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Supplier selection criteria and issues

Discuss about the Purchasing Management and their Effectiveness.

Purchasing can be considered as the first phase of the management of the materials. The procurement of services and goods from the external agencies can be regarded as purchasing. The aim of the assignment is to reflect the role of purchase management in an organization. The assignment also deals with the aspects of purchasing management and their effectiveness (Baily, 2013). The items that are purchased have to be of certain specific quality in required quantities that are available at that particular time and at a price that is competitive.

The organization for the analysis is KFC where I have been handling the responsibility as the purchase manager.  KFC is considered to be the largest and the best-known restaurant that deals with chicken specifically. KFC has approximately around 10 thousand locations and is spread across over 80 countries (KFC, 2017). The employees of KFC and those who are franchised are almost 200 thousand throughout the globe. It was in 1964 when KFC was purchased by Jerry Messy and John Y Brown for the USA for $ 2 million and that made KFC was established as a corporation (KFC, 2017).  Colonel bought 100 shares after duration of 5 years. Then in 1986 KFC was purchased by Pepsi. The logo of KFC was altered by Pepsi in 1991 to KFC from Kentucky fried chicken (KFC, 2017).  Later in 1992, the 90th restaurant of KFC was opened in the land of China and the 100th restaurant in Japan. KFC happens to be a side-line of Tricon global restaurant which is the largest group of restaurant in the world serving in almost 100 nations across the globe. Later in 1997, it spun off to be renamed as Yum! Brands.  McDonald's is one of the global competitors of KFC. The Admiralty Place in Woodlands Avenue 6, Singapore has KFC franchised which has objectives and aims as to enhance its share percentage in the fast food market. It also aims at improving the profit margins every year to sponsor the company's growth (KFC, 2017).

Among the major objectives and aims of KFC is that it runs its campaign is ways that KFC develops the image in the customers' minds that its customers would desire to go to KFC and should be the first choice of every customer. This brand wants to become the first chosen eatery as they being the first choice of customers can help it in boosting the business. This would result in maximum utility and profit (Chao, 2014).

Quality

ICT for Purchasing Operation

The objectives of the purchasing department are to provide responsive and efficient services so as to obtain products and services of high quality at costs that are reasonable. The objectives of the purchasing department include the purchase of goods efficiently to the maximum possible extent (Christopher, 2016). Providing continuous and high-quality services to the customers is one of the goals of the management of purchase at KFC.

Innovative

The appropriate criteria for supplying to KFC is to have a strict system of approval and management of suppliers which among the most challenging and thorough systems that have been experienced during managing the department. The suppliers should be selected, rewarded and assessed through the Supplier Tracking Assessment and Recognition system (STAR) (Ellram & Cooper, 2014). This will assist the global suppliers to work according to the specified standards and in provisions for independent assessment so as to supplement the audit program.

Better Policy Practice

Providing oversight, problem solution and guidance to other departments of KFC and to ensure that the purchasing procedures and policies are complied with, is the goal of this department. To clarify, streamline and simplify the process of purchase in KFC involves the purchasing practice by all the employees the most consistent (Ghobadian et al., 2016). 

Control on Purchasing Activity

Provision of an economy in purchasing activities in order to get the value of the return in best possible extent is one of the objectives of the purchasing department. To endure equitable and fair treatment to all individuals related to KFC such as its employees, suppliers, and customers is among the priorities of the brand (Johnsen, Howard & Miemczyk, 2014). 

Having Better Implementation Process

The implementation, development, administration of special programs regarding surplus sales and providing a platform for updates of all the future procedures and policies are also the responsibilities of the purchasing department (Kanapathy et al., 2016). Controls for food safety that include pest control, hygiene, facility management, operations, food security and recovery along with product protection are the suggested criteria that should be kept in mind while selecting a supplier (Lu, 2014).

Issues arising during supplier selection include group failure as while not being able to manage efficiently when there are multiple good choices of potential suppliers. The management needs to be systematic and categorized in handling the suppliers efficiently in order to have proper purchase (Monczka et al., 2015). Not being able to collect factual information because of over assured of opinions and assumptions can create hindrance in having proper purchase. Thus, proper information about the suppliers should be obtained.

Selector Issues

The information and communication technology in KFC involves the processes that utilize the technology of internet for the simplification of specific activities in KFC so as to boost up the productivity and efficiency. ICT allows KFC to have communications in easier ways with the suppliers, buyers, and customers. ICT in the purchasing operations can be regarded as the marriage between the operations associated with purchase and the Internet.  This marriage does transform many processes in the supply chain, right from purchase and procurement to the management of customers and production (O'Brien, 2015). To introduce and adopt ICT in KFC along with the diffusion of the Internet among the customers have definitely resulted in good comfort level and familiarity with the electronic technologies in various aspects. Involvement of information technology or the activity of purchase using ICT has come out to be a crucial tool for management in order to enhance the supply chain performance. The Internet is an ICT that has been utilized in every relationship that is related business to business (Rong et al., 2015).

The advent of the internet made it possible to have a quick and efficient management of various relationships in KFC. Some of these associations include the purchasing of goods that are semi-finished, equipment and components, interaction with the wholesalers, providing service through technology and taking new resources. New techniques result in impacts on the services and products in improved ways. Technology is very much crucial in competing with the other competitors (Schweiger, 2015).

Companies do keep eyes on their competitors and the new technologies that they use in the market. Complementing the SCM product line, quick service solution has been developed so as to replace prevailing RSS systems that are in use currently. The solution has been executed in Admiralty Place in Singapore (Spina et al., 2013). The application that is front end operates on a display that is touch screen and is completely integrated with the supply chain management, thus, offering  functionality that is end to end by attending to the needs of the restaurant and the entire cycle of the sale at the counter, inventory and purchase management. KFC has a more efficient delivery system than its global competitor McDonald’s irrespective of the fact that McDonald's has better machinery for cooking. Thus, KFC has faster delivery service (Tate et al., 2016). The KFC outlets in Singapore use email and telephone services for better communication with the head office.


This assists them in planning the strategies, getting instructions and sharing ideas for improving and maintaining the business as these are the two communication ways that are faster and cost effective. The point of sale is the location that is physical where the goods are sold out to the customers. The point of sales is the software terminal that is the replacement of computer for a cash register. It is more intricate and sophisticated than the conventional cash resistors (Schweiger, 2015).

It is a software system that includes the ability to track the orders of the customers, credit cards processes and inventory management.  The point of sale which includes all the hardware and software is installed in all the KFC outlets. The tools that assist in increasing the accuracy of the orders, development of seed of service and enhancing the level of satisfaction of the customers with the technical solutions that span the complete organization, right from the front counter to the office at the back, furthermore beyond the organization.

The purchasing costs are the financial costs that are needed for an investor to invest and the cost becomes the cost basis for the investor for calculating profit or loss when the investment is sold. The cost of purchase includes any sales or commission charges that are paid for the investment along with the average cost weighted that is used to purchase multiple times of the same security.

The most important part of the business is to undertake the regular purchase analysis to ensure that the best use of capital is been done (Tate et al., 2016). The more huge the organization grows, the purchasing needs get more complex and hence, delivery times should be analyzed maverick spending and if the best use of the suppliers is been done.  Comparison of competitive bids is one of the best means of validating the costs. By asking three or more than three suppliers about the costs of the same product, determination of the reasonability of the product can be done (Spina et al., 2013). Though, it does not prevent the total costs analysis. The lowest cost may always not be represented by the lowest bid. Analysis of total cost of acquisition must be done.


There are possibilities of the cost being associated with products of lower costs so at to perform according to the standards, the extra costs for early substitution or the redesigning or testing costs that are needed to make the product of lower cost applicable. The total acquisition costs are the cost in the real sense that has to be compared. Prior quotations comparisons are also a tool for purchase costs analysis.

In certain situations, the comparison of recent quotations for a particular service in order to determine the current quotation is found to be the most effective. This is mostly used in the cases where the acquisition timing is critical along with the competitive quotes being solicited result in delaying of the procurement (Tate et al., 2016). 

The method of comparison of the list of the published price should only be applied when the materials that are mostly similar to the services and items that are available to the general customers and the price has to appear in the published list of the price.  While comparing these lists of costs, it is crucial to consider the discounts of the standard industry for the purchasers to do a specific dollar or volume of quantity (Zimmermann & Foerstl, 2014).

These types of discounts must only be taken into account when the list costs and the noted in the documentation of the purchase are being compared. The costs are set by regulation or law in some cases. There is mostly a "pronouncement" of a certain form that helps in referencing the cost structure.  This method can be used during the purchase of such items. These methods do find application for analysis of purchasing costs in KFC.

Conclusion

The purchase management of KFC is briefly described in the assignment. The significance of purchase management as experienced being the manager of the department has been illustrated. The aspects of the management of purchase and measures needed to enhance the effectiveness of the purchase management are clearly stated.  Emphasis has been given to the selection of the supplier.  Imbuing strict criteria for selection of suppliers is been illustrated. Focus on the issues cropping up during the selection of the suppliers is also described. Along with the issues, the decisions that should be made so as to resolve the unexpected issues arising during the suppliers' selection are illustrated in brief.

The role of Information and Communication System in the purchase management of an organization is reflected. The role of Information and Communication Systems in the operations associated to purchase has been described. The goals and requirements for purchase are reflected. The focus is also given to the purchase costs analysis. The tools used for the analysis of the costs related to purchasing are discussed briefly that find application in the organization.  The recommendations for the analysis of the issues related to purchasing management are also provided in the assignment.

References

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

Chao, W.S.,(2014). Enterprise Architecture of Purchasing Management: SBC Architecture Description Language in Practice.

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

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

Ghobadian, A., Stainer, A., Liu, J., & Kiss, T. (2016). A computerised vendor rating system. In Developments in Logistics and Supply Chain Management (pp. 103-112). Palgrave Macmillan UK.

Johnsen, T., Howard, M., & Miemczyk, J. (2014). Purchasing and supply chain management: a sustainability perspective. Routledge.

Kanapathy, K., Yee, G. W., Zailani, S., & Aghapour, A. H. (2016). An intra-regional comparison on RoHS practices for green purchasing management among electrical and electronics SMEs in Southeast Asia. International Journal of Procurement Management, 9(3), 249-271.

KFC®: Finger Lickin’ Good®. (2017). KFC: Finger Lickin’ Good. [online] Available at: https://www.kfc.com [Accessed 3 Feb. 2017].

Lu, A. C. (2014). Research on Enterprise Architecture of Purchasing Management

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

O'Brien, J. (2015). Category management in purchasing: a strategic approach to maximize business profitability. Kogan Page Publishers.

Rong, T., Yanhui, C., Yuan, L., Jie, J., & Yanqin, C. (2015). Countermeasure Study and Influencing Factors Analysis on Teaching and Scientific Research Equipment Purchasing Management in Universities and Colleges. China Modern Educational Equipment, 1, 001.

Schweiger, J. (2015). Development of a Purchasing and Supply Management Maturity Framework. OPERATIONS AND SUPPLY CHAIN MANAGEMENT, 8(1), 11-21.

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., Fawcett, S., Schoenherr, T., Ashenbaum, B., Carter, C., & Bals, L. (2016). Purchasing & Supply Management.

Weele, A. J., & Raaij, E. M. (2014). The future of purchasing and supply management research: About relevance and rigor. Journal of Supply Chain Management, 50(1), 56-72.

Zimmermann, F., & Foerstl, K. (2014). A Meta?Analysis of the “Purchasing and Supply Management Practice–Performance Link”. Journal of Supply Chain Management, 50(3), 37-54.

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