Note: Sample below may appear distorted but all corresponding word document files contain proper formattingExcerpt from Essay:
Procurement and Supplier Management: Potential Behavior and Trust of Suppliers
The objective of this study is to examine procurement and supplier management and the potential behavior and trust of suppliers and to discuss this in light of current academic debates and provide practical illustrations to support the answer. The work of Chen, Paulraj and Lado (2004) entitled "Strategic Purchasing, Supply Management and Firm Performance" states of purchasing that it has "increasingly assumed a pivotal strategic role in supply-chain management." (p.505) There has been a great deal of discussion about the level of trust needed in the relationship between suppliers and purchasers and authors writing in this area of study began noting in the 1990s that a shift in paradigm was taking place in the area of procurement pushing strategic purchasing to the forefront of academic research. Now more than ever purchasing strategies are critical in the organization's bottom line. Trust among suppliers and purchasers will be examined in depth in this study.
It has been documented by researchers how "strategic purchasing actively participates in corporate planning process, facilitates beneficial organization-environment alignment, and fosters cross-functional integration among supply-chain activities, among other things. Moreover, purchasing plays a key liaison role between external suppliers and internal organizational customers in creating and delivering value to external customers." (Chen, Paulraj, and Lado, 2004, p.505) Sheth, and Sharma reported in 1997 that the increasingly "turbulence in the marketplace" had made it clear that firms would be required to make a transition from "transaction oriented marketing strategies and move toward relationship-oriented marketing strategies for enhanced performance." (p.91) In fact, it was predicted that the source of competitive advantage in the next generation would be "the type of relationships that firms have with their suppliers" citing four reasons for this: (1) This change is being driven by marketers or sellers since firms have started customer-specific identification and needs and are catering to those needs meaning that a relationship with suppliers assists the firm to receive higher grade service and to be more efficient in the area of procurement; (2) secondly, firms will begin to recognize that relationships with suppliers will enable them in a higher level of effectiveness making it easier to implement strategies including quality platforms where the firm has relationships with their suppliers; (3) Third stated is that there are enabling technologies that assists the firms in selection of the best suppliers and customers enabled by computer programs that give firms the capability of calculating profitability of specific customers and suppliers; and (4) Fourth stated is that the "competition and growth of alliances will force firms to develop better supplier relationships to maintain a competitive edge." (Sheth, and Sharma, 1997, p.92)
The work of Spekman, Kamauff, and Myhr (1998) reported that a new era had been entered in the "understanding of the dynamics of competitive advantage and the role played by procurement," stating that suppliers and customers are no longer "managed in isolation, each treated as an independent entity." (p.630) Likewise in 1997 the work of Dyer and Chu reported that the issue of trust "in economic exchanges has recently received considerable attention in the academic literature. Trust in exchange relationships have been hypothesized to be a valuable economic asset because it has been described as an important antecedent to effective interorganizational collaboration." (p.1)
Trust is stated to: (1) result in lower transactions costs and enable greater flexibility in the response to changing market conditions; and (2) result in higher levels of information sharing which will serve to bring about improvement in coordination and joint efforts resulting in inefficiencies being minimized. Dyer and Chu, 1997, paraphrased)
I. Supplier Selection
The work of Beil (2009) states that supplier selection "is the process by which ?rms identify, evaluate, and contract with suppliers. The supplier selection process deploys a tremendous amount of a ?rm's financial resources. In return, ?rms expect signi-can't bene-ts from contracting with suppliers o-ering high value." (p.1) The U.S. manufacturer is reported to spend "roughly half its revenue to purchase goods and services. This makes a company's success dependent on their interactions with suppliers." (Beil, 2009, p.1) The role of procurement managers within the organization has grown in importance and according to Beil "often involving staggering dollar values: A recent cross-industry survey of companies -- in areas ranging from aerospace to semiconductors -- placed companies' average total spend per procurement employee at $115 million." (Beil, 2009, p.1) Buyers are required to define and measure what it is that "best value means for the buying organizations, and execute procurement decisions accordingly.' (Beil, 2009, p.2) The buyer is required to "interface with technical, legal and operations experts within the buyer's company and act as an expert negotiator and coordinator across many internal and external parties." (Beil, 2009, p.2)
II. New Suppliers Importance
There are reported to be several reasons that new suppliers are important. Stated first is that there may be new suppliers that are in some way "superior…to a firm's existing suppliers." (Beil, 2009, p.3) A new supplier might have developed a "novel production technology or streamlined process which allows it to significantly reduce its production costs relative to predominate production technology or processes. Or, a new supplier may have a structural cost advantage over existing suppliers, for example, due to low labor costs or favorable import/export regulations in its home country. Second, existing suppliers may go out of business, or their costs may be increasing. Third, the buyer may need additional suppliers simply to drive competition, reduce supply disruption risks, or meet other business objectives such as supplier diversity." (Beil, 2009, p.3)
III. Reasons for Screening Suppliers
Beil (2009) states that it is challenging to find a new supplier primarily because of the "need to verify the suppliers ability to meet the buyer's myriad requirements." (p.4) Beil states that supplier non-performance "on even the most basic level and for the most simple commodity; can have dire consequences for the buyer…" (2009, p.4) Beil (2009) states to emphasize this point to consider the buyer in the following nursery rhyme:
For want of a nail, the shoe was lost. For want of a shoe, the horse was lost.
For want of a horse, the rider was lost. For want of a rider, the battle was lost.
For want of a battle, the kingdom was lost. And all for the want of a horseshoe nail. (Beil, 2009, p.4)
This nursery rhyme 'for want of a nail' is a message stated by Beil to be such that "holds a surprising degree of relevance for today's complex, global supply chains. Boeing's 787 Dreamliner production schedule was signi-cantly a-ected by shortages of fasteners, essentially bolts that secure sections of the fuselage together. (2009, p.4) Included in the screening of new suppliers are such as: (1) reference checks; (2) financial status checks; (3) surge capacity availability; (4) indications of supplier quality; (5) ability to meet specifications; and (6) buy-in from internal customers. (Beil, 2009, p.5) However, the qualification processes for suppliers are "costly and can be time-consuming." (Beil, 2009, p.6) Qualification times can be weeks or even months and this includes for commodity-type parts such as printed circuit boards. (Beil, 2009, p.6) After identifying potential suppliers, the buyer makes information requests to the suppliers, which may include the following:
(1) Request For Information (RFI) is issued when the buyer seeks to gain market intelligence regarding what alternatives and possibilities are available to meet the buyer's needs buyer will eventually issue an RFP or RFQ,
(2) Request For Proposal (RFP) is issued when the buyer has a sense of the marketplace and has a statement of work which contains a set of "performance" requirements which it needs ful-lled.
(3) Request For Quote (RFQ) is issued when the buyer can develop a statement of work that states the exact speci-cations of the good or service needed. (Beil, 2009, p.6)
IV. Avoiding Fraud and Corruption
Deloitte reports on the prevention of fraud and corruption on procurement practices and states the following are red flags to watch out for: (1) record keeping is poor or non-existent; (2) higher price and lower quality goods; (3) excessive entertaining of procurement staff by suppliers; (4) deviations in communications between procurement staff and suppliers such as calls or text-messaging to mobile phones; (6) procurement staff requiring extended periods of notice prior to an audit taking place; and (7) inexperienced buyers dealing with overbearing suppliers. (nd, p.1) Also necessary to monitor for fraud and corruption are: (1) 'Out of hours' transactions; (2) Matching employee and vendor details; (3) Short-term changes to employee or supplier accounts; (4) Inappropriate authority to transact deals; (5) Conflicts of interest; and (6) EFT Transactions conducted without the appropriate approval. (Deliotte, nd, p.1)
In order to avoid fraud and corruption in procurement it is necessary that the organization develop the right culture and this makes the understanding of "country-specific codes of conduct and ethics policies" particularly important. Secondly, hiring the right people will enable the organization to avoid fraud and corruption in procurement as well assessing the…[continue]
"Procurement And Supplier Management Potential Behavior And" (2013, April 19) Retrieved October 22, 2016, from http://www.paperdue.com/essay/procurement-and-supplier-management-potential-101090
"Procurement And Supplier Management Potential Behavior And" 19 April 2013. Web.22 October. 2016. <http://www.paperdue.com/essay/procurement-and-supplier-management-potential-101090>
"Procurement And Supplier Management Potential Behavior And", 19 April 2013, Accessed.22 October. 2016, http://www.paperdue.com/essay/procurement-and-supplier-management-potential-101090
Procurement Contracts Procurement contract close-out is a heavy and important topic for firms that have procurements needs on a consistent or even a fleeting basis as the materials and products acquired through these procurements products are often needed to keep the flow of good sales going and/or keeping operations under control and running in optimal fashion. There are really only a few basic ways that an executed contract can end with
The most critical elements of how MIS systems and processes are contributing to efficiency of enterprise-wide procurement strategies also includes cost reduction through process improvement (Bernstein, Kok, 554, 555). The distributed order management process workflow specifically that links suppliers to companies purchasing their products relies in a high degree of pricing, product availability and data synchronization to function correctly. The use of MIS systems and processes together are automating
Part 6.1. I would seek to change the cognitions of the employee in order to change the affects and the behaviors. The cognitions underlie the other two traits, so any change must start with the underlying values and beliefs. It is important for managers to have an understanding of organizational behavior because managers are responsible for guiding that behavior in directions that support the organization's objectives. Knowledge of OB is
In this regard, a project manager must have a follow-up on facilities development in order to ascertain success. Strategic Planning and Project Programming A good strategic plan shapes programming of essential capital projects in an organization. Market demands and resource constrictions impede the success of the projects. The programming activities linked with planning, and other management functions establishes the priorities and time required for completion of various projects to achieve the
Supply Chain Management Hypothesis defined Concepts of SCM and the evolution to its present day form Critical factors that affect SCM Trust Information sharing and Knowledge management Culture and Belief -- impact on SCM Global environment and Supply Chain management "Social" and "soft" parameter required for SCM Uncertainties This chapter aims to give an outline and scope of the study that will be undertaken in this work. The study lays out the issues faced by manufacturing organizations when it comes
Use of single version of the truth and single information Balanced set of strategic metrics (Financial and non-financial). New methods of cost accounting (ABC, Target Costing). Internal vs. External Focus (Benchmarking and Self-Assessment). Process Management and Measures (value delivery). Stakeholder value measures Uniform set of measures Causal relationships between measures across all levels. Source: Lieberman; (1994; et.al.). Automotive Industry Analysis Entering 2007 it is clear that Japanese firms, lead by Toyota, will be at parity with and potentially surpass the
Supply chain management in FMCG sector Fast Moving Consumer Goods (FMCG) Managing supply of FMCGs Demand and Supply Distribution Channel Traditional channel of FMCGs distribution National Vs Global Presence Products and Services Supply chain opportunities Usage of Supply Chain Management Business development Business performance Cost reduction Revenue Increase Inventory management Overall Business Performance Competitive advantage Future trends Issues in global supply chain management: FMCG sector Multi-channel Supply Chain Management Individual Tagging The FMCG sector is represented as manufacturers and distributors of packaged products. They are also coupled with mega retail brands