Role of procurement process and inventory management in financial performance of Summit Power Limited (SPL)

Abstract

I was appointed as an intern in Summit Power Limited (SPL) from 17th September 2023 to 16th December 2023. I was appointed to the Commercial wing of the procurement division and assigned the job of recording Bill of Entry (BoE). During my internship period, I have the opportunity to explore the importing process, purchasing procedures and inventory management. Summit Power Limited (SPL) is a power generating organization that has earned a reputation as a solution to the power crisis problems of Bangladesh. The organization develops an efficient and effective management that has facilitated a systematic working environment. As their jobs require precision and are related to one of the emergency sectors of the country, the organization realizes that performance of every individual is important. The organization has several departments such as admin & human resource, account & financial, procurement, development, information technology (IT), training and compliance to develop a highly systematic management system. Existing literature reviews indicate that procurement process and inventory management has a significant effect on financial management of an organization. Though power generation companies are not required to maintain a finished good inventory as electricity is consumed immediately, they are required to maintain a maintenance inventory for uninterrupted operations. Therefore, the objective of the project is to evaluate the role of procurement process and inventory management in financial performance of the organization. As quotations and costs are subject to confidential information of the organization, the report analyzes the financial performance of the organization of the last five years of the mother company (excluding the subsidiaries) to evaluate the role of procurement process and inventory management. To evaluate the quality management of the procurement division and inventory management, the project section also examines the key features of the procurement process and inventory management. The analysis finds out that though the gross profit and operating profits are decreasing over the years the inventory management does not have any significant effect on the financial management of the organization.