CHAPTER ONE

INTRODUCTION

           The purpose of this work is to conduct an in-depth search on the role played by purchasing department in the procurement of capital equipment in ANAMMCO Enugu.

            To start with, we have to know what capital equipment procurement is and how it is done in ANAMMCO.  Capital equipment procurement, is the purchase of a longer lasting material or goods in the form of machines or equipments specifically by the purchasing department in ANAMMCO.  This department in the acquisition of capital goods as compared with the buying of production materials.  The purchasing department acts primarily in a service capacity as a gather of information, a contract administrator and purchasing consultant ANAMMCO Enugu management.

1.1          BRIEF HISTORY OF THE COMPANY

ANAMMCO was establish to cater for the needs of the automotive industries in Nigeria.

               In it first year to operation, the company produce 4, 352 units various MB truck model.

               This achievement was 58% of its installed annual capacity which is 7,500 vehicle on one shift.  Within the first five years.  The plant had produced what had put an additional 14, 609 Mercedes Ben vehicle into the Nigeria market.

               MB ANAMMCO in doubt, has made tremendous impact on the economy of the country.  As a representative of Bem AG of Germany in Nigeria, it has successfully brought automobile technology and know how into the country.

MANAGEMENT OF THE COMPANY (ANAMMCO)

The management of ANAMMCO is by both foreigners and Nigerians respectively. The Managing Director is Mr Kudilaomm.  He is from Germany.  In the same vein, the deputy managing Director is Mr. Lawrence Goddie Ubaka Odukwu.  The Assistant Managing Director is Mr. Onyia G. C.  They are Nigeria.

1.2          STATEMENT OF PROBLEM

            There are several ways in which statement problem are being stated in purchasing department in ANAMMCO.  It is worth mentioning that unpredictable number of requisition and change in quality specification of actual amount ant time of delivery as specified by the department hinders.  The progress of the department (lead time).  The idea of employing those that are not qualified technically intellectual also hinders progress of the departments, hasty decision often lead to problem of ill-fated investment and poor technical output of the plant in production use.  The process of not passing through quality control is the crucial situation because before any product can be said to be of god quality and standard, the idea of weighing and knowing the quality of product is encouraging.

1.3       OBJECTIVE OF THE STUDY

            The success of my commercial and industrial operation depends to a great extent on the prompt efficient supply of purchasing material supply and service to the organization.

            Therefore, the purchasing department in ANAMMCO plays a tremendous role in the procurement of capital equipment.

            Basically, the success of a business enterprise depends every bit as much on the purchasing executive who administer the other function of the business.

1.4       SCOPE OF STUDY

            Since the purpose of this study is to look into the efficient role played by the purchasing department in ANAMMCO.  Therefore, the scope of this study would be limited to such areas.

            The main limitation encountered in the carry out of this study, were time and money.  Due to the work involved in classes, it was not easy to square out to adequately complete the project and as a result the project took longer than necessary.

            The availability of money to take care of the financial angle involved, the collection data and printing was not constant.  However with a lot of dedication, the study was successfully completed.

1.6       DEFINITION OF TERMS

            The purchasing manager consider a lot of factors before buying the capital equipment, and those factor areas follow:

(a)        Average rate of return analysis

            The rte of return fundamentally related to the return from an investment to the value of the investment required to produce the return.  It can be mathematically expressed as

Rate of Return            =   Rate                100

                                 Investment        1

(b)       Pay-back Analysis

            This is the number of year required to recover the initial cash outlay invested in a project.  As an evaluation technique, it measures how quickly the project will return it original investment.  It deal with cash flow rather then accounting profits e.g

PM      =          Cash Outlay

                   Annual Cash flow

(c)        Procurement

            This is the aspect of obtaining equipment and this obtaining of equipment can be made through cash credit cheque etc.

(d)       Vendor

            This expatiate on the idea of selling and buying, and the person that supplies goods to the buyer is the vendor.

(e)        Negotiation

            This is a conference with another person with a view of reaching to agreement and this is the art where buyer and seller usually in a face to face contact to resolve the practice dreams and condition of contact.  Resolution if reached through agreement and understanding.

            The purchasing manager consider a lot of factor before buying the capital equipment this factors are listed below.

Purpose

            What actually is the prime purpose of the equipment?  This consist of the things the equipment