Procurement Of Textiles Made From Recycled Fibres - Analysis And Strategy

1. Explain each part of the “Flowchart for Optimal Utilization of Market Intelligence to Address Sourcing Challenges”.

2. Analyze those factors that are important when MODNL needs to qualify and select suppliers for a project requirement.

3. Examine the key factors, including risk factors that affect buyer/supplier decisions concerning contract pricing and the selection of the proper contract type.

4. Given a procurement situation for a major contract, analyze the application of e-Procurement and other types of supplier bidding models available for MODNL.

5. Given a situation to solicit a bid proposal, evaluate technical, management, commercial and ethical requirements, and then prepare a RFP for MODNL.

6. Given the receipt of a proposal or competitive proposals for a major contract, determine the key factors used when negotiating an agreement or evaluating competitive proposals and establish a negotiating strategy for MODNL. 

Importance of Procurement of Textiles Made from Recycled Fibres

The first part of the flow chart is the scope of the procurement of textiles made from recycled fibres. The initiative of the project was taken by the Ministry of Defence of the Kingdom of the Netherlands. The production of textiles has very disastrous effect on the marine life. The reproduction cycle of the marine life gets affected due to these hazardous wastes (Wang et.al., 2017). Moreover, there are also emissions of greenhouse gases that affect the environment and also failure in the productions lead to accumulation of wastes that effect the abiotic and biotic resources (Khan & Malik, 2014). Thus there is a need for post-consumer fibres for the production.

The internal analysis is required in order to understand the strengths and weaknesses that are associated with the company. Porter’s five forces model is used to carry out this internal analysis. The threat of new entrants, threat of substitution of the products, the bargaining power of buyers as well as that of the suppliers along with the intensity of the competitive rivalry are the major five forces of the model (Rothaermel, 2015). This analysis must be conducted in order to have a proper understanding of the business requirements. The primary aspects which are needed to be considered, in this context, are that of the bargaining power of the suppliers as well as the customers, the level of rivalry among the competitors as well as the substitutes present in the market (E. Dobbs, 2014). The spend data of the company must be analysed. Further, understanding of the products produced by the company as well as the services offered by them must also be made clearer. Also, the internal and external of the company comprising of its strengths and weaknesses in the markets and the opportunities and threats it needs to consider, have to be done. The SWOT model is used to make the analysis (Hill, Jones & Schilling, 2015).

The external analysis is basically the economic analysis. The key microeconomic concepts like the understanding of the supply market along with the demand market are essential for this analysis. Also, the macro environmental factors like political, economic, social, legal, technological and environmental, have to be considered for which PESTLE analysis can be conducted. The demand and supply trends prevailing in the market must be identified along with the equilibrium prices and quantity (van Wijngaarden, Scholten & van Wijk, 2012). The impact of this equilibrium must also consider the impact on the customers. The key players associated with this industry are also identified along with their service offerings.

The strategy development is done in order to understand the practices which are best for the specified commodity. Further, a list of the applicable sourcing levers must be prepared. An efficient strategy should be developed in order to minimize the costs associated with the production of the commodity (Birkinshaw, 2016). In this context, for the concerned company, cost reduction strategy might include that of increasing efficiency in the operational framework, setting up long-term sustainable relationship with suppliers and other strategies.

Internal Analysis for Understanding Company Strengths and Weaknesses

Another important step is to carry out source execution. The final products that are produced must be sold. The list of the suppliers must be created to understand that these suppliers meet the requirements. Another thing is that the requirements of the suppliers must also be kept on mind, as the same helps the company to establish long-term and productive relationships with the same (Birkinshaw, 2016). The equilibrium prices must be understood well with respect to the value of the commodity. The contracts with the source of raw materials also need to be designed and executed efficiently. Also, continuous improvements in the plans and procedures relating to the production process must be thought off. 

In January 2014 the Ministry of Defence of the Kingdom of the Netherlands started exploring the idea of the proposed project. The main concern of the Ministry of Defence of the Kingdom of the Netherlands is that the suppliers must meet the requirements of the recycled fibre concept. The Ministry of Defence of the Kingdom of the Netherlands decided to use the process of recycled fibres only on wash clothes and towels, scarves, handkerchiefs (Fischer & Pascucci, 2017). The most important factor that the Ministry of Defence of the Kingdom of the Netherlands used in the procurement criteria is that the newly produced towels should contain at least 10 percent of post consumed recycled textile fibres. The Ministry of Defence of the Kingdom of the Netherlands conducts the quality check of the final goods produced by using microscopic testing.

This testing is carried out by measuring the length of the fibre, amount of the damaged fibres and further the quality of the fibres used by the suppliers of the final commodity. This will allow the Ministry of Defence of the Kingdom of the Netherlands to measure the amounts of the recycled fibre that is used in the product. The most important factor is that the recycled product is the recycled fibre that is not the waste products from production of textiles rather it is the used fibres that is accumulated from the consumers after they have used a textile product (Snoek, 2017). The contracts that were offered by the Ministry of Defence of the Kingdom of the Netherlands were allotted to the suppliers that were economically advantageous. The maximum point was 100 out which Ministry of Defence of the Kingdom of the Netherlands assessed the suppliers of the product. The points that were assigned to each of the suppliers were based on the maximum percentage of recycled contents. 20 points is allotted to the supplier if the amount of the recycled fibre is found out to be more than 50 percent. For 30 percentage usage of recycled fibres 10 points is allotted and for 10 percentage usage zero point is allotted to the bidder (Akhir, 2017).

MODNL, in this context, needs to consider the bargaining power of their suppliers and also the options available to them, along with that of the aspects like those of the preference and needs of their suppliers and the price quotations as well as contractual aspects, to operate efficiently in the market. The internal strengths, weaknesses, opportunities and threats have to be analysed for the company, in order to increase their profitability. 

References

Akhir, E. A. P. (2017). The implementation of information strategies to support sustainable procurement (Doctoral dissertation, University of Brighton). –  Retrieved from: https://eprints.brighton.ac.uk/id/eprint/17212

Birkinshaw, J. (2016). Multinational corporate evolution and subsidiary development. Springer.

Dobbs, M. (2014). Guidelines for applying Porter's five forces framework: a set of industry analysis templates. Competitiveness Review, 24(1), 32-45. Retrieved from: https://www.uniba.it/docenti/somma-ernesto/CR0620130059.pdf

Fischer, A., & Pascucci, S. (2017). Institutional incentives in circular economy transition: The case of material use in the Dutch textile industry. Journal of cleaner production, 155, 17-32. Retrieved from: https://doi.org/10.1016/j.jclepro.2016.12.038

Grant, R. M. (2016). Contemporary strategy analysis: Text and cases edition. John Wiley & Sons. Retrieved from: https://s3.amazonaws.com/academia.edu.documents/43126581/Granrtaaa.pdf?AWSAccessKeyId=AKIAIWOWYYGZ2Y53UL3A&Expires=1538636164&Signature=x84lJyqM5zClpTwUWiF15a%2Fhqj0%3D&response-content-disposition=inline%3B%20filename%3DContemporary_Strategy_Analysis_Concepts.pdf

Hill, C. W., Jones, G. R., & Schilling, M. A. (2015). Strategic management theory. Cengage Learning,. https://books.google.co.in/books?hl=en&lr=&id=Qy8aCgAAQBAJ&oi=fnd&pg=PP1&dq=Hill,+C.+W.,+Jones,+G.+R.,+%26+Schilling,+M.+A.+(2015).+Strategic+management+theory.+Cengage+Learning,.&ots=o9mLVlHUxs&sig=tMoej0s8VU2133iYkCX2-HKjKTQ#v=onepage&q&f=false

Khan, S., & Malik, A. (2014). Environmental and health effects of textile industry wastewater. In Environmental deterioration and human health (pp. 55-71). Springer, Dordrecht. Retrieved from: https://link.springer.com/chapter/10.1007%2F978-94-007-7890-0_4

Rothaermel, F. T. (2015). Strategic management. McGraw-Hill Education. https://dspace.elib.ntt.edu.vn/dspace/bitstream/123456789/7607/1/Frank%20Rothaermel-Strategic%20Management.pdf

Snoek, S. (2017). Circular Economy in the Textile Industry.  Retrieved from: https://edepot.wur.nl/425277 

van Wijngaarden, J. D., Scholten, G. R., & van Wijk, K. P. (2012). Strategic analysis for health care organizations: the suitability of the SWOT?analysis. The International journal of health planning and management, 27(1), 34-49. Retrieved from: https://onlinelibrary.wiley.com/doi/pdf/10.1002/hpm.1032

Wang, L. K., Hung, Y. T., Shammas, N. K., Wang, M. H. S., & Chen, J. P. (2017). Handbook of Advanced Industrial and Hazardous Wastes Management. CRC Press. Retrieved from: https://scholar.google.co.in/scholar?hl=en&as_sdt=0%2C5&as_ylo=2014&q=Wang%2C+L.+K.%2C+Hung%2C+Y.+T.%2C+Shammas%2C+N.+K.%2C+Wang%2C+M.+H.+S.%2C+%26+Chen%2C+J.+P.+%282017%29.+Handbook+of+Advanced+Industrial+and+Hazardous+Wastes+Management.+CRC+Press&btnG=