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Task:For this assessment the student is required to submit a 5,000 +/- 10% word research report. Weekly tasks set for preparation, in class activities and reflection are designed to scaffold the...

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Task:For this assessment the student is required to submit a 5,000 +/- 10% word research report. Weekly tasks set for preparation, in class activities and reflection are designed to scaffold the development of your Final Report. Reports will be assessed on their demonstrated ability to: identify and provide background on a contemporary complex industry issue; use data from academic and professional sources to critically analyse the issue; ultilise skills gained in previous subjects; articulate and pursue well-reasoned, strong, valid and logical arguments; use examples, evidence, and personal interpretations for and against a particular position; provide a valid set of recommendations to address the issue; and create a professionally presented report.
length :5,000 words +/- 10%. You must cite a minimum of 50 academic references. The word limit does not include references or appendices.

topic : How procurement can help in having a good supplier relationship
Answered Same Day May 31, 2020


Akansha answered on Jun 03 2020
119 Votes
Role Of Procurement In Supplier Relationship Management
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Executive Summary    
Procurement is a process which consists of finding sources for material, making contracts and acquiring the goods and services or work from various suppliers, via tendering or bidding process (Burki and Buvik, 2010). Suppliers form a very important part of the organization. They can contribute towards many objectives of the business such as quality of the product, pricing and costing matters, service, and timely delivery of products, customer satisfaction, and goodwill in the market, innovation and competitive edge over other peers in the world. Hence, it becomes essential to develop and maintain long term relationships with the suppliers especially prime suppliers of the business. This concept is known as Supplier relationship management in today’s globalized market (Giannakis, 2012). SRM has gained good importance from the business houses in recent times as they are realizing the essence of building strong relations with their suppliers. The benefits of SRM are huge such as innovation, cost savings, reduced risks, shared profits, credibility, increased profitability, market share and reputation (Blakemore, 2015). The major role that is played in maintaining supplier relations is by the procurement function. It takes a lead role in establishing successful supplier relations during the course of procuring materials for the business and provides the business a competitive edge. This paper focuses on the role of procurement in building supplier relations in long term. It also highlights its advantages, objectives and recommendations for the organizations to follow.
Executive Summary    2
1.    Procurement    4
1.1 Meaning of Procurement    4
1.2 Direct and Indirect Procurement    4
1.3 Procurement Lifecycle    4
1.4 E-Procurement    6
1.5 Strategic Procurement    6
2.    Supplier relationship management    7
2.1 Concept    7
2.2 Foundation for strong SRM    8
2.3 SRM challenges    9
Figure: 1 Challenges of SRM    9
2.4 Benefits of effective supplier relationships    10
Figure: 2 Benefits of SRM    11
3.    Procurement and Supplier relationship    11
3.1 Building professional procurement team    11
3.2 Selection of right supplier: function of procurement    13
3.3 Building successful supplier relationships: How can procurement help?    13
4.    Conclusion    16
5.    Recommendations    17
References    19
1. Procurement
1.1 Meaning of Procurement
The process that involves sourcing, making agreements and making acquisitions for goods and services from some outside source/supplier, through a tender process or inviting bids from various competitive suppliers is known as Procurement (Shi and Susarla, 2011). This procedure makes sure that the buyer gets goods or services at minimal costs with best quality, perfect time and quantity or location as required compared to others. Processes which are intended to endorse fair competition and reduce risks of fraud are defined by various corporations. All the factors are a part of these buying decisions like delivery, marginal advantage and price variations. The decisions regarding procurement includes purchase choices under the influence of scarce resources. Cost-benefit analysis is used to make decisions on purchase of goods and services if proper data is accessible (Bernstein, 2015).
1.2 Direct and Indirect Procurement
There are some analyses which are without risk and some with risk that should be considered separately. The term of getting best worth must be applied when there is involvement of risk whether in cost or advantage (Vos, Schiele and Hüttinger, 2016). Procurement has been divided into two categories i.e. direct procurement and indirect procurement. One which is related to manufacturing related purchase decisions including all the goods which are a part of finished product like raw materials and different parts of the product. It is the main component of supply chain of the business which impacts the manufacturing process of production companies (Bolandifar, Kouvelis and Zhang, 2015). Whereas, the other type of procurement is indirect that is related to non-manufacturing related components such as operating resources that contributes to run the operations of the organization. This includes office supplies, consultation services, heavy machineries, outsourcing etc.
1.3 Procurement Lifecycle
Many of the companies consider their procurement procedure in concept of a life cycle or a recu
ing process. There are different frameworks available and offered by many consultants and scholar (Butt, Toller and Birgisson, 2015). Some common phases taken from the frameworks available are as follows:
· Need identification and analysis of the requirements: This is the first step in the process of procurement which involves examining the business goals through establishment of short term plan of 3 to 5 years for the procurement category which would be followed by definition of technical requirements. The company should be aware of its requirements regarding the new product, and the source whether it should be internal or external source (Bienhaus and Haddud, 2018). The goods might be reordering one or a new one to be ordered for the production process. Specific need should be identified like part numbers or other points of reference or identifiers, if applicable.
· External market analysis: after identifying the need of the products, the company must try to examine overall market scenario. It should try to understand the competitiveness within the market place and what trends are ruling the market which can affect the organization in the long run (Mols, 2010).
· Cost analysis: this step consists of assimilation, evaluation and management of the data related to the cost of products for making comparisons, acceptance or projections (Gupta et al., 2018). The cost analysis process is helpful for the business in taking make or buys decisions.
· Identifying the suppliers: this step included projecting specific suppliers who can offer the required or needed products and services. Potential vendors can be identified through various sources such as trade shows, market visibility, magazines, internet or sales people etc. Contemporary procurement software that are used by the businesses incorporate individual supplier catalog for specific goods (Islam, 2017). The organization will then identify those suppliers who meet the eligibility criteria to get the best deal for the organization.
· Non-disclosure contract: it is a general phenomenon to ask vendors and get them sign on the non-disclosure agreement in order to protect the business in case any sensitive data or information is shared in the process of procurement with various potential suppliers before providing them the requirement lists that includes the strategic information or policy making of the business.
· Communication with suppliers: after identifying more than one potential vendors from the available pool of suppliers, the business will invite them for a bidding procedure. There are various types of bidding methods such as quotation requests, proposal requests, information requests, tendering, partnership requests etc. There might be system software used to provide notifications for e-tendering or some external technology (Chinomona, 2013). This step includes direct contact of the business with the vendors. Investigation is made from them regarding the references of products and service quality, follow-up needs such as installation services, maintenance or wa
anty period of the goods. Trials are undertaken and then final selection is made.
· Negotiation and Contract: various terms and conditions such as price of goods and services, availability, custom requirements, delivery time etc. are discussed before making the contract. After this, all these details are highlighted in the purchase order or a formalized contractual agreement (Knutsson and Thomasson, 2013).
· Performance management: contract terms define the supplier terms, expedition, delivery of products, payment terms of the services etc. Installation as well as training processes are also included in it. As and when these goods are consumed, the business should make evaluation of its performance continuously with the help of a supplier scorecard (Bag, 2016). After completion of the contract or at the point of re-ordering, this scorecard experience would help the business in making future decisions to continue with the supplier or shift to some other.
· Supplier management: supplier relationship management procedure is utilized by the organizations which produce more strategic products or services that would require a continuous interface with the suppliers.
1.4 E-Procurement
Electronic procurement or E-procurement is also identified as supplier exchange, is an interface business to business, business to government or business to consumer buying and selling related to goods, services or work through the medium of internet or any other information technology system such as enterprise resource planning. It includes e-information, e-tenders, e-auctions, electronic vendor management, information management, catalog list, purchase order assimilation, status of orders, shipping details, e-billing, e-payments and agreement monitoring (Anuar, 2015). Elements of procurement remains the same for this system, just the medium is electronic.
1.5 Strategic Procurement
The nature of procurement function has changed dramatically in globalized world. During the past years, procurement was meant to assure timely delivery and availability of goods or services along with accurate transactions of business. Then, the economic development that happened during 1990s contributed to the recognition of the potential of procurement process contributing towards optimizing the costs of business (Whitelock, 2012). Procurement made possible the goal of price minimization through rationalizing the supply background and consolidating the volumes of purchase through application of category administration and sourcing the products strategically. Competition also resulted in global sourcing or outsourcing of the procurement activities. The concept of total cost of ownership was then discovered, through which businesses soon realized a need of process optimization from functional base along with cross functional assimilation. Hence, the strategic importance of procurement increased and it became the accountability of cross-functional employees. It helped in not only reducing the prices of products but also optimized lifecycle expenses (Yeow and Edler, 2012). The next level in making procurement function towards excellence is to inbuilt value-driven policy with suppliers’ collaboration to be the key milestone.
2. Supplier relationship management
2.1 Concept
Suppliers play very crucial role in today’s globalized market in the process of product development and maintaining competitive well-being of any business. With constant increase in the amount of suppliers, contractors etc. it is being very difficult to optimize the performance and management (Nazari-Shirkouhi, 2015). Various tools have been identified to simplify the procedure and to make it easy and quick, the decisions relevant to suppliers. Supplier relationship management is a process which assists business to enhance collaboration and assimilation with its suppliers, make use of new processes, and methods. It helps them in giving good understanding about every supplier to improve engagement. There are three steps that businesses need to implement in today’s market related to suppliers:
a) Supplier segmentation: to mention who will do what?
) Supplier plan and action: defining goals, procedures, resources
c) Supplier strategy implementation: executing the plan and conducting follow-up
Objectives of SRM:
· The most important goal of SRM is to become a customer of choice (Al-Abdallah, Abdallah and Bany Hamdan, 2014). This represents preference given to the customer in terms of availability of material, cost benefits, technology accessibility, innovation etc.
· Another objective is to increase the value of business through SRM. This represents increased competitiveness in the market via various factors which establish stakeholder worth of the business.
· Become influential through supplier capabilities and expertise. This relates to the advantageous status gained by the business by early engagement in such innovation and processes which others have not, via supplier capability.
· Other objective is to share profitability, investment growth and risk abilities. These can be the joint goals, performance and commitments regarding resources which would help the business to grow continuously (Lintukangas, 2011).
2.2 Foundation for strong SRM
Building good relations with the suppliers represent taking procurement in different terms rather than just the mechanics of contracts and agreements of purchase. Here, the emphasis on the method of interaction with suppliers would be different from the logistical method of supply chain. The things are not as simple as just signing an agreement and laying back to observe the process running itself. Here, SRM is all about people value and management along with the worth which can be added to the business operations through personal aspects. This definitely requires a very strong mindset for better people management (MODI and MABERT, 2010). The foundation for establishing...

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