Procurement In Micro Business Enterprises

Position of the organization in the supply chain

Discuss about the Procurement in Micro Business Enterprises.

Pre-Press, Landscaping and Toy Store are important businesses that formed the basis this paper. These companies use supply chain to achieve their needs. Pre-press is a printing impression company that operate in the United States. This company is a full-service organization engaged in printing-related needs. The company engaged in different services including design services, collateral, catalogue, and book printing. The full-serve company also engaged in file management, drum scanning, binding fore hard case, inkjet print, SWOP certificate proofs. The company has incessantly assisted its clients on different projects, even engaged nationally, and locally recognized publications because it has the capacity to meet the printing needs.

Landscaping firm is a full-service company that serves customers in the New York and the surrounding communities. This business provides cost-effective landscaping solutions to commercial and residential properties. It also focused on drought tolerance and water conservation landscapes. The Landscape business enjoys a long-term reputation for exceeding and meeting client expectations through outstanding customer service and quality workmanship for landscape projects.

The Toy Store is also an important business point for children because it offers different designs of toys for kids of different ages. This has proved to be the ideal place where customers can source toys and games for children. Parents can order for girl’s products and boys toys that can ensure the children are occupied indoors. The parents can collect various games, puzzles, collectables, and traditional toys. By stocking toys and accessories for toddlers and babies, the business has offered educational games. The Toy Store also stock K’Nex, Lego Technic, Lego, and Mega Bloks that can help kids to learn problem-solving techniques by ensuring they develop exemplary coordination skills.

These companies have taken strategic positions in the supply chain. For instance, landscaping business has an opportunity to design toys for the Toy Store, while the Pre-Press has to develop the designs to meet the expectations of the customers. Each of these companies needs one another for their operations to be complete. For instance, Pre-Press needs the design toys based on a design. The work of the Landscape Company is to design these toys to allow Pre-Press to make them and supply to Toy Stores. As explained by Monczka, Handfield, Giunipero, and Giunipero (2016, 4), a supply chain can only be successful if all the parties collaborate efficiently. This can define the production outcome based on the demand.

Comparative Procurement Processes

The business, such as Toy Store requires the right supplier. This process of choosing the right supplier calls for an extensive scanning process depending on the price lists. The company will have to consider different factors, among them reliability, quality, service, and value for money. However, the company will compare these factors depending on the business strategy and priority. Toy Store will have to use strategic approach to identify and choose the right supplier thus understand the potential customers and determine their purchasing decisions as clarified by Monczka et al. (2016). According to Ibac (n.d), progressive companies like Toy Store must not only produce quality products, but also do so at reasonable price. The quality of product is connected to the supplier and production workforce.

The firm selects suppliers depending on the capability than the competitive process (Beil 2009). Monczka et al. (2016) believe that today, the sourcing trend is to cut the base of suppliers. Therefore, it is critical for Toy Store to go for a supplier that outperforms competition. Wysocki (2004) maintains that outsourcing is becoming a competitive weapon in businesses. Since it has proved difficult to task management with decisions of buying or make lesser services and component parts, outsourcing is filling the gap (Monczka et al. 2016). Nonetheless, the outsourcing decision requires strategic partnership. This is the only way the firm can arrive at the right make-versus-buy decision.

The Toy Store seems to understand its strategy that complements its strategy execution. For example, it recognizes purchasing, logistics, production control, and inventory management are connected (Monczka et al. 2016). Given the high demand of children toys, the business must undertake intense screening process. It will involve taking proactive step involving verifying its qualification before awarding the contract (Gormley 2016). Through the supplier qualification screening, the company will reduce the chances of contracting a non-performing company. The company has to ensure the suppliers are a responsive partner. The qualification screening process would involve different steps including reference checks, financial status checks, among other aspects.

Reference checks allow the business to contact the previous customers and seek information about the delivery performance of the supplier. The feedback from the consumer will help Toy Store to justify whether the firm complies with contract terms. Similarly, the financial status checks allow the firm to scrutinize the supplier’s ratings thus determine the financial viability of the firm (Ronnback 2012). For instance, if there were instances that the supplier assumed debts, the aspects of raising a red flag would be possible. The surge capacity availability is essential in contracting a supplier (Gormley 2016). The company manage to determine the capacity of suppliers in improving delivery qualities. This will help to address the long-term demand.

Procure to Pay

In the modern world, these companies have opted for e-procurement thus achieving efficient purchasing transactions. As indicated in the appendix, the procure-to-pay process ensures the movement of materials and orders accompany documents. According to Monczka et al. (2016), companies have experienced delayed preparation and management of purchasing documents for decades. However, with the new technology, companies are streamlining the document flow process for each purchase. E-procurement has become the best tool that has enabled businesses to achieve efficient purchasing transactions. The e-procurement also allows them to manage the document flows as it automate the document generation processes and transmit the purchase documents to the intended suppliers electronically (Monczka et al. 2016, 52).

Toy Store needs to adopt the eprocurement because of its benefits. it allows an organization to generate and transmit purchasing documents electronically. With this technology, the firm will always reduce errors and mistakes as everything takes place electronically. The e-procurement improves communication between the company and its suppliers. By adopting the e-procurement, Toy Stores can improve communication with its suppliers including Landscaping and Pre-Press. It also reduces “the time between need recognition and the release and receipt of the order” (Monczka et al. 2016, 52). Toy Stores and its suppliers seem to have embraced the e-procurement elements.

Toy Store, Landscaping, and Pre-press recognizes the significance of this purchasing cycle as itallows them to identify the needs. Unlike big companies that have procurement teams, the small businesses like Landscaping usually undertake direct procurement. With the procurement personnel, the companies have undertaken planning proceeses thuis enhance spend analysis and prepare forecasts. In these businesses the procument officers have to meet with its internal customers to understand the needs. However, in Toy Stores, the supply managerent seems to revolve around sourcing of external inputs.

The internal customers have helped Toy Store to identify the needs for its unique products. Indeed, these employees communicate the needs to purchase including the purchase requisitions, customer orders, forecasts, stock checks, regular reordering system, and the identification of material requirements.

The purchase requisition is an important method to inform purchasing needs. The suppliers of Toy Store have always transmitted the needs by computer-generated methods and phone calls. The company, however, has to identify the suppliers based on the needs. The company would approve the contract if the material needs and costs per unit are within the contract description. The company later place orders and receive the documents thereafter settle the pay (Monczka et al. 2016). With the e-procurement, the purchase process has become simple.

Forecast and Plan Requirements

Recently, supplier-buyer relationships have proved necessary because in many market segments, about eighty percent of the total production income depends on the supplier that offers them through payment for equipment, materials, and labour (Wagner & Bode 2009). Similarly, the increasing trend of specialization has compelled businesses to seek solace in contract manufacturing. The significant value transfer experienced today, has also compelled Toy Store to focus on the management of supply chain relationships. This is because; the strategy provides an opportunity for the organization to survive fierce competition in this aggressive market sector. To this effect, Toy Store has to maintain strong relationships with its suppliers and contract manufacturers (Gormley 2016). Without a doubt, buying companies must handle pressure from rivals and customers. For this firm to remain in relevant and manage costs, it must seek solace in supplier relationship management. Strong buyer-supplier relationships provide a window for an organization to avoid the unpredictable suppliers in the market.

Toy Store should embrace a competitive supplier relationship so that both parties can benefit from an appropriate arrangement. The move will help both companies to achieve their objectives by pursuing their interests. In this negotiation arrangement, the supplying and buying firms will avoid stopovers and secure their well-being. Wagner and Bode (2009) maintained that transactional relationships assume that the buyer will lower prices to help remain competitive in the market. The tier-three suppliers give the business a competitive advantage in the market (Pontre, Welter, Malta, Faria, & Chernyshova 2011). Apart from transactional relationship, Toy Store can also benefit from a cooperative relationship arrangement. This system acknowledges the potential of all parties in the supply chain, and thus they strive to maximize their strengths to sustain the relationship (Tang, Teo & Wei 2008). Therefore, a cooperative relationship optimizes benefits for the players in the network.

Toy Store should evaluate the performance and ability of the supplier based on delivery of the services or products. It can use performance-based or process-based evaluation mechanisms (Schapper, Malta, & Gilbert, 2006). With the performance-based evaluation, the company will use the objective measures of its performance, while the process-based evaluation involves the use of the supplier’s service or production process (Tang et al. 2008). It further allows the firm or buyer to audit the supplier at the site. This enhances the assessment of supplier’s system capability in meeting the market demand. Despite the size of the supplier, it would be prudent for the organization to seek certification through third-party including ISO 9001-2008. The Toy Store can evaluate the potential of its suppliers through the linear averaging or the cost-ratio methods.

Need Clarification/Requisition

In the network of supply chain, dependence is the need of an organization to maintain and manage its supply chain associates with organizational relationships. This ensures the business achieves its organizational goals (CIPS, 2013). Unfortunately, the dependence construct can be vague and the firm would rely on the operational construct to measure and evaluate its perceived time and relationship dependencies towards suppliers and customers.

According to the description of Svensson (2002), there are seven different dimensions of dependencies. Knowledge, social and time aspects appear to be closely reliant within organizations. Knowledge aspects focus on the interaction processes between companies, especially two businesses. The interaction allows the two firms to learn from the strengths and weaknesses of the other. Zaman (2011) argues that interaction would create knowledge regarding the ability of an organization to solve a problem. The time aspect is the instance when two businesses focus on the time-based needs. With time, both firms can synchronize the mutual business operations. Wysocki (2004) affirms that unlike the knowledge aspect that addresses the interaction process, the social aspect values the interaction between two businesses founded on the personal relationships. It implies the personal chemistry and social atmosphere between the management can easily affect the activities of the company based on the relationships between the involved companies.

As part of the procurement process and strategic planning, an approach to the suppliers has proved critical. For instance, no businesses can operate without a supplier because suppliers provide products to them. The discussed organizations in this article have incessantly sourced their products from international and domestic suppliers. Despite the Toy Store operating for over eight years and Landscaping and Pre-Press operating for about two decades, all these companies have demonstrated the significance of suppliers to deliver the raw products and goods efficiently. Indisputably, the dependence degree of suppliers for Landscaping and Pre-Press firms is average. This could be associated with the ability of Pre-Press to source its raw materials from the domestic and international suppliers based on the demand and requirements. For the plates, the company can get the stock locally because the suppliers who can stock plates coated with aluminium are readily available locally.

Planning is critical during the procurement process. Each other the three businesses must select the best supplier for them to achieve planned purchases (Kern 2011). For the Toy Store, each supply remains unique based on the products leaving thus makes the shop vulnerable, as it will have no choice of supplier. The only factor that the firm needs is the identification of a desired product it needs to purchase. However, for Landscaping and Pre-Press companies seem to have a supply base because they offer homogenous product. This allows the company to seek for a strategic approach to identify the supplier. It, however, will depend on the availability of suppliers to provide materials in specification.

Both organizations remain hesitant to depend on sole supplier relationships on their products purchased. The move ensures the suppliers provide materials at the market prices thus reduce the risks regarding the failure to supply (Kersten & Bemeleit 2006). Upon identifying the appropriate suppliers, each of these businesses would undertake individual processes to place orders formally. For the Toy Shop and Pre-Press, they seem to generate the same purchase orders. Nonetheless, the landscaping business prefers suppliers who can provide different materials the firm requires for its operations (Zaman 20112). The landscaping business can work with suppliers who can accept orders before even making the first order. Based on these processes, the business enjoys the flexibility of placing orders at any time (Kern 2011). The processes on Continuous Improvement relating to the effectiveness of capacity planning can help in setting expansion and improvement goals. This can help the firm to create new versions of capacity plan. Such actions can help the business to mitigate problems regarding flexibility thus ensures regular capacity assessment.

Conclusion

In the modern business environment, supply chain and networks have proved to be the ultimate lifeline for businesses. The sourcing function is an indisputable contributor of competiveness and strategic goals in any industry. However, companies experience challenges in charting their course in establishing corporate purchasing departments. From this article, it is evident that companies need quality materials. The business would seek services from suppliers with high delivery dependability and offering at the best market value. The Pre-press, landscaping, and Toy Store are companies that can operate in a strong network. The selection of the best supplier depends on the potential of the firm and the needed materials for a project. Therefore, the businesses must evaluate their suppliers by emphasizing cooperative relationships with buyers and suppliers to meet their business goals.

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