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Factors affecting methods of procurement
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According toMusau (2015), procurement performance entails how well organizational procurement objectives have been attained. The extent to which procurement function is able toobtain best value for spent organizational money to purchase products and services is the best indicator of procurement performance. Procurement performance entails two major aspects that is;efficiencyandeffectiveness. Effectiveness in procurementis essentially the extent to which previously stated firm purchasing goals and objectives have been met, on the other hand, procurement efficiency is the associationthat exists between planned and actual required resources needed to realize formulated goals and objectives as well as their related activities.Effectiveness in procurement …show more content…
(2014) deduced that procurement performance can be assessed by focusing ondelivery,flexibility, quality, cost and technology. Optimal performance attainment is dependent onhow current suppliers`relationships aremanaged so asto ensure constant availability of needed quality supplies at the organization. This will ensure that sourced materials are indeed procured at the right costand atthe right time. Procurement performancestrives toenable improvements in the procurement process at the organizationso as to improve on qualitydelivery of firm products and servicesatleast possible time and …show more content…
This system connects, accumulates, processesas well as provides imperative information to all parties thus enhancing continuity in the procurement process. However, if valid output is to be expected, features as well as requirements of the procurement process must be compatible to current system technologies (Giner, et al, 2011). The harmonization of suppliers as enhanced through the adoption of electronic sourcing enables firms to readily identify new potential suppliers for specific needs when old suppliers` capabilities are in question. The adoption of E-tendering that supports sending requests of pricesand information to suppliers as well as receiving suppliers responses improves on procurement efficiencies as it leads to significant cost reductions thus leading to better procurement performance through cost savings.For this system to achieve desired results however,all users must beready and willing to adopt the new systemsso enable seamless adoption and consequently ensure optimal
Any time the company is looking into software project, there are areas associated with risk such as cost, time and relationship with suppliers. However, for Harley-Davidson, “collocation of suppliers with production facilities and their integration into company’s development process was the essential part of long-term relationship development”. Through a continued focus on collaboration and strong supplier relationships, the company could position itself to achieve strategic objectives and deliver cost and quality improvement over the long-term. Since, at that time company had no centralized system in place to handle relationship with suppliers and consequently, most of company’s time was spent on supplier management activities. For example, reviewing inventory, expediting and data entry. Furthermore, each supplier had different information systems for “Maintenance, Repair, and Operations (MRO), Original Equipment (OE), Parts and Accessories (P&A), and General Merchandising (GM) purchasing activities”. The systems, already provided by supplier, had to be further modified to meet individual need at each location, such as “the OE system at Harley-Davidson’s York, Pennsylvania site was different from the OE system in Kansas City”. However, due to long-standing tradition of gradual change implementation and focus on quality, quick transitions were unwelcome and did not come easy for the company. The size of the project determined how much risk was involved in terms of cost, time, and supplier relationships. The idea of switching to global purchasing system was seen as a threat not only in supplies and production flow interruption, but also in damaged dealer/customer relationships and lost sales. Furthermore, failure of the sy...
Suppliers must maintain good relations with the companies in the industry. This is low because there are multiyear service contracts and the delivery industry uses items such as vehicles, employee benefits, general goods and airline contracts associated with overhead of running business, but all contracts are rewarded through an RFP process. There are enough players in the market and had high fixed cost and thus have substantial buying power.
Clearly defining this stage of the supply is vital to it success, along with supplier identification and using supplier scorecards. It is also imperative to use the latest in software to synchronize these systems and manage the information and communication among all stakeholders.
Maintaining good quality helps the organization to avoid focus on rework and loss. Quality attracts customers and acts as detour to other suppliers. Most organizations fall for huge supplier list and spend their time in negotiating for costs over quality. It is a good practice to maintain minimum of approved most trusted suppliers than to promote huge suppliers list.
Supplier involvement has been an important development in global sourcing and as a focus on core competence within the organizations. Outsourcing has been used for the products within the companies where purchasing had the major role of ordering
In general, there are different types of procurement type for various situations due to no one method can be suitable under the all different construction project. In this case, there are four procurement paths, which are traditional, design and build, management and design and manage, will be advised to use. However, each method has different aspects of advantages and disadvantages.
Over the last decade, the supply chain management has influence to business all over the globe. Purchasing is one function within supply chain which becomes the most important element to establish value-added products or services. The major aspect of purchasing is supplier selection. It is recognized that selecting appropriate supplier is one of the key success factors of a firm. Selecting the right supplier is always a difficult task for purchasing manager (Liu et al., 2005). Right suppliers selection can lead the company to success and achieve the objectives. On the contrary, wrong supplier selection can lead the company to financial problem. Therefore, purchasing departments need to emphasize about supplier performance evaluation which not only concern one criterion such as price, but also consider of multi criteria for evaluating suppliers in order to select the right supplier.
One major problem involved in global sourcing involves the selection of suppliers. Whether the purchaser or an external agent coordinates the international purchase, foreign suppliers must be subject to the same, or in some cases more rigorous, performance evaluation and standards as domestic suppliers. Never assume a foreign company can automatically satisfy a buyer’s performance requirements or expectations. Some good evaluation questions to ask are: Will the foreign supplier maintain any p...
This paper examines the legal aspects of procurement management and specifically how procurement management can be used as an effective tool for the overall management of a project. This paper focuses on the basics of common contract laws, the basics of agency law, the Uniform Commercial Code (UCC), and some aspects of that pertain to the Federal Acquisition Regulations (FAR). A summation of the company’s position in relation to a given supplier (provided the company decides not to procure all of the material in a contract) will be examined along with how that position is strengthened by understanding the legal aspects of procurement management. Finally, the paper will analyze how the project manager is supported by the contracting management function.
As pointed by Parsons A.L (2002), there was increasing dependent on the relationship and customers is demanding to receive high standard of products and services for them to sustain the business in the intense manufacturing environment. Besides, Xu et al. (2008) has highlighted that supplier is developing a long-term relationship with their crucial suppliers to increase the competitiveness and to establish an effective and efficient supply chain. Trend (2005) also mentioned that work closely in partnership with suppliers is the only way to survive in today’s competitive business environment.
Management in any company must understand the art of obtaining products and services. The procurement or purchasing cycle considered as one of concepts of purchasing that taking orders and activities from suppliers and transfer it to the final destination and follows specific steps for identifying the need of the company through the final step of the contract admin.
The power of buyers is the extent to which suppliers have the ability to influence potential buyers. 4. What is the difference between a.. Describe the four approaches to organizational effectiveness, give specific examples of something that a company should measure in order to evaluate its effectiveness. Give a specific example of something that a company should measure in order to evaluate its effectiveness under each approach.
Procurement in any type of business is vital because this strategic function does not only improve the organization's profitability, but it also improves the streamline processes of a company, reduce the prices and costs of raw materials, and helps it to identify better sources of supply. On the other hand, the supply chain management helps a company to optimize its operations so that speed and efficiency are both maximized. For customers, speed is important because they value fast service. However, increasing speed would cause a company too much. Thus, maximizing efficiency is essential. For the purposes of this paper, the chosen area of expenditure are the products produced and manufactured
Organization performance is the performance effectiveness and the performance efficiency. The performance effectiveness is the measure of the task or goal accomplishment, it would be to what degree of a goal achieve. Managers who chose the right goals and achieve it can be say performance effectiveness. Besides, the performance efficiency is the measure of the resource cost associated for the goals, it would be how much of the resources are used and how productivity of resources. The more time and resources are saved in achieving goals, the most efficient production supervisor is.
This is the activity carried out by organizations that own production sites, and their performance has a major impact on product cost, quality, speed of delivery and delivery reliability, and flexibility [8]. As it is quite an important part of the supply chain, production needs to be measured and continuously improved. Suitable metrics for the production level are as follows. Order lead-time, the total order cycle time, called order to delivery cycle time, refers to the time elapsed in between the receipt of customer order until the delivery of finished goods to the customer. The reduction in order cycle time leads to reduction in supply chain response time, and as such is an important performance measure and source of competitive advantage [9]. It directly interacts with customer service in determining competitiveness. Range of product and services: According to [8] a plant that manufactures a broad product range is likely to introduce new products more slowly than plants with a narrow product range. Plants that can manufacture a wide range of products are likely to perform less well in the areas of value added per employee, speed and delivery reliability. This clearly suggests that product range affects supply chain performance. Effectiveness of scheduling techniques is another important measure of supply chain effectiveness. Scheduling refers to the time or date on or by which