Discuss about the Purchasing Management for Acquisition of Products.
In today’s competitive environment the progressive firms like Sheng Siong tries to maintain product quality and competitive price. The product quality increases the customer satisfaction. The purchasing managers have selected the suppliers based on their capabilities. The current aim of the purchase managers is to increase the efficient suppliers’ base. As stated by Spina et al. (2013), the purchasing manager has selected the suppliers based on those who continually outperform the competition. The purchasing managers have carefully analyzed and evaluated the demand of the customers. The professional purchasing managers of Sheng Siong have realized the importance of good and healthy food products and the value-added capacity of the suppliers. It has been noticed that selection of suppliers has become a competitive weapon for increasing business and maintaining customer satisfaction. As stated by Luzzini et al. (2012), the purchasing managers have to implement strategic partnership with the suppliers.
The purchasing manager manages the acquisition of products as per the requirement of the organization. As stated by Barney (2012), the purchasing managers select the suppliers. They are also responsible for managing issues and implementing new strategies to reduce the purchasing cost. It has been observed that the purchasing managers have implemented an information communication strategy for enhancing the purchasing operation and management (Weele & Raaij, 2014). In this assignment, the criteria for selecting suppliers and the issues regarding the suppliers have been discussed. The implemented information and communication technology system for purchasing operation has been described. The purchasing cost analysis has been conducted for implementing the appropriate tools.
Sheng Siong is the third largest chain retail organization in Singapore (Weele & Raaij, 2014). This organization was founded in 1985 (shengsiong.com, 2016). The organization has already expanded their business and opened 40 stores in Singapore. The organization has the largest grocery and fresh food supermarkets retailing chain in Singapore (Spina et al., 2013). The organization sells grocery products, food products and ready to eat products (Barney, 2012). It has been observed that the organization has collected the products directly from the manufacturers. The purchasing managers have divided the product segment into three different categories such as featured items, newest items and best selling items. NTUC FairPrice Co-operative Pte Ltd is the main market competitor of Sheng Siong. NTUC has more than 33% market share in Singapore (Spina et al., 2013). On the other hand, the 24 hours store open strategy has increased the popularity of NTUC (Luzzini et al., 2012). It has been observed that Sheng Siong has implemented a new distribution centre in Mandai Link to increase the operational efficiency. It has been observed that the Mandai Link Distribution centre has increased their productive capacity (Monczka et al., 2015). The organization has also implemented a warehouse product processing unit and needs product distributional centers to sell larger quantities of goods and thereby earn greater benefits (Weele & Raaij, 2014). Therefore, the aim of the organization is to reduce the food waste in other stages of the supply chain and improve the relation with suppliers for better business operation.
Figure 1: strategic partnership
(Source: Spina et al., 2013)
As stated by Monczka et al. (2015), the core capabilities are not identified by all business organizations proficiently. It has been observed that most of the inhouse decisions of the customers are taken by considering the capabilities and capacities. It has been observed that the consumer organizations take higher time for analyzing the value of the strategic business partners or the consultants (Walker & Jones, 2012). It has been observed that the organization was unable torecognize that the products or services offered by them are approaching to maturity. The purchasing managers of Sheng Siong have observed that the competitors have attracted the customers with new technology and new food items.
Therefore, the purchasing managers have to implement the key factors to make or buy success. The purchasing managers have to perform in a rationalized assessment of the organization’s capabilities (Hartmann, Kerkfeld & Henke, 2012). The purchasing managers have to evaluate the alternative strategic partnership arrangements. After evaluating the vendor companies, the purchasing managers have to select the appropriate suppliers (Luzzini et al., 2012). The purchasing managers have to evaluate the requirement of the organization and the customers and instruct the suppliers to supply those products.
The purchasing managers have to specify the product attributes. They also need to forecast the expected requirements. The purchasing managers have to ensure right quality food product at a reasonable price. As opined by Priem and Swink, (2012), every business section should understand about the individual activities which have major impacts on overall strategy execution of the firm. It has been observed that factors like purchasing activities, supply chain management, and production controlling are linked together under the overall business process. Therefore product outsourcing is the responsibility of the purchasing managers (Pooler & Pooler, 2012). It has been observed that purchasing managers have managed the supply chain management process. The basis of the supply chain management is the idea of efficient coordination of the resources and teamwork. The purchasing managers have to maintain the buyers and suppliers relationship for uninterrupted supply of fresh and good quality food and grocery items (Monczka et al., 2015).
As stated by Tate, Ellram and Dooley, (2012), purchasing is a service function in the organization. The fundamental objective of the purchasing department is to provide good products at minimum price. It has been observed that the purchasing goal has been implemented by the purchase managers through two different evaluation processes such as general evolution and audit evaluation. It has been observed that purchase managers have implemented the general evaluation process by observing the needs of the organization (Schoenherr et al., 2012). It has been observed that the organization has implemented a happy family product segment to attract the customers. Such a type of marketing strategy has increased the demand of the products like rice, oil, sugar and daily grocery items. Therefore the purchase managers have observed that the organization has not maintained a perfect demand and supply ratio with their existing suppliers. Therefore, the purchasing managers have to involve some new suppliers or vendor organizations to maintain the demand and supply balance (Luzzini et al., 2012).
The purchasing managers have observed that purchasing goals of the organization include good and fresh product quality, reasonable price and on-time delivery. The purchasing managers have to understand the additional cost of expending the procurement. As stated by Ashby, A., Leat and Hudson-Smith, (2012), higher product price will reduce the customer satisfaction. On the other hand, the cost of failure will create excessive stock piling. As argued by Priem and Swink, (2012), the cost of failure may make the business obsolete. The purchasing manager has to measure the efficiency of the purchasing department. It has been observed that Sheng Siong has faced a product related problem (Luzzini et al., 2012). The management has failed to identify any problem but it dissatisfaction among customers is observed. The management has received numerous complaints regarding the quality and price of grocery (Chicksand et al., 2012). Therefore the purchasing manager has planned to evaluate the requirement of the organization before suppliers’ involvement.
It has been observed that the information and communication technology helps the purchasing managers in different aspects such as collecting information, evolution, communicate with sales department communicates with interested sellers and as well as market analysis. As stated by Giunipero, Hooker and Denslow (2012), the marketing managers have observed the changing trends of the Singapore market through the social networking sites. It has been found that the purchasing managers have taken the help of active communication systems to communicate with the sales managers and the administrative team while finalizing the deal with suppliers (Weele & Raaij, 2014).
Thus, the purchasing managers have to take the help of information technology and communication systems for their purchasing activities. The purchasing managers would need to implement information technology for analyzing the review report. Additionally, the purchasing managers have to implement the Business-To-Business E-Commerce software system (Barney, 2012). This particular software will help in streamlining the process of purchasing and improve the way of international communication. On the other hand, efficient database software will be used by the purchasing managers which are able to provide exact outputs which can be used as the inputs of the supply chain management system. As stated by Green et al., (2012), the relation between the purchasing and ICT will help the purchasing managers choosing the suppliers or sellers of foods and grocery items.
It has been observed that the purchasing managers have implemented the purchase cost analysis with an aim to make an audit report on that. The purchasing cost analysis depends on the purchasing goals and requirements of the organization. As stated by Priem and Swink (2012), the purchasing goal of a retail organization is to purchase the good quality products in a reasonable price from the seller organizations.
The purchasing managers of Sheng Siong have observed that the food and grocery products require more awareness than regular products. On the other hand, the purchasing managers will also anticipate the purchasing price of the food products and grocery items (Giunipero, Hooker & Denslow, 2012). It has been observed that the retail organizations have not stored the packaged foods for a long time. On the other hand, the retail organizations have preserved the products in antibacterial freezers and chillers which are highly cost effective. Therefore the purchasing team has to select the food items according to their market demand and quality (Chicksand et al., 2012). The purchasing manager has to evaluate the reports of the quality department with respect to particular items before signing the contract.
It has been observed that the popular food and grocery retail organizations have purchased the items in large quantities and are made to stock with many available sources. However, the large organizations have high brand value and are confident to store large amounts of grocery items but this is not the same with the the small or medium retail organization, as they have to choose items which lead to the future success of the organization (Ashby, Leat & Hudson-Smith, 2012). It has been observed that the some grocery retail organizations have preferred low price products and the repetitive buyers are their target customer segment. However, Sheng Siong is a large food items and grocery retailer in Singapore. Therefore the purchase managers would preserve the goods for future. As stated by Schoenherr et al. (2012), 60% suppliers have provided huge discounts on bulk orders. Therefore, the purchasing process will be cost efficient for the organization. As stated by Tate, Ellram and Dooley (2012), more than 80% organizations are interested in long-term capital investments because it would provide better stability in the business. Therefore the administrative team of Sheng Siong needs to support the purchasing managers to implement the long term investment on the purchasing process.
The purchasing managers need to understand some specific factors for implementing a new purchasing strategy. The purchasing managers need to coordinate with the user department for identifying the perfect products (Pooler & Pooler, 2012). The purchasing managers have to identify the potential suppliers for the firm. The purchasing managers have to conduct the proper market study for identifying the correct grocery items. The purchasing managers have to evaluate the proposals of the suppliers. After that the purchasing managers have to implement the cost analysis based on the purchase cost and sales profit. As stated by Hartmann, Kerkfeld and Henke, (2012), the purchasing managers have to evaluate the past issues of the suppliers. Thereafter, the purchasing managers have to arrange a meeting among the sales manager, suppliers and purchase managers for final negotiation (Walker & Jones, 2012). After finalizing the purchase price, the purchasing managers them communicates the same to the administrators. Finally, the administrators take decision about the purchasing procedures of the purchasing managers.
Conclusion:
This report is based on the purchasing procedures of Sheng Siong and the operations of the purchasing managers. It has been observed that Sheng Siong tries to maintain the product quality and competitive price. The product quality increases the customer satisfaction. The purchasing managers have selected the suppliers based on their capabilities. The purchasing managers have implemented their strategy to improve the purchasing operations. However, it has been observed that the organization has faced some product related issues in the past few years. Therefore, the purchasing managers have to implement the strategic partnership strategy for selecting the sellers. The purchasing managers of Sheng Siong have observed that competitors have attracted the customers with new technology and new food items. The purchasing managers have to implement the new information technology for analyzing the purchase goals of the organization. Communication helps the purchasing managers in sending information to the sellers and the administrators. The purchasing cost analysis will help the purchase managers to evaluate the purchasing goals of the retail organization which is to purchase good quality products at a reasonable price from the seller organizations.
Reference list:
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Chicksand, D., Watson, G., Walker, H., Radnor, Z., & Johnston, R. (2012). Theoretical perspectives in purchasing and supply chain management: an analysis of the literature. Supply Chain Management: An International Journal, 17(4), 454-472.
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Monczka, R., Handfield, R., Giunipero, L., & Patterson, J. (2015).Purchasing and supply chain management. Cengage Learning.
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