purchasers in the company?

Certificate Diploma Degree

Elementary

6. Is there is any damage of materials in your organization?

Yes No

7. If your answer is yes, how can the materials would damage and reason?
………………………………………………………………………………………………………………………………
………………………………………………………………………………………………………………………………

8. Does the company perform the Purchasing activities effectively and efficiently?

Yes No

9. If your answer is Yes, how can it performs the Purchasing activities effectively
and
efficiently?..................................................................................................................
.............................................................................................................

10. Does your company have a habit of discussing any case with difference
departments while performing the Purchasing activities?

Yes No

11. If your answer is yes, list down some department below.

………………………………………………………………………………………………………………………………
………………………………………………………………………

12. If your answer is No, for what reason?

………………………………………………………………………………………………………………………………
……………………………………………………………………………..

13. Does your company try to Purchase the materials by considering each
Purchase parameters (the right quality, right price, right quantities, right time,
right place and right source from the right suppliers)?

Yes No

14. If your answer is Yes, explain the way of using these

parameters……………………………………………………………………………………………………………
………………………………………………………………………………………………………………………………
……………………………………………………
15. If your answer is No, why
not…………………………………………………………………………………………………………………………
………………………………………………………………………………………………………………………………

16. Does the company have a problem related to the Purchasing activities?

Yes No

17. If your answer is yes, let you mention some

problems………………………………………………………………………………………………………………
………………………………………………………………………………………………………………………………

18. If your answer is No, why does not

………………………………………………………………………………………………………………………………
………………………………………………………………………………………………………………………………

19. Does the company face the shortage of materials?

Yes No

20. If your answer is Yes, what are the cause of that

shortage?....................................................................................................................
..........................................................................................

21. If your answer is No, what are the reasons?

………………………………………………………………………………………………………………………………
……………………………………………………………………………

22. What type of bidding system that the company can use in purchasing
activities?

Open bid Closed bid

No bid at all Some time open and close bids

23. Where do you get the raw materials?

 No where

Domestic Foreign

Both

24. What are the impacts of Purchasing regarding to human resources?

Lack of experience No problem at all

Lack of qualification Low no of Purchasers

25. Can you frequently Purchase the raw materials?

Monthly Yearly

Weekly Not fixed

26. Do the concern bodies assess the Purchasing activities?

Yes No

27. If your answer is yes, who are the concern bodies?

……………………………………………………………………………………………………

…………………………………………………………………………………………………..

INTERVIEW
1. Where do you purchase the materials for the operational performance of
your company?
2. Does an impractical use of purchasing activities have an impact on the
operational performance of your company?
3. Does your company can follow the purchasing procedures in the
performance of buying activities?
4. Does your company try to establish a good supplier’s relationship?
5. Can you explain the major problems and impacts related to the purchasing
activities of the company?
6. How can the company assess would assess the purchasing system?
7. Does the company have good qualification of purchasing activities?
8. Did the company face an interruption in the operation?