Purchasing Management Analysis Of Giti Tire Private Limited In Singapore

Question:

Discuss About The Manufacturing Company Singapore Considered?

This Paper aims to explore the effectiveness of three aspects of the purchasing management which are the supplier selection criteria, the purchasing costs, and the use of information and communication technologies, the ICT. The purchasing management involves the buying of the spare parts, services, and the raw materials for the selected organization (Miemczyk, Johnsen &Macquet, 2012). For this paper, Giti Tire Private Limited which is a manufacturing company in Singapore is considered. As a purchasing manager in Giti Tire Private Limited, I will analyze all the aspects of the purchasing process involved in the company. The purchasing procedures differ from one company to another though there are some similar factors starting from the demand and other requirements. The Giti Tire Private Limited is a global organization which engages in manufacturing of tires, has about 3200 employees, and distributes its products to about 130 nations. The company faces stiff competition from various organizations such as Dextero, Runway, and Primewell which also won the awards based on tire production. The significant goal for the company is to focus on the customers, to listen, watch, and also learn. On the other hand, the strategies for Giti Tire Private Limited involve delivering excellence and exceed the customers’ expectations to maintain and attract more customers, as well as increase the sales globally.

In analyzing the purchasing goals of Giti Tire Private Limited, it aims to establish, manufacture, and sell the tires and the related products to various parts of the world such as the United States, Europe, Indonesia, China, and others. Some of the purchasing needs are that the Giti Tire Private Limited requires conducting testing, markets and also trading the tires to increase the customer’s satisfaction (Giunipero, Hooker, &Denslow, 2012). The company is ranked among the top in the entire world based on their industry and the quality of the products. The company needs to go global and embrace the pride regarding their services and innovation. The Giti Tire should employ an effective supplier selection criterion to investigate, recognize, and deal with suppliers. A supplier selection criterion allows the company to make use of the financial resources, and in return, Giti will expect benefits as well as a high value of suppliers’ contracts. There are several supplier selection criteria which are common to many companies such as quality and safety, service, delivery, convenience, risk, cost, agility, and social responsibility (Tate, Ellram & Dooley, 2012). Giti Private Limited should select the required suppliers through various ways to avoid issues which arise during supplier selection criteria.

Purchasing Costs

First, they should identify the suppliers by obtaining the relevant suggestions from the stakeholders (Spina, Caniato, Luzzini &Ronchi, 2013). Cost and value are best drivers that the company should consider when identifying the supplier. Second, Giti should measure the supply outcomes by considering the risks. At this point, the company should develop an assessment or an audit program for efficiency. Third, Giti should acquire the feedback from the suppliers through questionnaires to identify the niche and examine the supplier’s understanding regarding their operations. Fourth, certification is important since it will strengthen the relationship between the company and the suppliers. This step is beneficial since Giti will ensure that the suppliers are more integrated to the process of manufacturing. Developing partnerships will ensure that Giti will communicate effectively with the suppliers. Finally, the company should ensure that quality is observed for the customers to increase their satisfaction. Therefore, I recommend Giti Tire Private Limited embrace the cost supplier selection criteria. The criterion is appropriate since it explores the delivery commitment, the services, responsiveness and reliability, and the resource savings of the suppliers. However, the supplier selection criterion is associated with various issues. For instance, companies experience issues when selecting the suppliers hence they have to make critical decisions (Baily, 2013). The theory behind supplier selection complicates the position of a purchasing manager in the company. The CSR issues which prevail underscore the supplier selection criteria hence the interpretive structural theory is employed to validate the process. Giti Tire Private Limited embraces the CSR issues hence should embrace the proposed theory to identify the issues which underscore the supplier selection criteria (Chicksand, Watson, Walker, Radnor & Johnston, 2012). The purchasing managers are obliged to respond and be confident when making decisions which concern the supplier selection criteria. The Giti Tire Private Limited should adopt the gray-based theory in decision-making to solve the issues associated with the supplier selection criteria. The purchasing managers can use the gray-based theory to review the attributes of the supplier selection criteria.

After reviewing the purchasing goals and needs of the Giti Tire Private Limited as well as other relevant information, it is clear that the company needs to adopt effective Information Communication and Technology to enhance the purchasing operations within the company. Therefore, this paper examines various ICT and their impact on the purchasing operations (Monczka, Handfield, Giunipero & Patterson, 2015). Also, the ICT has direct impacts and mediates the practices which concern purchasing.  It is evident that the ICT has positive impacts to the purchasing operations through effective implementation of the practices to enhance efficiency. Some companies use various ICT systems such as Peoplesoft, Arriba, and the Commerce One as software. The software assists in streamlining the purchasing operations hence effective communication is facilitated within the organization. Some of the outlined software contains the databases which ensure the operations are accurate and timely. I also recommend the Giti Tire Private Limited to adopt the e-sourcing equipment to cope with the changes and trends in the supply chain (Arabzad, Kamali, Naji & Ghorbani, 2013). With the help of the current ICT, the company will develop a better visibility for the purchasing operations as well as the supply chain. This is because the company will have more power to control the manufacturing activities hence coping with the stiff competition. The management of the supply chain will be simplified using the ICT. Also, Giti Tire Private Limited will maintain and increase the satisfaction of the customers.

Information and Communication Technologies

 Therefore, there are techniques which I recommend for the Giti Tire Private Limited; to integrate the modern ICT into the company hence the management of the supply chain will be enhanced. First, the computerized tracking and shipping will help the company simplify the operations as well as reduce the errors which may arise. This step will help Giti consolidate the supply chain elements; hence the information will be well monitored and tracked. At some point, the ICT will help to enhance the experiences of the customers since the shipping errors are minimized (Gelderman, Semeijn & de Bruijn, 2015). The Radio Frequency Identification is a type of ICT which would be effective for the Giti Tire Private Limited since it has uncountable advantages to the organization. This type of ICT will help the company detect the anomalies and allow the employees to take caution to correct the mistakes. In simple words, the company will exercise full control as they remove the anomalies and also, the operating costs are minimized (Luzzini, Caniato, Ronchi & Spina, 2012). The company would also use the social media as a type of ICT to restructure the supply chain. The social media will allow the company to achieve visibility. Also, the company will use the social media to interact with the clients to respond to questions raised, and also updating them with information regarding the company. Finally, the Giti Private Limited should make things easier within the supply chain by eliminating the unimportant links, minimize the expenditures, enhance efficiency, and eliminate complex procedures (Zakeri &Syri, 2015). For this reason, the company will need to adopt the advances in ICT which are emerging to cope with competition. Additionally, risks will decrease, and the company’s reputation will improve hence customer satisfaction is achieved.

Businesses benefit greatly from the application of an effective cost analysis formula to their purchasing process. Giti tire private limited, therefore, would also benefit from the use of the same method. And, there is need to come up with the right strategy for a particular industry. Purchasing cost analysis entails the analysis of the activities that take place in the purchasing department, are the purchasing plans being kept properly and so on (Rodríguez-Escobar & González-Benito, 2015). In terms of the suppliers, are the suppliers offering the best terms and prices or has the right supplier been chosen? The size of the company matters with respect to cost and inventory analysis. As the company becomes bigger and the complexity of purchasing needs increase, to company should specialize in analyzing maverick spending, delivery times, and whether the company is making the best use of the current suppliers.

Integration of Modern ICT

There are several tools that should be used in the analysis of the purchasing costs. First, Giti tire private limited should start off with the cost analysis. This entails the actual cost of purchase of certain goods. Unfortunately, additional costs are incurred during handling, storage, and delivery. In other cases, the suppliers may demand advanced payments. In a scenario where a lot of goods are being purchased, therefore, more people will be needed for delivery, this will in turn result to additional costs, and eventually, and the costs are far higher. Second, there is need for inventory analysis.  This will involve the determination of the costs of storing (Liu, Eric,  Tyner & Pekny, 2014). A good purchasing analysis on the current inventory should have the ability to predict the outcome of the future optimal inventory. Also, it should be in a position to predict the optimum inventory levels that will not pose a negative effect to the productivity or the sales. Machines and people who are idle result in more expenses. Thirdly, the company should make the best use of suppliers, if the company is served by several suppliers. The analysis entails determining who is supplier and what they are supplying. The company may find out that it relies on one supplier which might not be a good idea after all (Butler, 2012). On the other hand, consolidation of suppliers will enable the company get better terms and prices that correspond to large purchases. Forth, Giti tire private limited needs to take care of Maverick spending. In cases where the company uses purchase requisitions, inappropriate, high price or low quality items may be ordered. Also, an item could be purchased from one suppliers whereas it could have been cheaper from another supplier. A purchase analysis of all the purchase requisitions, therefore, will serve to identify the maverick purchases that could be costing Giti tire private limited. Finally, a delivery time analysis is crucial especially for the large companies such as Giti tire private limited.

Total Cost Ownership (TCO) refers to the purchase price of assets in addition to the operation costs. When Giti tire private limited, for instance, is faced with the task of choosing among many options in a purchasing decision, the company should consider the total cost of ownership which is long-term rather than the purchase price which is short-term (Caniato, Ronchi, Luzzini & Brivio, 2015). Activity-Based costing (ABC) is an accounting concept which is applied to identify the operations of a firm and then allocate indirect costs to the products. The ABC system identifies the connection between activities, products, and costs, and through this respect, it allocates indirect costs to the goods less random than traditional concepts.

Conclusion

In conclusion, this paper analyzes the elements of the supply management which are the supplier selection criteria, the issues, the purchasing costs as well as the information communication technology. As the purchasing manager of the Giti Tire Private Limited, the analysis of the elements is significant in this paper. Relevant information based on the products, the supplier markets, the competitors, the company strategies and the goals are explored in this paper. The supplier selection criteria is associated with various issues which are well discussed in the paper. As a purchasing manager, I recommend the Giti Tire Private Limited to employ the appropriate supplier selection criteria which would be considered in decision-making as well as addressing issues which relate to the procedure. For the purchasing operations, the company needs to adopt effective ICT to enhance these operations. The ICT sets a pace for the company to cope with the changes occurring within the supply chain. Also, the company needs to increase productivity to facilitate obtain customer satisfaction. Additionally, the ICT unifies the company to the customers (Melville, Kraemer & Gurbaxani, 2004). Various theoretical models are explored such as the gray-based, and the interpretive structural theories to explain further about the supplier selection criteria. A purchasing analysis is explored where appropriate tools are recommended to analyze the purchasing costs. The Total Cost Ownership or the Activity Based Costing is discussed as well. This paper explores the elements exhaustively regarding the Giti Tire Private Limited which is a type of a manufacturing company.

References

Arabzad, S. M., Kamali, A., Naji, B., &Ghorbani, M. (2013). DEA and TOPSIS techniques for purchasing management: the case of aircraft manufacturing industry. International Journal of Logistics Systems and Management, 14(2), 242-260.

Baily, P. J. (2013).Purchasing and supply management.Springer.

Butler, J. R. (2012). Hospital cost analysis (Vol. 3). Springer Science & Business Media.

Caniato, F., Ronchi, S., Luzzini, D., &Brivio, O. (2015). Total cost of ownership along the supply chain: a model applied to the tinting industry. Production Planning & Control, 26(6), 427-437.

Chicksand, D., Watson, G., Walker, H., Radnor, Z., & Johnston, R. (2012). Theoretical perspectives in purchasing and supply chain management: an analysis of the literature. Supply Chain Management: An International Journal, 17(4), 454-472.

Gelderman, C. J., Semeijn, J., & de Bruijn, A. (2015). Dynamics of service definitions—An explorative case study of the purchasing process of professional ICT-services. Journal of Purchasing and Supply Management, 21(3), 220-227.

Giunipero, L. C., Hooker, R. E., &Denslow, D. (2012). Purchasing and supply management sustainability: Drivers and barriers. Journal of Purchasing and Supply Management, 18(4), 258-269.

Liu, X., Eric, G. O., Tyner, W. E., &Pekny, J. F. (2014).Purchasing vs. leasing: A benefit-cost analysis of residential solar PV panel use in California.Renewable Energy, 66, 770-774.

Luzzini, D., Caniato, F., Ronchi, S., & Spina, G. (2012). A transaction costs approach to purchasing portfolio management. International Journal of Operations & Production Management, 32(9), 1015-1042.

Melville, N., Kraemer, K., & Gurbaxani, V. (2004). Information technology and organizational performance: An integrative model of IT business value. MIS quarterly, 28(2), 283-322.

Miemczyk, J., Johnsen, T. E., &Macquet, M. (2012). Sustainable purchasing and supply management: a structured literature review of definitions and measures at the dyad, chain and network levels. Supply Chain Management: An International Journal, 17(5), 478-496.

Monczka, R. M., Handfield, R. B., Giunipero, L. C., & Patterson, J. L. (2015).Purchasing and supply chain management. Cengage Learning.

Rodríguez-Escobar, J. A., & González-Benito, J. (2015).The role of information technology in purchasing function.Journal of Business & Industrial Marketing, 30(5), 498-510.

Spina, G., Caniato, F., Luzzini, D., &Ronchi, S. (2013). Past, present and future trends of purchasing and supply management: An extensive literature review. Industrial Marketing Management, 42(8), 1202-1212.

Tate, W. L., Ellram, L. M., & Dooley, K. J. (2012). Environmental purchasing and supplier management (EPSM): Theory and practice. Journal of Purchasing and Supply Management, 18(3), 173-188.

Zakeri, B., &Syri, S. (2015). Electrical energy storage systems: A comparative life cycle cost analysis. Renewable and Sustainable Energy Reviews, 42, 569-596