What are the Procurement Factors to be Considered by an Entrepreneur?


By: Site Engineer, Staff

full bio

The entrepreneur should examine and resolve the following factors before procuring new business facility. Any attempt to neglect any segment will be seriously paid for in a regrettable way. So, the entrepreneur is advised to consult professionals for adequate professional advice and assistance during machinery procurement.

These factors are:

1. The Condition of The Environment

Different equipment performs better in certain environmental conditions. For example, if you are living in an arid zone, where the sun shines once in a while, to go and purchase a solar energy machine will not be a wise decision for the entrepreneur. The entrepreneur should, therefore, take into consideration the effect of dust, heat or humidity on the equipment to be purchased.

2. The Cost of Equipment

The entrepreneur should estimate and include the training cost, installation cost and life expectancy of the would-be machine should be like as part of the general cost.

3. How Big The Business Will Be

The entrepreneur should project and forecast how big he would want the company to be in the future such as the next 5 to 10 years. This will enable him to make room for future expansion, personnel training, and enlarged market share.

4. Nature of Raw Materials

It should be noted here that different machines perform better when certain raw materials are put into them. For example, when procuring a grain-milling machine, the entrepreneur should make sure that he does not purchase a machine that only mills rice when he intends to buy the one that mills only corns. So the nature of the raw materials to handle determines the type of machines to procure.

5. The Sources of Energy for the Equipment

For the location where there is a frequent power outage or where there is no power source at all entrepreneur should make room for a standby generator if he is to do a continuous production. So, such cost for extra power source should be taken into consideration and be provided for.

6. The Condition of Sales

The entrepreneur should take into considerations which of the sales conditions fit his business most in addition to good quality.

7. The Effect of The Changing Technology

Technology change is very dynamic so it should be taken into consideration. Provision should be made for flexibility for expansions to meet up with the competitions and the new technology changes.

8. The Machinery Maintenance/Level of Skills of the Operators

The cost of maintenance in terms of availability of spare parts, maintenance of personnel and the availability of skills to maintain the equipment must be considered by the entrepreneur. For example, some machine parts are not available locally, even the experienced maintenance personnel are only found overseas. Such a machine should not be purchased, as the problems, it will give will be much to destabilize the owner and the company.

9. The Vendor’s Reputation and Location

Some vendors have garnered a lot of good or bad reputation in terms of the performance of their machines. Liven where they are located is very important as to the availability of spare parts and the maintenance personnel. So his consultant should guide the entrepreneur not to fall into a wrong hand.

Finally, it may sound simple here on the surface value, but in the real practical sense, equipment procurement is a serious issue that should not be handled with levity because once a mistake is made during procurement, the whole production process will be affected and a reverse will cost a fortune, so the entrepreneur is advised to be wise.

Sources of Information on Technology

When seeking information on what type of technology to procure and where to procure the technology, the entrepreneur should explore different avenues to make sure the best equipment is procured.

Some tips on how and where to seek information are:

  • Foreign Sources: Different embassies worldwide normally have records of their countries machines manufacturing, so the entrepreneur can get in touch with their commercial attaches for such assistance.
  • SME’s Consultants: The entrepreneur can equally get in-touch with small and medium enterprises consultants who may keep records of such companies or even banks that may have, in one way or the other, been giving financial assistance to such companies.
  • Trade Fairs: Many companies go to trade fairs to advertise their products. An entrepreneur can take advantage of such opportunities to go and source for the equipment he wants and may even ask detailed questions on the usage, which practical explanation may be given to him.
  • Trade Associations: Getting involved with some trade association may assist the entrepreneur to have knowledge of the address of some companies that produce that equipment or their parts. The entrepreneur should equally read related journals newsletters and publications on those areas of need.
  • Local Sources: Local fabricators are springing up more on daily basis than before, most especially on small and medium scale areas. The entrepreneurs can get through to these local manufacturers through ministries of commerce and industries, industrial development centers, manufacturers associations, and competing industries.

How to Improve Productivity

Within organizations, attempts to improve productivity, that is, to generate more outputs from the same or fewer inputs depend on the five-step process described below:

  • Set Goals to Establish the Desired Productivity Level: Number of studies in a wide variety of jobs and industries support the use of goal setting as a means of raising productivity levels.
  • Establish a Base Point Against Which to Assess Future Improvements: Measures that managers could use as a base point include the number of claims processed daily, income per square foot of selling space, amount produced per day, percentage of output passing inspection, percentage of repaired items that had returned for further repairs, or customers service per hour. The important thing is to choose measures that focus on important aspects of productivity for a particular organization or work unit.
  • Select a Method and Implement: Managers should choose the method that appears to have the best chance of success in a particular situation.
  • Review Methods for Increasing Productivity: Useful methods in improving or increasing productivity include; improving employee selection techniques, placing people in jobs that are well matched to their qualifications, training workers in job-related skills, redesigning jobs to give workers more control over their own productivity, providing financial incentives that are carefully tied to productivity issues, and using feedback and performance appraisals to let workers know how they are doing.

Generally speaking, way to meet the productivity challenge is through judicious use of information technology.


Don’t forget to share this post!

Whatsapp Share Icon