Chapter 2 is titled “The Purchasing Process” and includes the following topics:
- How to set purchasing objectives
- The roles of strategic supply chain managers
- How to improve the procure-to-pay process
- Purchase orders
- Improving the purchase process
SupplyChain 247: Please read the article “Top Challenges and Solutions for Optimizing Procurement & Inbound Supply Processes” at SupplyChain247.com. (You may need to register for this information. There is no charge for this news source.) This article can be found at the following link: https://www.supplychain247.com/article/top_challenges_and_solutions_for_optimizing_procurement_inbound_supply/procurement (Links to an external site.)
Please read Chapter 2 and the article from the SupplyChain247 (SC247) before answering the questions below. ————————————————————————
- Discuss how a purchasing department can influence the financial performance of a large manufacturer or a large retailer (Please provide an example for an existing manufacturer or retailer).
- For a growing number of manufacturers, the purchasing department is increasingly involved in purchasing secondary services and noncritical components. Why is the role of purchasing expanding for so many organizations today?
- The article in SC247 summarizes several methods for optimizing procurement and inbound supply management. Select two optimization methods discussed in the article and discuss how a manufacturer or retailer could use each method to gain a competitive advantage.
1. I would say that purchasing can influence the financial performance of a large manufacturer or a large retailer in a number of different ways. I think that a lot of success within a company is due to the purchasing department. The purchasing department needs to be able to think quickly and make decisions based on predictions made on what they will need as a company. A good purchasing department will ensure that they have the materials needed to complete their work and a strong purchasing department will be able to help the company make more money than they are spending on things. An example that I would use is a company like Apple. They must have a fantastic purchasing department because they have to purchase all of the materials to make laptops, watches, phones, etc. and they are obviously making profit on their purchases and sales.
2. I think that the role of purchasing is expanding for so many organizations today because it ensures that there is a timely delivery for materials from vendors and also purchasing is able to work alongside other divisions within a company to make sure everything is being paid for and being delivered in a timely fashion. The whole point for a purchasing department is to purchase all materials and items needed to ensure a smooth production and sale of a product. It can and does make it easier for everyone to actually do their job without having to worry about deliveries and materials in general.
3. The two optimization methods that I selected were Automatically Reallocate Inbound Materials and Integrate Transportation Too. A manufacturer or retailer could use the first option to basically help manage inventory and guarantee that there won’t be any shortages unless something unforeseen happens and even then, they might be well off. A manufacturer or retailer could use the second option to make sure that supply meets demand. They can use it to minimize transportation costs and maximizing space used to transport. This will basically maximize efficiency of transportation and delivery.
4. Do you believe that a small company would benefit just as much from having a purchasing department as a large company?
Khalid Al Gammari
Optimizing procurement and inbound supply is very crucial to any company or organization. Mainly, it deals and helps in building a relationship between the manufacturers, their suppliers, co-manufactures, logistics providers, and customers. Additionally, without the right procedure or the right knowledge, things could end up badly in the procurement department. Inbound supply on the other hand ensures that all things run smoothly during supplying goods worldwide. The paper will give a clear analysis of some of the top challenges and solutions for optimizing procurement & inbound supply processes.
The purchasing department is the backbone of every organization or company. However, it also plays a major role in influencing financial performance for a large manufacturer or a large retailer. Some of the main factors of the purchasing department are: lower cost, the department must ensure that the company is making profits by purchasing quality goods at a lower cost and selling at a huge cost. This greatly helps large manufacturers and retailers save a lot of cash hence making them grow. Managing relationships is also a key factor especially between the suppliers and the company. The department connects with different suppliers and creates bonds for long-term relationships in business. Additionally, it also creates good relationship bonds within the work areas between finance, marketing, logistics, and distribution a good example of such is the U.S Air force.
The purchasing department has been rapidly growing in many manufacturing companies. Mainly, the purchasing department checks and maintains the financial health of the company. Mostly, for manufacturing companies, the department ensures that quality materials are purchased. Additionally, it also assists in improving the quality by establishing the performance and tracking them to their targets. The purchasing department also makes communications with other heads of departments and ensures that they do not lack anything in their respective areas of work. Procurement policy and procedure also are needed for an organization to do well. Rules are set to explain any monies spend on purchasing anything and also order are documented this also helps in avoiding corruption and theft of companies’ money. Therefore, by doing all this the purchasing department is expanding to be able to cover all needs needed for the organizations.
Automatically Reallocate Inbound Materials- Ideally, automatically reallocating inbound materials will create a very huge impact on the company. Mainly, it helps in satisfying the needs of the clients by ensuring that the suppliers and deliveries are made in time. Additionally, when there is a high demand for goods with reallocating inbound materials there will be no shortage since the company is matching with the supply.
High Precision Matching of Deliveries with Requirements and Greater Accountability-Delivering goods has been a major problem for some companies but the right information of when the clients need the goods could greatly help in improving competitive advantage. Ideally, when the clients receive goods in a good state, it builds trust and creates a long-term relationship, therefore, making the company more competitive with others. However, for greater accountability, the company needs to improve on the tracking mechanism hence giving better results.
What do you think could help minimize the challenges facing procurement and the inbound supply process?