Discuss about the Purchase Department for International Workshop on Programming.
The purchasing department is the department which handles all the activities related to buying and selling of supplies and materials. It ensures the preparation of purchase orders, timely delivery of materials and also prepareation of purchasing list for the items to be purchased by the business. Its responibility includes the delivery of materials on time and also payment to suppliers on time. The department has to prepare the list of orders with the help of cost accounting for working closely with accounting department to ensure the sufficient capital to purchase the material. The purchasing department also ensures that the activities of buying and selling are complying with all company policies. It is also responsibile for evaluating the prices to receive the material and selection of the best possible price for the maximise profit. It is essential for the business to make sure that there is always sufficient products in the warehouses or on shelves to keep the store well stocked or to keep the factory going and customers happy. Purchase department plays an important role in the company that is why a good technical knowledge of the industry is required (McNally, Akdeniz, and Calantone, 2011)
Material cost is the cost which is invested in the production of a product but excluding labour. It means the cost at which company purchases the material but excluding labour. Production department ensures quantity of material and refill of the same in time from which company can easily supply the material to the customer. Material cost is the cost which shows loss or profit of the company. By calculating the material cost company can measure the financial position of the company. Selling price of the company is dependent on the cost of material. Future price adjustment is also fluctuating due to the fluctuation of material cost. The material cost is important to measure factor. If the business has high revenue but the cost is high then it shows no profit and net loss.
Features and characteristics of the product which is control by the manufacturer at the basic requirements. The supply of the quality product is the major function of the company. Customer gets satisfied by the quality of the product. The company makes the product according to the consumer needs and requirements which satisfies them by the product. Product quality is dependent on the type of raw material which is used in making the product. Skill and experience are required for the production of the goods because of implementing technology at the time of manufacturing. Quality of the product is defined as the major divisions such as quality of design, quality conformance, proper storage, safety, and reliability. For a company, bad quality of product affects the confidence, sales, and image of the company. That is why the good quality of the product is essential for the company (Kugler, and Verhoogen, 2011).
Pruchase logistics is referred to as an organised framework of different activities of the purchasing process such as initiating bids, negotiating the price of the product, evaluating measurements and qualitative characteristics of products, assuring that the required quantities of the items are met and the most appropriate prices are quoted by the suppliers. The process also includes consideration of time constraints and thus the timely delivery of the relevant products (Gudehus and Kotzab, 2009).
An organisational structure is subdivided into various enterprises according to the requirements of the business. The company’s purchasing organization is dependent on the way in which company operates its supply chain. Purchasing organization collects all the requirements for whole of the company. If the purchasing organization functions in the wrong manner then cost of material is higher which is not beneficial for the company (Kolter, 2012).
Purchase department has the responsibility to handle the cost of material, quality of the product which is based on the raw material, cost of the transportation, and also make purchases and consequential division of purchased quantities to variopus enterprises according to the individual requirements (Panozzo, and Cortella, 2008). Purchase department managed the cost after measuring the cost of external products and services. Cost for the company is calculated as the sum of all expenses by an organisation. Material cost is essential to calculate separately because revenue depends on it. Material cost is the cost at which material is purchased by the organisation for production but excluding the labour. Material cost indicates the financial position of the company. If the cost of raw material is high as compared to the profit then company will suffer losses (Schuurman, et. al 2009). Purchase department has to measure the material cost. Material cost is evaluated by material cost variance which shows the right choice for the company. Purchase department measures the cost by comparing the options or competitors prices. For measuring the cost, they have to analyse the options and then select the best choice in which cost of the material is less as compared to the others. By analysing the cost, quality of the material is also essential to be analysed. Quality of product is dependent on the raw material of the product. Purchase department have to examine the product in the light of reasonable prices. Low quality would affect the company. While examine the quality of material, cost of the material is also analysed by giving them suitable rankings. First number ranking will be the best option which is beneficial for the company. It is important for success of the consumer. To examine the quality of the product purchase department has to take a sample with the suppliers and take advise from advisory board for good quality of the material. Before buying the material other expenses are also evaluated such as transportation cost, installation cost, and others. Purchase department has a responsibility to measure whole cost from beginning to end. From the cost of material to the finished product purchase department has to calculate the sum of total spend on the external things. Transportation cost which is charge and others. By applying the linear programming logistic cost is evaluated and then a decision can be taken easily (Kolter, 2012). Not only transportation cost, but every cost has to be evaluated which are related to the product such as packaging cost (Garwood, SafeFresh Technologies LLC, 2009). The company has to select the purchase organisation which has the responsibility to purchase the material for whole company. Purchase department has to always make sure that stock should be in the company to keep the continuous supply. It has to collect the requirements of purchasing of the whole company. Then according to the requirements of the company, purchase department has to contact with the suppliers according to the demands of the company. Each plant of the company has one company code and each plant has one purchasing organisation which has its own records and conditions for pricing. They have the record of its vendor data but excluding data, they collect the information of the vendor according to the requirements. They evaluate the vendor by the MM vendor evaluating for cost saving and getting the good quality of product. Purchase organisation evaluates the vendor by their material quality and pricing. By comparing the whole data or records of the vendor, they taker decision which is beneficial for the company. By applying the method, purchase department measures the performance (Seider, Seader, and Lewin, 2009).
Purchasing performance of the company can improve by the following ways. Material cost affect the company profits. Cost of the material is deducted by choosing a mix suppliers. Select the suppliers who can provide best price. They can also save the cost by taking the benefit of discount and warranties (Jasch, 2008). Purchasing department of the company has to identify the sharing and managing risk with suppliers. Purchasing organisation has to identify that which type of goods and services are require for the company and then take the right steps to secure the supply chain (Quayle, 2006). Purchase department has to make the relationship with the suppliers by attracting them to working with the business and also getting them to invest in the long-term relationship. Purchasing department improves the quality of the product by making targets for the performance level for quality and then tracking the performance against the targets. Purchase department has to take care of the delivery of the durable goods. Companies work closely with their vendor which develop and assist their quality of the product. Purchase department will evaluate the transportation, packaging cost of the product. Purchase department has to take the advantage of discount or free delivery from the suppliers. They have to select the reasonable source of transportation for delivering the products. By adopting the technology labour cost is affected (Laforet, 2011). Packaging cost is also reduced by adopting the new technology. By adopting new technology, problems related to supply chain can be solve. New technology and inventory control system improves the efficiency of the supply chain management. From these ways purchasing performance will improve.
Coles is one of the multinational brand name in the sector of supermarekets in the regions of Australia. The bsuiness entiy is a well renowned brand and is operations the busienss practices all over the globe successfully. According to the research it has been noted that from the last 100 years the business corporation has been offering best quality products, outstanding customer services and also are also adding great value to the lives of million Australians. Coles is offering varied range of products and services for providing high level of satisfaction and that has developed a large customer base and market share in Australia. As given in the present scenario Coles is sourcing a dairy product in three different regions in Australia and the furtehr analysis is also focused on the same concept. As a diary require more logistics and operations which ensure freshness and safety because of perishable goods (Li, Ford, Zhai, and Xu, 2012). With the perishable goods, sourcing from three different geographical locations in Australia, Bangladesh, and New Zealand is a difficult task. By sourcing with Australia, Coles Australia has no risk and also it is cost saving for the company. The business entity operates in the New Zealand, South Africa. If Australia Coles purchases from a different location, it has a risk to purchase. Purchasing products from New Zealand does not have the higher risk because the bsuienss entity is also operating in New Zealand as the the entity is well aware of the norms and regulations of the region. They can easily buy the material from the local suppliers (Cochrane, et. al 2012). Perishable foods are spoiled very quickly within a day or two days. Importing the goods is expensive to the source of purchase the material, high risk of spoiling the goods, and delay of the goods these are the risk which incurred by the sourcing from a different location. In New Zealand, Australia Coles operates in New Zealand which cannot have a higher risk. If any problem creates it can be handled easily (Gaud, Galland, Hilaire, and Koukam, 2008).
Example- If the busienss entity is making the purchase of raw materials at New Zealand, there will be minimum level of risks as the markets are local and the business firm is well aware of the market regions and they know the suppliers. Whereas, in case of the purchase made from the markets of Bangladesh, the intensity of risks will be high. For instance, the business entity may have a threat of spiling of goods as they are perishable.
Example- If Coles Australia is placing an order from the market regions of Bangladesh for the dairy product. And if the delivery gets delayed due to any of the reason and due to which the raw materials or the products will get spoiled. And if the product gets spoiled while delivery time on the way then the responsibility of loss incurred is on the person who buys the product. And also it is cost effective because material cost is high by freight charges.
Example- When Coles Australia is buying the products withiin the home market regions then the risk of product spoiling willl be minimum and also the expenses incurred will be comparitively less.
Perishable goods spoil very fast within a day or few days. The company has to buy the perishable goods in bulk and transport the goods by the plane from which goods can quickly import or deliver to the company (Jedermann, Ruiz-Garcia, and Lang, 2009). But for saving the goods, chemicals are used to prevent the perishable goods and by using the gas perishable goods can be stored for few days. Warehouses are also used for the perishable goods to store the goods. With the help of good packaging, goods can be easily imported without spoilage from one place to another (Bowden, and Nagamine, Bowden Group, 2010). More new packing will introduce, instead of using the old one. Packing of Debbie Meyer green bags help to prevent the perishable goods from the dust or air from this goods cannot be spoil (Daneiels, Radebaugh, and Sullivan, 2011).
References
Bowden, L.A. and Nagamine, J.S., Bowden Group. (2010) System and method for providing a regulated atmosphere for packaging perishable goods. U.S.: Patent
Cochrane, N. J., Yuan, Y., Walker, G. D., Shen, P., Chang, C. H., Reynolds, C. and Reynolds, E. C. (2012) Erosive potential of sports beverages. Australian dental journal, 57(3), pp.359-364.
Daneiels, J. D., Radebaugh, L. H., and Sullivan, D. P. (2011) International business: environment and operations, Boston: Pearson, pp. 690-697.
Garwood, A. J., SafeFresh Technologies LLC. (2009) Continuous production and packaging of perishable goods in low oxygen environments. U.S.: Patent
Gaud, N., Galland, S., Hilaire, V. and Koukam, A. (2008) An organisational platform for holonic and multiagent systems. In International Workshop on Programming Multi-Agent Systems. New York: Springer, pp. 104-119.
Jedermann, R., Ruiz-Garcia, L. and Lang, W. (2009) Spatial temperature profiling by semi-passive RFID loggers for perishable food transportation. Computers and Electronics in Agriculture, 65(2), pp. 145-154.
Kugler, M. and Verhoogen, E. (2011) Prices, plant size, and product quality. The Review of Economic Studies, 79(1), pp. 307-339.
Kolter, H. (2012) Marketing management, Boston: Pearson education.
Kelly, P. (2009) International business and management. UK: Cengage Learning, pp. 253-261
Laforet, S. (2011) Brand names on packaging and their impact on purchase preference. Journal of Consumer Behaviour, 10(1), pp. 18-30.
Li, L., Ford, J. B., Zhai, X. and Xu, L. (2012) Relational benefits and manufacturer satisfaction: An empirical study of logistics service in supply chain. International Journal of Production Research, 50(19), pp. 5445-5459.
McNally, R. C., Akdeniz, M.B. and Calantone, R. J. (2011) New product development processes and new product profitability: Exploring the mediating role of speed to market and product quality. Journal of Product Innovation Management, 28(1), pp. 63-77.
Panozzo, G. and Cortella, G. (2008) Standards for transport of perishable goods are still adequate? Connections between standards and technologies in perishable foodstuffs transport. Trends in food science & technology, 19(8), pp. 432-440.
Quayle, M. (2006) Purchasing and supply chain management : strategies and realities, Hershey: Idea Group Publ.
Schuurman, J. P., Schoonhoven, L., Defloor, T., van Engelshoven, I., van Ramshorst, B. and Buskens, E. (2009). Economic evaluation of pressure ulcer care: a cost minimization analysis of preventive strategies. Nursing Economics, 27(6), p. 390.
Seider, W. D., Seader, J. D. and Lewin, D. R. (2009) Product & process design principles: Synthesis, analysis and evaluation, US: John Wiley & Sons.
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