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Current Scenario of Procurement and Supply Chain Management

Question:

Discuss about the Procurement & Supply Chain Management.

The supply chain in broader terms includes the entire production process along with its development, store and supply and procurement plays pivotal role in these. The term Supply Chain Management (SCM) deals with business activities having primary focus on the supply-side (Christopher 2016).  SCM charts out the planning design, execution strategies, control methods and monitoring techniques of supply chain proceedings that aim to create an infrastructure that is competitively higher than other market proceedings (Wisner, Tan and Leong 2014). Procurement is done on the part of business entity in order to meet the demands for goods its business model requires compared to supply chain that deals with the end result of customers accessing the goods. Creation of positive to higher net value, supply demands synchronization, leveraging logistics and, measuring global performance are also major component of SCM and procurement is one of the founding process underlying the success of well-managed supply chain.

This essay is to present a critical review of one newspaper article where he author outlines how the evolution of procurement process is going to take place with the advent of new management and supply skills, technological advances and arrival of business intelligence leading toward strengthened supply chain management system. I agree to almost every point that the author has made in favor of procurement being developed and efficient over time with the transformation in the management designs of the business that now focuses more on the integrated information reaped through technological advances and skilled supply enhancing the future of procurement as well as strengthening supply chain as a whole.

Author: Gerard Chick, chief knowledge officer at Optimum Procurement.

Evolution Of Procurement

I strongly support the evolution of procurement process that would minimize the cost that would further fizzle out the worries regarding budget allocation and maintenance as successfully noted down by the author. I support it because of the fact that a largely strong procurement takes care of the contraction in the need of spends management without the requirement of large and discreet organizations doing the task operating at enterprise levels. It further generates profit in terms of reduced cost and cost saving or growth in revenue over time (Procurement and Supply Australasia, 2017).  

The article sheds light on the evolution process of procurement in the future time to help business organizations or entities build a strong supply chain that is efficient in shrinking spending management, replacing cost savings by profitability, and initiating and evoking budgets in the business process (Wisner, Tan and Leong 2014). The procurement process at its strategically intrinsic impact evokes the importance of management of spending.

The Evolution of Procurement Process in Future Supply Chain Management

Emergence Of New Supply Management

I strongly believe emergence of newer management of supply decisions would consolidate the supply chain financing because procurement process is the new emerging service growing explosively in the SCM. Current procurement and sourcing activities requiring no redistribution to internal end users will now going to be executed by the expertise service providers (Stadtler 2015). The largely grown demand of the service of procurement enhances the quality as well as quantity of the supply of the service quite dramatically in recent time with the evolution of procurement. The scopes of the strategies to evolve the service has widened with time leading to greater prospect of the component in SCM (Christopher 2016). The financial scope of procurement increases with maintaining link with physical supply chain. Under this optimization of cash  flows, building and utilizing working capital, implementation of dynamic discounting are followed.

Changes In The Supply Skill

Since the supply of proper skills and technique is inherently linked to the success of well managed supply chain system, I bear same opinion as the author that reinforces the positive impact of changed supply skills on the efficient procurement. This brings forth the importance of new definition of expertise that involve extension and enhancement of attributes significant to the supply of professional knowledge and skills. The broad skill sets should make inclusion of knowledge of almost all sectors and subjects related to the business field activities (Sianipar and Yudoko 2012). The operating nodes should have knowledge of economics, politics, science,, technological modernity, commerce  and global impact analysis in order to provide the support that strong supply chain would need to propel its procurement service. This issue further generates a competition in order to bring out and recruit the best talent to support the strategic needs of suppliers globally

Arrival Of Business Intelligence

I support the argument made by author in favor of business intelligence playing important role to create more transparent and efficient supply chain system. To justify this I would like to focus on how the existing global trading and strong network through e-sourcing and online communicative communities lead the prices to become more transparent without negotiation. The arrival of various business intelligence tools spills wide information related to risk associated with supply-side activities. The huge data when tapped and put into models generate information that helps in business forecast, business analysis as well as risk assessment processes (Procurement and Supply Australasia, 2017). As per the author, utilizing these data

Business Intelligence and Procurement in Supply Chain Management

and further analysis in order to reap future trend and pattern in the business prospect is the new process of business predictions and core element in structure planning (Janvier-James 2012). Availability and accessibility of data bringing forth the information related to spending, overall performance and risk factors derived through business intelligence techniques leads to greater procurement operation and decision making that overtime positively adds to the supply chain system.

Risk Management & Demand Capacity

Existence and entrance of new and culturally different organization that marks fast growth brings forth the challenge of selection of suppliers. This leads to more risk and complexity as the process becomes more fluid (Mellat-Parast 2013).

I find in this point that the focus is more tilted toward building strong network with digital up gradation and automation. I agree to the author’s insight, as this would empower SCM professionals to discover, create connection and collaboration with other suppliers, end users and partners. This would further minimize the risk associated with in supply chain with well-managed procurement that is now facing increase in the automated system regarding Procure-to-pay (P2P), management of contract and sourcing leading to greater integrity in the supply chain system. This will provide more clear insights in the business operation with transparency. The past decades focused more on saving cost for procurement (Monczka et al. 2015) compared to today’s world that focus on communication and information to minimize the risk in business and supply.

I support the view totally, because with the advent of mobile technology, the procurement gets bigger and faster with fast and easy application and communication between professionals included in the supply chain. What I found is that the trends converging towards the future is supposed to create supply relationship more risky with proper anticipation and increased awareness regarding risks associated in business and supply.

Conclusion                                                

To conclude it can be said that the future of procurement process in creating strong supply chain management lies in the opening of new innovation oriented models that includes cost saving strategies. I strongly believe the extensions and expansions in the organizations create more opportunity for the procurement to play role. With the information acquired through business intelligence and application of them to minimize risk lets Suppliers have more power to leverage can take decisions in favor of them sharing both rewards and risks they are entitled to through motivational contracting.  Supplier focus is more on the quality of solutions they provide. Future of procurement sheds light on the various management, technical and skill based factor that would lead toward integrated and stronger networks of communication with which the supplier consumer lines fade allowing integration and improvement in the information and their utilization. This will interpret into the collaborative network that strengthens the supply chain and its management.

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

Janvier-James, A.M., 2012. A new introduction to supply chains and supply chain management: Definitions and theories perspective. International Business Research, 5(1), p.194.

Mellat-Parast, M., 2013. Supply chain quality management: An inter-organizational learning perspective. International Journal of Quality & Reliability Management, 30(5), pp.511-529.

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

 Procurement and Supply Australasia. 2017. Let's take a sneak preview at the future for Procurement - Procurement and Supply Australasia. [online] Available at: https://procurementandsupply.com/2015/11/lets-take-a-sneak-preview-at-the-future-for-procurement/ [Accessed 7 Sep. 2017].

Sianipar, C.P. and Yudoko, G., 2012. Understanding Issue Dissemination and Arrival Patterns on Suppy-Chain Using Network Analysis and Social Media.

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

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

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