Supply Chain Management Purchasing Research Paper

Pages: 8 (2649 words)  ·  Style: APA  ·  Bibliography Sources: 3  ·  File: .docx  ·  Level: College Senior  ·  Topic: Business - Management

SAMPLE EXCERPT . . .
There are many considerations besides price that should be considered when selecting suppliers. For instance, if a supply is cheap, but when the product arrives is not found to be of acceptable quality to be useful, this is not only wasted money, but wasted time as well. The supplier then is in the position of having to find a substitute product and is under a tighter time schedule than if the first supplier had been the right supplier. Product will have to be rejected and shipped back, often causing additional cost and delay. Quality is a major consideration in the selection of a supplier.

How the supplier operates internally and their ability to deliver the right product at the right time is also an important consideration. If the project is large, and the component needed has a high importance to the project, the supply manager should plan to visit the facility where it is produced. This could also be a part of the supplier selection process, perhaps visiting the top candidates to see how they operate. Requesting product samples is another good technique for gauging the quality and reliability of suppliers. This also gives the organization a sample that they can examine and test to see how it will work for them. These are only a few techniques that will help to make the best selection possible.

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Negotiating prices also a part of the purchase process. The negotiating process can be a matter of personal skills, rather than a process that has a specific set of rules to follow. The negotiation process can be different for every supplier in the value chain due to differences in business models, the time involved produce the good, and other characteristics that are specific to that company.

Research Paper on Supply Chain Management Purchasing and Assignment

The first step in price negotiations is to determine what the policies of the supplier company are and how they will work with the organization. Procedures must be compatible in order to provide benefit for both parties. It may be that some organizations do not allow price negotiation at all. They may have set prices and be unwilling to deviate from them. Unwillingness to negotiate price may be a reason to consider non-selection of that supplier. Negotiating price based on volume discounts and repeat business is one of the most reliable and widely used negotiating techniques. The degree to which a supplier is willing to do this will be a key determining factor in whether that supplier is a good candidate for the project or not. Price policies are a major consideration in the negotiating process.

Benefits and Costs of Outsourcing

Outsourcing supplies and services has a grown to the point where this is now common practice in organizations of many different sizes and in many different industries. In the past, the tendency was to produce everything to the extent possible in house. Companies used to be generalists, engaging in as many parts of the process as possible. Businesses were centralized with many of the operations taking place a short distance from each other. Producing goods in house used to be considered less expensive than outsourcing them.

However, this is no longer the case. Businesses have drifted from a centralized philosophy to a decentralized philosophy (Barney, 2012). This is been made possible by advances in communications and transportation systems. Outsourcing has many advantages over producing goods and services in house. The first and most obvious advantage is a reduction in the need to maintain large storage facilities. Storage of materials is costly and in many companies, a big waste of resources. Outsourcing reduces the need for storage space, thus reducing operational cost.

One of the disadvantages of outsourcing is that it must be coordinated between the two parties. Information must flow in both directions freely in order to coordinate sources and to develop trust among the parties (Kourdi, 2009). The Internet makes coordination of efforts and finding suppliers much easier than it was in the past. Information can travel quickly, making outsourcing much easier and reliable than it was in the past (Chen, Leu, & Chiou, 2006).

Benchmarks in Outsourcing

Many of the biggest companies in the world have built their success through management of their supply chain. Wal-Mart is one of the best examples of using supply chain management to gain a competitive advantage. Wal-Mart is a seller of general goods. There are many other companies that offer a similar basket of general goods for sale. Wal-Mart differentiates itself from its competition by being able to offer customers a greater selection at lower prices. As result they have leveraged their supply chain to become one of the largest corporations in the world. Wal-Mart is one of the best examples of how the supply chain can be used to create value and product differentiation (Rice, 2012). There are many other companies that are excellent examples of efficient supply chain management, but Wal- Mart stands out when one thinks of its supply chain management and competitive advantage.

In conclusion, supply chain management is often something that occurs behind the scenes of an organization. It is not the first thing in the minds of other members of the business organization, or the customers. This research has demonstrated that although it is often out of sight and out of mind, it is one of the most vital functions of the business organization. No business could operate without proper attention to supply chain management. It was found that supply chain management had many direct and indirect impacts on the organization. It had a measurable affect on the profitability of the organization but was also essential for maintaining good customer relations. Proper attention to supply chain management can mean the success or failure of a business. The thesis that supply management is one of the most important components in creating competitive advantage is supported both in the literature examined and the example presented. Supply chain management is one of the most important functions of the business and one that often deserves more attention than it gets.

References

Barney, J. (2012). Purchasing, Supply Chain Management and Sustained Competitive Advantage: The Relevance of Resource-based Theory. Journal of Supply Chain Management. 48 (2),3-6.

Chen, CY., Leu, JD., & Chiou, CH. (2006). The impact of E-Supply Chain Capabiliy on Competitive Advantage and Organizational Performance. International Journal of Electronic Business Management. 4(%), 419-427.

Johnson, P.F., Leenders, M.R., & Flynn, A.E. (2010). Purchasing Supply Management (14th ed.). Boston: McGraw-Hill Irwin.

Kourdi, J.. (2009). Chapter 36 - OUTSOURCING. 100 Great Business Ideas: From Leading Companies Around the World. Retrieved July 29, 2012 from http://www.elan.com.mx/biblioteca/100%20Great%20Business%20Ideas%20-%20From%20Leading%20Companies%20Around%20the%20World%20%28100%20Great%20Ideas%29.pdf

Leenders, M., Johnson, P., Flynn, A., & Fearon, H. (2006). Purchasing and Supply Management (13th ed.). Boston: McGraw-Hill Irwin.

Rice, A. (2012). How Walmart if Changing Supplier Sustainability -- Again. Renewable Choice Energy. Retreived July 29, 2012 from http://www.renewablechoice.com/blog-walmart-supplier-sustainability-12-30-12.html . [END OF PREVIEW] . . . READ MORE

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