CHAPTER ONE
1.0 INTRODUCTION
Material Procurement can be defined as the purchase of goods or services at a
total cost of the optimum possible in the correct amount and quality of
procurement. These goods and services are also purchased at the right time and
location to express profit or the use of Government, business, business, or
individuals by signing a contract.
The process of acquisition of goods or services that are required as a raw
material (direct procurement) or for operating purposes (indirect procurement) a
company or a person might call acquisition. The procurement process involves
not only the purchase of commodities, but also the quality and quantity of
controls. Typically, providers are listed and pre-determined by the contracting
company. This makes the smoother process, the promotion of a good
relationship between the buyer and the supplier.
The synonyms for procurement, which are the gain, purchase, and acquire, can
shed light on the meaning of procurement. The procurement process may vary
from company to company, and a Government entity can have a slightly
different procurement process compared to a private company.
Acquisitions can also be defined simply as the procedure in which the goods or
raw materials are purchased when prices are low. Procurement is advantageous
if the goods are purchased in large quantities. E-procurement is another method
2
of electronic media is used for the acquisition or purchase of goods. Everything
is processed electronically, the search for the right bidder delivery and payment.
The procurement procedure may vary depending on the product and the uses of
the product. Health team must be efficient and reliable, and the procurement
process is carried out carefully in order prevent the defective equipment
purchase. Another important factor that usually includes definitions of the
procurement is the amount purchased the product. This is important because the
quantity of purchased goods is inversely proportional to their cost.
Thus, acquisition is a process that is carried out by the company almost every
individual and for their own personal benefit or benefits, involving the purchase
of commodities by choosing the appropriate provider.
1.1 Statement of the Problem
Most company’s are suffering some set backs due to their procurement system.
Most often low quality goods are purchased and they end up loosing money.
Also at times, they lack a steady supply, resulting to lack of materials for
production, hence the need for computerization of bill of material processing
system.
1.2 Aims and Objectives of the Study
The main objective is to computerized bill of material processing system of
business transactions. This will help the manager know when to make purchases
of items, ascertain the exact number of each items or stock available, to
3
ascertain the materials that are either mostly or sparsely used as well as
knowing the exact number of each material or items that are lacking thereby
helping to improve workflow in the organization. Moreover to reduce time
wasted in data processing and information retrieval. And finally to improve
management activities, which will lead to improved productivity, accountability
and business management of the organization.
1.3 Purpose of the Study
This purpose of this study is to design a computerized bill of material
processing system for a company. This will help in monitoring their material
procurement.
1.4 Significance of the Study
The project is aimed at designing, a new better alternative system to help the
organization in material procurement thereby making the management system to
be more effective. Also the software designed will help management to: –
(a) Maintain a database of materials procured.
(b) Safeguard data and information in the system.
(c) Reduced workload in the present system.
(d) Keep accurate record on material procurement
(e) Reduce time wasted in data processing.
4
1.5 Scope of Study
This project work is designed to cover all aspect of purchases of materials in a
company. The system incorporates materials procurement recording and stock
taking.
1.6 Constraints and Limitations
During the process of this research work some drawbacks were encountered
while trying to get adequate needed data and information.
They include the reluctance of the management of the firm under study to
release vital information, which they feared would jeopardize the security of the
organization. And secondly, time and financial constraints which had great
influence to this work.
1.7 Assumptions
It is assumed that all information gathered with respect to material procurement
management information system is correct as implemented by computers.
1.8 DEFINITION OF TERMS
Procurement: It can be defined as the purchase of goods or services at a total
cost of the optimum possible in the correct amount and quality of procurement.
5
Receipt: Receipt is the process of accepting from sources, all materials or items
used in the organization.
Issue: This is the process of giving out items from store to various departments
in the organization.
Computer Program: This is a set of instruction that guides the computer on the
action to perform.
Flowchart: This is graphical representation of step by step by which computer
can follow to execute a task