Procurement Management Of Global Companies: Strategies And Challenges - An Essay.

Three Case studies

Discuss about the Procurement Management of the Global Companies.

The study focuses on the procurement strategies of the global companies as well as the Toy Store.  They struggle to increase the value of the customers in order to improve their performance. Companies are trying to grab the attention of the customers in order to purchase goods from the suppliers. It is seen that the companies are building strategies and policies for the suppliers (Beske, Land and Seuring 2014). The purchase of the materials and the services come under the category of procurement. The impacts of the suppliers in the manufacture of the goods are the vital points of concern that the managers of the companies must focus in order to maintain the cost of manufacturing. The supply base is considered as the important aspect of the supply chain of the enterprise. In this context, Toy Store is a small medium enterprise that is facing issues in the supply chain management, quality of the suppliers, supply chain relationship management (Brandenburg et al. 2014).

It can be said that the capabilities of the suppliers usually help the enterprises in order to differentiate themselves towards their customers while providing them quality products or services. The manufacturing sector focuses the percentage of the sales of the goods and manufacture of the products. The main aim of the company is to minimize the cost of manufacturing goods in order to earn a substantial profit (Christopher 2016). The supply-chain management activities are focused while implementing newer approach in order to bargain hard with the suppliers and reduction of price. The essay will describe about three good practices of purchasing and supply chain issues of three case studies. It will discuss about the problems and issues in procurement. Apart from that, it also provide recommendations to the Toy Store in order to mitigate the problems in the procurement processes.

In order to describe the problems of the supply-chain management issues of the Toy Store, three good practice examples along with sourcing snapshot is chosen from the textbook in order to make support of the problems identified in the procurement process of Toy Store. The three case studies of three companies are described in details by comparing them in terms of core problems and the suggested solutions to the individual companies (Dekker et al. 2013). Apart from that, the implications of the knowledge gained from the good practice examples and sourcing snapshot are used to mitigate the procurement challenges of the Toy Store.

Sourcing snapshot: Supplier Continuous Quality Improvement Program by Intel

The case study of Intel regarding Supplier Continuous Quality Improvement Program (SCQI) is focused on maintaining the quality of the products provided by the supplier and the improvement program that encompasses the performances of the suppliers. Intel focuses on practicing minimization of time and reduction of cost of the inspection. The SCQI program by Intel establishes the indicators, metrics and goals that evaluate the total capabilities of the suppliers of Intel (Monczka et al. 2015). The aim of implementing this program is to evaluate and check the procedures of the suppliers towards the company. The good practice examples suggest that the company has issues with the suppliers regarding supply chain relationship management. However, the company has successfully mitigated their quality related problem with their suppliers. It can be said that suppliers are an important part of the whole supply chain of Intel in order to maintain the quality of the products sold by Intel to the customers across the world (Monczka et al. 2015).

The case study focuses on the improvement of the performance of the supplier while maintaining a good relation with the suppliers. The company has found that performance of the suppliers depends on the intensity of relationship maintained by the company. It also describes about the effectiveness of the supplier relationship program of the Dublin based biopharmaceutical global company called Alkermes, plc in Ireland. The company has conducted survey in order to check the performance of the supplier. However, Alkermes, plc has found the responsiveness and the performance of the suppliers waning (Monczka et al. 2015). In order to mitigate the gap of the communication of the company with their suppliers, the codes of conduct of the suppliers with the company must be improved after identifying the areas of improvement. It will help Alkermes, plc while formulating the programs of supplier-relationship management that will help in manufacturing products with guaranteed high quality to the customers of the company (Monczka et al. 2015).

The case study has focused that the company is known for its supply chain management. Rockwell Collins is practicing processes on the material planning processes that will help the company in reaping further benefits in terms of inventory and asset management. By practicing this, the company has more stable supply chain. The innovative process of maintaining a supplier portal by the company is to check the performance of the suppliers working with the company (Monczka et al. 2015). The supplier team of Collins is focused on the strategic sourcing and containing costs of the company by maintaining a good relationship with the suppliers. The sourcing snapshot illustrates the fact that Rockwell Collins is using lean supply chain management and six-sigma. It can be said that by using efficient supply chain management systems, the company is earning a good reputation in the market as well as towards its customers while supplying high quality products and services to its customers (Monczka et al. 2015).

Good Practice Example: Improving Supplier performance through supply relationship management (SRM)

In this section, the similarities and differences of the problems faced by the three companies that has been discussed earlier are described in details. The core problems of the three case studies will help in providing solutions to the small medium enterprise Toy Store in terms of procurement management and supply chain management (Ellram and Cooper 2014).

The core problems of the three companies are related to the management of the supply chain issues along with the relationship with the suppliers. It can be said that the profitability of the company depends largely on the distribution, supply chain management and manufacturing process, etc. The purchasing and the planning processes of Intel and the pharmaceutical company are facing issues in the supply chain management (Fawcett, Ellram and Ogden 2014). The similarity of the core problems of the purchasing process is that there is a gap between the communication channels. It is important to maintain a good relation with their suppliers. The supply chain process of Toy Store is also not up to the mark. Toy Store is not maintaining the relation with the suppliers. Failure in the supply chain relationship management will cause the increase of cost of production. Increase in the cost of production will lead to less profitability. Apart from that, it can be pointed out that the Rockwell Collins, Intel, etc. have an improved supply chain management system that focuses on the lean supply chain, six sigma and quality maintenance program with the suppliers (Fredendall and Hill 2016).

Globally companies are facing issues in purchase management because of the limited resources. Limited resource of the companies while managing the purchasing processes is a big problem that is the cause of maintaining quality in the supply chain management. The case studies of the three countries focused that the suppliers are not providing good quality of the raw materials to the companies that causes manufacture of low quality items (Golicic and Smith 2013). It will diminish the image of the company not only in the market but also in the minds of the customers. Procurement people must emphasize on the continuous improvement of the processes of the transaction level of the different types of the issues of the companies with the suppliers (Handfield et al. 2015).

Apart from having similarities, there are differences of the problems of the three companies including Toy Store. It can be said that the procurement challenges are faced by the people associated with managing the suppliers. The codes of conduct of the company with the suppliers are not in a good position. Toy Store usually facing challenges with the management of supplier relationship in order to maintain the cost of the manufacturing of the costs. Procurement challenges also include the competitive methods used by other companies in order to earn huge profit while selling goods in the market (Hsu et al. 2013). It requires improved methods of supply chain relationship management that is not used by Toy Store.

Sourcing snapshot: Supplier portal and P2P of Rockwell Collins

However, on the other hand, it can be said that Intel and Alkermes are facing issues in quality issues of the products of the suppliers and the performance of the suppliers. The company has conducted a survey in order to check the suppliers’ issues and performances. After conducting the survey, it is found that there is a huge communication gap between the company person and the suppliers that is the reason of the lower performance of suppliers. On the contrary, Intel has found that the quality of the products that the company is manufacturing is not up to the mark (Mangan, Lalwani and Lalwani 2016). Hence, there is a chance of diminishing the image of the brand. The company has found the quality issues only when it has found the performance of their existing processes of supply chain. Another company, Collins is known for its improved practices of procurement processes and supply chain relationship management practices. There are some issues found in the relationship of the company with the suppliers and in the distribution problems with the other related companies (Pagell and Shevchenko 2014).

While discussing the problems faced by the companies, the natures of the problems are discussed in details. However, it can be said that the problems of the companies have both similarities and differences. Therefore it is pointed out that the companies have used methods which are similar in order to mitigate the problems of procurement at the core level (Ross 2013). After discussing the core problems of Intel, Collins, Toy Store and Alkermes, it has found that since the core problems are different but falls under the category of supply chain management problems, so the solutions and the methods of mitigating the processes are different (Rushton, Croucher and Baker 2014).

It is suggested that the processes of Supply chain quality management program of Intel is unique in terms of quality maintenance. It is a proper method that will help global companies as well as small medium enterprises like Toy Store. The internal operations of the procuring department must be efficient enough in order to perform the activities of the procurement activities and the supply chain management activities. They can be done by implementing the following methods such as:

• To determine the staffing levels
• To develop and adhere the administrative budgets (Schaltegger and Burritt 2014)
• To provide growth opportunities and professional training for employees
• To introduce new improved buying materials and systems that would use improved technology in order to include the visibility in spending and efficient payment and invoicing that will lead to satisfaction of the user (Seuring 2013)

However, it can be said that talent management is another aspect that is practiced by the organizations in order to implement new procedures of procurement and supply chain management. Talent management is considered as a vital aspect that is essential not only in procurement management but also in other business operations because the necessity of qualified and experienced purchasing personnel is expanding globally (Stadtler 2015). Organizations are expanding their business operations that require a solid supply chain management system across its different branches. With the implementation of new technologies alone will not only help to get the expected results. Toy Store, Alkermes, Intel in this perspective focuses on the supplier’s aspect rather than the other practices. Implementation of theoretical models of supply chain management along with proper customization is essential (Tseng and Chiu 2013). However, it can be said that Alkermes, Collins, etc. use models like lean supply chain management, six sigma, just in time in a customized way according to the needs of the procurement needs.

Compare and contrast of the core problems

The case studies of Alkermes portray the gap of communication between the suppliers and the company personnel. Hence, it can be said that the performance management of suppliers are not working well so that they can meet the demands of the customers and the quality management department of the company. Intel on the other hand is emphasizing on the models of supply chain quality. All these methods will be successful only when talented pool of efficient expertise of employees are present in the different branches of these global companies like Intel, Alkermes and Collins, etc (Waters and Rinsler 2014). The sourcing of products is necessary to determine the various aspects of procurement. It can be done by sourcing services and products at a proper price, sourcing them from proper source i.e. suppliers, sourcing them in an exact quantity, arranging them in a right time for service/delivery performance to the internal customers. In this way, it can be pointed that though the issues of three companies in the case studies are similar in the category of supply chain management and procurement management processes but they are different in terms of functions and systems of supply chain and distribution system (Wieland and Handfield 2016).

In this section, the best practices that are cited from the good practice examples and sourcing snapshot of the text book are to be used by Toy Store while improving their supplier relationship management as well as their improved performance. The goal of Toy Store in the perspective of procurement management is not only production of good quality toys and other related products but also to sell them at a reasonable price to the customers. The products must be of higher quality so that they can meet the latent demands and expectations of the customers. For this goal, implementation of lean supply chain management can be used in order to manage the level of inventory and the level of production of the toys at right amount (Wisner, Tan and Leong 2014). Apart from that, six sigma and just in time methods of supply chain measures that Alkermes has been using can also be used by Toy Store while maintaining the stocks in the inventory. It will help the company in manufacturing products as well as delivery of their toys to other retailers and distributors. The recruitment of the workforce regarding the procurement of the different types of methods and approaches are essential (Wolf 2014). Talented workforce will help in the strategic partnership of the company that involves outsource strategy. The supplier performance management is recommended to Toy Store to increase the supplier buyer relationship. This practice is used by the Alkermes after conducting a survey among the different suppliers. It can be said that the procurement strategies of Toy Store are not updated in order to meet the aggressive competition in the market (Zhu, Sarkis and Lai 2013).

Similarities of the core problems in the case studies

Evaluation of the quality of the products sold by the suppliers of the company can use the model used by Intel in its phase of procurement management and the supply chain management. Toy Store has conducted a survey to check the quality of the products and the code of conduct of the suppliers. The important objectives of Toy Store in the aspect of purchasing and sourcing are maintenance of the suppliers, selection of suppliers, and development of the suppliers’ performance management (SPM) (Wieland and Handfield 2016). Few steps are recommended to Toy Store in order to ensure purchasing and sourcing are:

• Selection of suppliers which are competitive
• Identification of the new suppliers which have excellent performance while developing new suppliers
• Performance of the existing suppliers is to be tracked (Rushton, Croucher and Baker 2014)
• Implementation of new technology in the manufacturing process and in the new product development
• Development of various contingency plans along with supply options while reducing risk in the newly implemented strategies of supply chain
• Supporting the requirements for a globally and diverse competitive supply base (Schaltegger and Burritt 2014)

Conclusion

It can be concluded that the case studies that has been taken from the textbook is found to be essential while recommending the best practices to the organization. However, it can be said that processes of supply chain management and procurement processes are critical aspects in any business environment. The essay focuses on the implications of the case studies on the problems of Toy Store in the perspective of supply chain management. It can be said that the company is facing issues in choosing suppliers and evaluating their performances. Selection and evaluation of their performances are necessary because these activities are related to the profitability. The procurement management issues of Toy Store can be solved if the best practices that are explained in the essay are implemented in the supply chain management processes of the company. The company is facing issues in the supplier relationship management and their performance evaluation.

In the modern competitive business world, it can be said that companies must have an innovative and improved supply chain process that will enhance the distribution system of the company. In the end, these good practices will help in earning huge profits while implementing strategies of cost leadership in the management of supply chain processes. Apart from that, it can be said that the good practices of the companies like Intel will help Toy Store in mitigating the issues if the company can implement the practices in a customized way. Recommendations along with the comparison of the practices of the organizations are explained in a detailed manner. It will help in implementing the knowledge gained by reviewing the case studies to the supply chain activities of Toy store. However, the procurement activities of the different companies are described in various perspectives of purchasing and supply chain management aspects.

References

Beske, P., Land, A. and Seuring, S., 2014. Sustainable supply chain management practices and dynamic capabilities in the food industry: A critical analysis of the literature. International Journal of Production Economics, 152, pp.131-143.

Brandenburg, M., Govindan, K., Sarkis, J. and Seuring, S., 2014. Quantitative models for sustainable supply chain management: Developments and directions. European Journal of Operational Research, 233(2), pp.299-312.

Christopher, M., 2016. Logistics & supply chain management. Pearson UK.

Dekker, R., Fleischmann, M., Inderfurth, K. and van Wassenhove, L.N. eds., 2013. Reverse logistics: quantitative models for closed-loop supply chains. Springer Science & Business Media.

Ellram, L.M. and Cooper, M.C., 2014. Supply chain management: It's all about the journey, not the destination. Journal of Supply Chain Management, 50(1), pp.8-20.

Fawcett, S.E., Ellram, L.M. and Ogden, J.A., 2014. Supply chain management: from vision to implementation. London: Pearson.

Fredendall, L.D. and Hill, E., 2016. Basics of supply chain management. CRC Press.

Golicic, S.L. and Smith, C.D., 2013. A meta?analysis of environmentally sustainable supply chain management practices and firm performance. Journal of supply chain management, 49(2), pp.78-95.

Handfield, R.B., Cousins, P.D., Lawson, B. and Petersen, K.J., 2015. How Can Supply Management Really Improve Performance? A Knowledge?Based Model of Alignment Capabilities. Journal of Supply Chain Management, 51(3), pp.3-17.

Hsu, C.W., Kuo, T.C., Chen, S.H. and Hu, A.H., 2013. Using DEMATEL to develop a carbon management model of supplier selection in green supply chain management. Journal of cleaner production, 56, pp.164-172.

Mangan, J., Lalwani, C. and Lalwani, C.L., 2016. Global logistics and supply chain management. John Wiley & Sons.

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

Pagell, M. and Shevchenko, A., 2014. Why research in sustainable supply chain management should have no future. Journal of supply chain management, 50(1), pp.44-55.

Ross, D.F., 2013. Competing through supply chain management: creating market-winning strategies through supply chain partnerships. Springer Science & Business Media.

Rushton, A., Croucher, P. and Baker, P., 2014. The handbook of logistics and distribution management: Understanding the supply chain. Kogan Page Publishers.

Schaltegger, S. and Burritt, R., 2014. Measuring and managing sustainability performance of supply chains: Review and sustainability supply chain management framework. Supply Chain Management: An International Journal, 19(3), pp.232-241.

Seuring, S., 2013. A review of modeling approaches for sustainable supply chain management. Decision support systems, 54(4), pp.1513-1520.

Stadtler, H., 2015. Supply chain management: An overview. In Supply chain management and advanced planning (pp. 3-28). Springer Berlin Heidelberg.

Tseng, M.L. and Chiu, A.S., 2013. Evaluating firm's green supply chain management in linguistic preferences. Journal of cleaner production, 40, pp.22-31.

Waters, D. and Rinsler, S., 2014. Global logistics: New directions in supply chain management. Kogan Page Publishers.

Wieland, A. and Handfield, R.B., 2016. Supply Chain Management. In 5th World Conference onProduction and Operations Management. P&OM 2016.

Wisner, J.D., Tan, K.C. and Leong, G.K., 2014. Principles of supply chain management: A balanced approach. Cengage Learning.

Wolf, J., 2014. The relationship between sustainable supply chain management, stakeholder pressure and corporate sustainability performance. Journal of business ethics, 119(3), pp.317-328.

Zhu, Q., Sarkis, J. and Lai, K.H., 2013. Institutional-based antecedents and performance outcomes of internal and external green supply chain management practices. Journal of Purchasing and Supply Management, 19(2), pp.106-117.