Improving Procurement And Sourcing Efficiency

Suppliers want steady orders and prompt payment, they also want to feel valued by the company that they supply.

Organisations around the world are increasingly operating in very dynamic business environments. Among the areas that are being monitored is the way raw materials for production are procured and how the finished products reach the market and eventually the consumer. This paper will provide a review of published documents on strategic procurement in organizations by providing a critical analysis of the strengths and weaknesses of their findings. The paper will present the impacts of the findings of the reviewed articles on the activities of an organisation that operates in a business to customer industry. And also a supermarket will be used in this case.

very important to a business is the suppliers. Supplies provide organizations with training play a very critical role in attaining a competitive edge. In case a business the materials that they require so that they run their activities effectively (Cheese 2007). The way a supplier behaves tends to have a direct impact on the business. For instance, in a situation where the supplier provides poor services, it affects the quality of the products. It is, consequently, very vital to maintain a close relationship with the suppliers so as to remain secure and competitive. As businesses require investment to grow, they introduce shareholders in the company to invest their money in the organization (Damlin, Dietersdóttir, Fornander, Brykt, Polyantseva &Sundquist 2013). Shareholders bring pressure to an organization; this is mostly because they require a profit from the money they invested. It is, therefore, essential to manage the relationship with the shareholders as well.

Procurement management is the processes to purchase or acquire the products, services or results needed from outside the project team to perform the work. Project Procurement Management involves not just purchasing products, services or results, but also ensuring that those that are purchased are right for the project, meets standards and is based on project requirements. This life cycle includes tracking from order through deployment and completing with invoice reconciliation.

Although competitive bidding will continue to be used, especially in the public sector, to ascertain market prices for non-strategic items, many of these items will be outsourced to third-party buyers or consortia to conduct the bidding. Moreover, organizations will continue to purchase most non-strategic products and services under master contracts, some of which will be negotiated by consortia that have leveraged and buying expertise. A trend is expanding for the continued use of third-party purchasing by primarily private sector firms pursuing all forms of competitive advantage possibilities.

Procurement by public entities is guided by primary law principles of transparency, equal treatment and non-discrimination, procurement laws sets up an extensive legal framework regarding the procurement of work, supply and service contracts. There are two main reasons for the use of specific procedures i.e. why contracting authorities do not just negotiate or simply buy from the closest supplier. First, it provides for more public accountability and therefore less cases of corruption practices. Additionally, tendering procedures aim to ensure the best value for money by making it necessary for suppliers to act highly competitive. As a result, market mechanisms will help in facilitating the best possible practices. In situations where market mechanisms are not effective, tender procedures might lose their effectiveness as well. If for example there is lack of competition due to certain complexities or as a result of lower bidder interest, negotiations with just one or two suppliers may be the most efficient manner to handle the process. Therefore, we discuss the inherent advantages and disadvantages of sealed bidding and contracting by negotiation as procedural frameworks for tendering.

The topic selected is (Strategic Procurement & Supply Chain Management). For this study, we have selected Toyota Motor Corporations as our company of choice. Toyota is without doubt the best in the world, with its many philosophies and principles on how to make the best out of the least; JIT, lean production and elimination of waste and the desire for continuous improvement are just a few ways how Toyota has become the best in the auto industry. Toyota as a name, a company, and as a brand has become synonymous with Quality.

People: The emergence of the triple bottom line has led to companies becoming more aware of how their decisions affect not only employees and customers but those within the community they operate in. To achieve this in an ever changing global world a company needs to create policies and guidelines on how to select suppliers and evaluate performance.

It is quite challenging to discuss about procurement management without stating the importance of its strategies. There are four main basic procurement strategies that serve different functions within a procurement management. To begin with, a “Partnership” strategy focuses mainly on constructing mutual commitment in long term relationship with suppliers. While a “Secure Supply” strategy aims to secure short and long term supply while reducing risk from suppliers. In addition, a “Category Management and E-Procurement solutions” serves as a tool to reduce logistic complexity, improve operational efficiency, and attempts to reduce the number of suppliers. Lastly, a “Competive Bidding” strategy emphasizes on obtaining the “Best Deal” for short term transactions with suppliers.(van weele) Each of these four strategies involves a unique purchasing methodology, which implies that the complexity is embedded in an individual strategic implication. Therefore, it requires different tools to accomplish the specific strategical characteristics. A business entity may need to support and execute procurement decisions with other strategic apparatus with analytical methods, including market analysis, uncertainty analysis, price forecasting, supplier relationship and along with others.(Harvard)

In order to institutionalize best procurement and acquisition practices in an organization, I would begin by forming a cross-functional team made up of supply management personnel, finance personnel, attorneys, human resources, engineers, and other subject matter experts. As was highlighted in chapter ___ of the class text, this is the best approach for ensuring that the broadest possible range of ideas and perspectives are incorporated early into the planning process. Additionally, it ensures that a great idea conceived of by one functional area is viewed from within the restrictions and/or limitations imposed by another. As with specifications development, this process allows the team to develop a reasonable, effective, and implementable plan that works across functional areas and provides the greatest return on investment.

Procurement intends to explore supply market opportunities and to implement resourcing strategies that deliver the best possible supply outcome to the organization, its stakeholders and clients (Kidd, 2005). Therefore, construction procurement exists to purchase a construction project as requirement of firms or organizational entities to achieve its goals. However, the choice to use external resources is the part of firms’ decision-making

to have good strategic development. Since these purchases are the main source of their business products, risk will need to be minimal.

In today’s global economy, organizations are faced with a variety of changes in the business environment. The selection of competent suppliers has long been regarded as one of the most important functions to be performed by a purchasing department.

Procurement is referred as a process where, the project team plans the activities and items of a project that is required to be created or bought from someone outside the project team or organization. In order to make this decision, make-or-buy analysis is done by the project team that helps them to decide whether to perform activities within the team or to contract with a seller. Most of the organizations don’t have enough qualified resources for performing all the activities of a project. Therefore during make-buy-analysis project team objectively look at the skills that are required to make a product and evaluate the current resources. If the current resources don’t have enough skills then new resources are hired or work is outsourced to the seller who has relevant skills whereas, it is useful to outsource the work instead of purchasing new resources, when the organization wants to concentrate on all of its effort into development and research of new products

A dissertation is submitted in partial fulfilment of the requirements of The University of Salford for the degree of Master of Science in Procurement, Logistics and Supply Chain Management