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Select an organization that you are familiar with and assume that the purchasing manager of this organization. Analyse the effectiveness of these three aspects of the purchasing management, namely supplier selection criteria and related issues, purchasing costs, and the use of information &communication technologies (ICT) for purchasing operations and management.

Introduction to Purchasing Management and its Importance

Purchasing management can be defined as the management of the purchasing process and related functions in the organization. The organization can frame and operate the purchasing department with the help of one or more employees in order to ensure the timely receiving the goods, manage suppliers and controlling inventory cost to increase the profitability of the organization (Procurement Analysis – Saving Purchasing Costs, 2017). This report defines the important aspects, which are required to be considered by the purchasing department of 3M Singapore Pte Ltd., a subsidiary firm of 3M Company, at the time of making the purchase of raw materials. It includes management and selection of suppliers, use of information and communication technology to improve the purchasing operations and tools that can be used to analyze the purchasing cost of the company in an appropriate manner.

3M Singapore Pte Ltd. is engaged in the marketing of abrasives, industrial tapes and adhesives, security and safety solutions, flexible circuits, commercial graphics, RFID solutions, homecare products, stationery products, reflective films and healthcare solutions manufactured by 3M Company in Brunei, Singapore, Bangladesh, Nepal, and Myanmar. It also produces sintered abrasives, electronic adhesives, and flexible circuits for its consumers in the United States, Europe, and Asia. In addition to this, the company also facilitates material analysis and predictive services to a number of industries and manufactures for the film based products that are majorly used in electronic, automotive and commercial applications.

It serves shipbuilding, oil and gas, electronics, construction, semiconductor, automotive market, healthcare, consumer markets, and aerospace. 3M Singapore Pte Ltd. was incorporated in 1966 and is located in Singapore. It operated as a subsidiary firm of 3M Company (Company Overview of 3M Singapore Pte Ltd, 2018).

A cross-cultural group of representatives of the company should define supplier selection criteria for a particular service or product. In a manufacturing company like 3M Singapore Pte Ltd., such group of members may include representatives from production, quality, purchasing and engineering. The group members should also include personnel with applications/technical knowledge of the services and products that are to be purchased.

  • The quality standards of the company should be matched with the material purchased because poor quality components may increase the waste and time consumed by the production line.
  • The supplier should be reliable in case of pre-payment and consistency of orders. It helps the company to become consistent in producing goods and services to fulfill the emerging demands of the customers.
  • The supplier should be able to work as per the norms and conditions of 3M Singapore Pte. Ltd.
  • The purchasing department of the organization aims at maintaining good relationships with suppliers to get the trust of suppliers as well as the best market price to make a purchase of raw material.

Some supplier selection criteria that are required to be considered at the time of making any purchase can be discussed as below:

  • Past performance and previous experience with the service/product to be purchased.
  • The relative level of superiority of quality system which may also include mandatory quality system registration and meeting regulatory requirements.
  • Ability to meet potential and current capacity requirements and resources to manage the delivery schedule.
  • Financial Stability and market image of the supplier.
  • Availability of technical support and willingness to contribute to optimizing and developing the design and maintaining a long-term relationship(Ghoushchi, Milan, & Rezaee, 2018).
  • The total cost of dealing including communication methods, material costs, verification cost, and inventory requirements.
  • Track record of supplier related to the improvement of business performance.
  • Assessment of total cost and comparing the same with the other suppliers available in the market(Done, Liao, & Maedler, 2011).
  • Obtain a Bradstreet & Dun or another financial report that are easily and publically available.
  • Requesting for a formal quotation which would include specifications of the services and products along with the applicable prices.
  • Schedule a visit to the supplier’s place by the selection or management team.
  • Request for the certificate of the quality system and making confirmation about the same either by written survey or on-site survey.
  • Feedback from the other customers of that particular supplier.
  • Review and analyze the industry or database sources for the supplier and product line.
  • Evaluation which may include lab tests, prototyping, validation, testing or information provided by the supplier and collect by the selection team(Inemek & Tuna, 2009).

Needs and Goals of the organization

The company aims to make its purchasing operations effective and efficient with the help of introducing information and communication technology. It would also help the organizations to keep an eye on the material in transit and manage information related to the suppliers in an easy manner. It is required to innovate new ways to boost up the purchasing operations and optimize the productivity (About 3M, 2018).

Details about 3M Singapore Pte Ltd

Information technology is also used to have a quick and immediate communication with the suppliers in case of an emergency. Thus, the organization needs to introduce IT techniques in each and every function of the operations management. The company also needs to hire professional personnel to manage such operations and existing employees are required to be trained about the new technologies (Singapore, 2017).

Computerized Shipping and Tracking

The company can reduce shipping errors and simplify the purchasing process with the help of internet-based software and modern technologies. There are a number of software that can enable the owners of the business to combine all the aspects of the aspects of supply chain at a single place. The software will allow the management to organize data inventory in a digital manner, to manage tracking and shipping information and to create electronic invoices without the use of pen and paper (3M, 2018). By using supply chain management technologies, the company can highly reduce the time spent in receiving, shipping, compiling and tracking the order, which can also result, into saving both money and time.

The use of information technology will help in improving the customer experience by providing the good and services to the customers in a short time. With the help of digitalized tracking, management can immediately identify the shipping errors made by the suppliers (Wagner & Essig, Electronic procurement applications and their impact on supplier relationship management, 2006).

Radio Frequency Identification is a major part of the technology that can provide numerous benefits to the organization. RFID chips are placed like labels on every stock of goods that can help the organization to track its inventory. The use of RFID chips will help in improving the efficiency of the supply chain by detecting the errors immediately at the time of their occurring. It will help in increasing the control of the organizations over the goods in transit and track them with full feasibility. These chips can also help in reducing potential errors and operating cost as these provide computerized product management (Shaikh, Al-Maymouni, Al-Hamed, & Dardas, 2014).

Social media is the fastest emerging information and communication technology of the world having millions of users over Twitter, Facebook, and other networking websites. 3M Singapore Pte Ltd. can turn towards the use of social media to increase the visibility of the organizational services and to attract the potential suppliers. With the help of social media, the organization can also get all the information about its suppliers with the help of reviews posted by other customers. Along with this, management can create more open communication with existing and new suppliers. The customers may also be able to know about the suppliers of the company and thus, the company can establish fair business practices to increase the trust of customers (Ylimaula, 2013).

Analysis of Supplier Selection Criteria for Purchasing Department in Cross-Cultural Perspective

Goals and Objectives of the organization

The management of 3M Singapore Pte Ltd. aims at minimizing the purchasing cost to increase the overall profit of the organization. It is also concerned about the quality of material and makes sure that there would be no any impact on quality.

Purchasing and procurement is an important part of 3M Singapore Pte Ltd. Thus, it is required to undertake a continuous analysis of purchasing functions to ensure that the purchasing department is making the best use of available financial resources (Colin, Galindo, & Hernandez, 2015).  As the company is involved in supplying heavy electronics which incurs a high amount of investment, it is required to analyze each and every specification about the purchasing of types of machinery and other important raw material as it would directly have an impact of the investment made by customers. Some tools and techniques can be used by the company to make purchase analysis are as follows:

Cost Analysis

The one thing that is required to be considered by the company is the actual cost of purchased goods. The overall cost also includes the cost of delivery, storage, and handling. There can also be some suppliers, which may require advance payments. So if the company is ordering large and heavy items which may require several persons to move and the organization would have to pay them, then the actual cost would become very high in comparison to the cost of goods only. Similarly, handling cost would also be very high in case of overstock of goods. A full purchasing and procurement analysis would help in identifying the total purchasing cost from an individual supplier (Wagner, Cost management practices for supply chain management: an exploratory analysis, 2008).

The next important aspect to analyze includes the cost of handling the goods as well as the cost of not having the goods for manufacture and then sale. An accurate purchasing and procurement analysis of the current inventory would facilitate the purchase manager to predict ideal future inventory. It would also help to know about the optimum level of inventory that would not like to influence the productivity or sales in a negative manner. This technique of handling and analyzing inventory is called Just In Time approach introduced by Toyota (Mukopi & Iravo, 2015).

As the company is dealing with more than one supplier worldwide, suppliers analysis can help the purchasing department analyzing the cost of purchase in a better way. In addition to this, by consolidating the suppliers, the organization can get better terms and best prices that may reduce the overall purchasing cost of the company (Kepher, Shalle, & Evans, 2015).

Use of Information and Communication Technology to Improve Purchasing Operations

Delivery time is most important in large-scale organizations especially when the organization is having the good image and providing services in more than one countries. A bulk delivery that requires to be paid very quickly can play chaos with a strict cash flow. Thus, it is required to analyze the delivery time taken by each supplier to minimize the final delivery time for customers (Momiwand & Shahin, 2012).

Conclusion

On the basis of the above analysis, it can be concluded that the management of the purchasing process and operations is an important aspect of the business management process of an organization. The purchasing need and goals of the 3M Singapore Pte Ltd are described in a brief manner on the basis of which selection criteria of suppliers have been provided so that the management can find the link between the both. In addition to this, considering the objective of using ICT in managing purchasing operations, some information and communication technology practices have been recommended to the purchase management department to increase the effectiveness of purchasing operations on the suppliers as well as on the profitability of the company. Further, identifying the importance of purchase cost analysis in context to the company, some tools and approaches have been described that can be used by the purchasing department to carry out analyzing more appropriate manner. All information contained in this report is derived from the authenticated sources like the official website of the company and journal articles on purchasing management. This report overview the needs and goals of purchasing department then provide recommendations according to every need and capability.

References

Procurement Analysis – Saving Purchasing Costs. (2017). Retrieved September 26, 2018, from https://www.purchasing-procurement-center.com/procurement-analysis.html

About 3M. (2018). Retrieved September 26, 2018, from https://www.3m.com.sg/3M/en_SG/company-sg/

Company Overview of 3M Singapore Pte Ltd. (2018). Retrieved September 26, 2018, from https://www.bloomberg.com/research/stocks/private/snapshot.asp?privcapid=25794262

3M, S. a. (2018). 3M Sustainability. Retrieved September 26, 2018, from https://www.3m.com.sg/3M/en_SG/sustainability-sg/

Colin, M., Galindo, R., & Hernandez, O. (2015). Information and Communication Technology as a Key Strategy for Efficient Supply Chain Management in Manufacturing SMEs. Procedia Computer Science, 55, 833-842.

Done, A., Liao, C., & Maedler, M. (2011). technology in Purchasing: Impacts on Performance and Future Confidence. Retrieved September 26, 2018, from https://pdfs.semanticscholar.org/8e08/b81099d44e052954c540db3dd5c981d6ccf9.pdf

Ghoushchi, S. J., Milan, M. D., & Rezaee, M. J. (2018). Evaluation and selection of sustainable suppliers in the supply chain using new GP-DEA model with imprecise data. Journal of Industrial Engineering International, 14(3), 613-625.

Inemek, A., & Tuna, O. (2009). Global supplier selection strategies and implications for supplier performance: Turkish suppliers’ perception. International Journal of Logistics Research and Applications, 12(5), 381-406.

Kepher, A. B., Shalle, I. N., & Evans, O. (2015). Role of Supplier Management on Procurement Performance in Manufacturing Sector in Kenya: A Case of East African Breweries, Kenya. International Journal of Social Science and Humanities Research, 3(4), 540-555.

Momiwand, A., & Shahin, A. (2012). Lead Time Improvement by Supplier Relationship Management with a Case Study in Pompaj Company. World Applied Sciences Journal, 16(5), 759-768.

Mukopi, C. M., & Iravo, A. M. (2015). An Analysis of the Effects of Inventory Management on the Performance of the Procurement Function of Sugar Manufacturing Companies in the Western Kenya Sugar Belt. International Journal of Scientific and Research Publications, 5(5), 1-14.

Shaikh, A., Al-Maymouni, R. K., Al-Hamed, L. H., & Dardas, A. (2014). The Role of RFID in Supply Chain Management Macro Processes. International Journal of Innovation, Management, and Technology, 5(5), 388-393.

Singapore, E. (2017). Why commercialization is at the heart of 3M Singapore's strategy. Retrieved September 26, 2018, from https://www.edb.gov.sg/en/news-and-resources/insights/manufacturing/why-commercialisation-is-at-the-heart-of-3m-singapore-s-strategy.html

Wagner, S. M. (2008). Cost management practices for supply chain management: an exploratory analysis. International Journal of Services and Operations Management, 4(3), 296-320.

Wagner, S. M., & Essig, M. (2006). Electronic procurement applications and their impact on supplier relationship management. International Journal of Services Technology and Management, 7(5/6), 439-462.

Ylimaula, K.-A. (2013). EXPLORING THE POTENTIAL OF SOCIAL MEDIA IN SUPPLIER RELATIONSHIP MANAGEMENT. Retrieved September 26, 2018, from https://www.impgroup.org/uploads/papers/8012.pdf

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My Assignment Help (2021) Essay On Purchasing Management In 3M Singapore Pte Ltd's Effectiveness. [Online]. Available from: https://myassignmenthelp.com/free-samples/bmo2202-purchasing-and-supply-management/purchasing-cost-of-the-company.html
[Accessed 16 July 2024].

My Assignment Help. 'Essay On Purchasing Management In 3M Singapore Pte Ltd's Effectiveness.' (My Assignment Help, 2021) <https://myassignmenthelp.com/free-samples/bmo2202-purchasing-and-supply-management/purchasing-cost-of-the-company.html> accessed 16 July 2024.

My Assignment Help. Essay On Purchasing Management In 3M Singapore Pte Ltd's Effectiveness. [Internet]. My Assignment Help. 2021 [cited 16 July 2024]. Available from: https://myassignmenthelp.com/free-samples/bmo2202-purchasing-and-supply-management/purchasing-cost-of-the-company.html.

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