Effective Strategies For Purchasing In Retail Business

Attributes to Consider When Planning Purchasing Activities

Question:

Discuss about the Purchasing Management & Retail Business.

Every business activity is a continuous process that requires proper strategy to succeed. In the case of a retail business, the purchasing process is the first and most important activity as it determines the success or failure of other activities later conducted in the business. There are strategies that require a careful consideration when purchasing products to ensure for efficiency and satisfaction on both sides of the business. The paper discusses the supplier management criteria, Cost management and ICT influence on supply. All these strategies requires a special approach as well as more recommendations for future  

Retailing is the closest supplier of goods and services to the consumers in both small and large quantities. Singapore is known for the many retailer businesses dealing with different products for the satisfaction of goods and services of the people around the area. Lucky Plaza, for example, is a retailer on Orchard road which deals with low-priced products for low budget consumers. Unlike other retailers along the same street who deal with luxurious products afforded by the wealthy, Lucky Plaza can cover for almost all consumers in the market due to their fair prices (Choi, 2006). Their competition is therefore in the positive direction as the demand for their products increases with the reduced prices. The main items sold here clothing, accessories, used books, chocolate, sweets and many others that come either brand new or used but in good condition. The retailers on the Lucky Plaza Street strive to satisfy for the large market of the local consumers who are the main buyers of their products. They strategize on quality, affordability and excellent customer relations that attract more clients in the outlets (Kahraman, 2003). The future of the business seems promising as they plan on advancing into other streets and capturing a larger market for their products.

There are several attributes that an organization must consider when planning their activities with supplies. The approach is necessary because, through the vendor’s activities, the team determines the quality of products they receive, the prices and eventually the profits they make. Some of the important aspects that every organization should consider include cost, risk, service, delivery, convenience, social responsibility, and agility. All should be under control to ensure that there is a maximum benefit to both parties (Bhutta, 2002).

There are many risks involved in the supply of right from the source to the business which if not well covered might significantly affect the progress of the organization. Some suppliers are based on the natural environment whereby the group is expected to get involved in the extraction of products, especially raw materials. In this kind of setting, some risks involved are accidents and loss of the products of mining (Jabbour, 2009). Other risks are involved during the transportation process regarding accidents that might result in high losses for the business. It is therefore important to consider setting aside funds to cover for the risks in case they occur and most importantly come up with strategies to reduce such occurrences.

Risks in the Supply Chain

The service and delivery usually fall under a similar category in that suppliers should offer quality services while delivering their products to their clients. The client here is the business whose primary purpose is to get the products they order in their right quantities, quality and at the right time. The firm should get in touch with a trustworthy supplier who is ready to observe timing and other terms of delivery for a positive impact on the organization (Boran, 2009). Regulating the delivery is also an issue that affects the structure in such a way they can satisfy their consumers without delays. Buyers are usually interested in a business that provides for all their needs anytime they visit.

Convenience is an issue that affects all the aspects of supply and might be of positive or adverse impact on the activities of a business operation. The more convenient the suppliers are the best it is for business activities of the recipient firm. It is best for an organization to choose providers who are readily available regarding transport and communication. Most of the delays experienced in supply are caused by inconveniences of distance and time. The business should, therefore, opt for methods that bring them closer to their sources of materials. If for example, the essential supplies are vegetables from a certain farm, then an organization should choose the ones that have quick access to infrastructure. It is in this case that they also consider timing and security to avoid any losses that might result from theft and delays (Jabbour, 2009). If the supplier brings the products to the organization setting, then the best way is to have trustworthy associations that ensure for no delay. Finally, it is important to consider the social responsibility that the business plays to its stakeholders during the process of supply. Most work towards reducing traffic, pollution and other inconveniences in the social environment.

The process of acquiring goods from one business to the other involves a lot of expenditure from the time they are obtained from the seller, taken to the buyer and finally used as intended. For retailers like Lucky Plaza, the goods are finally considered purchased from the supplier if they get to the shops and start selling with less or no interference (Weele, 2009). An organization should, therefore, calculate all the costs incurred to ensure that they keep their profit-making plans in check. A business can only provide for maximum benefits if they cut on expenditure and increase their incomes in all of their activities

Importance of Service and Delivery

The primary costs involved begin with the actual purchase price of products from the supplier. The cost should put into consideration all the activities that will include more spending before selling a particular product to the consumer. The buying price increases with the expenditure on transporting, warehousing or storage, taxation, and delivery to customers (GCR, 2004). If all these costs happen to be higher than the selling price, then the business will be making a loss. It is therefore important to purchase from the suppliers who give better offers and discounts for maximum profits. When it comes to transportation, the most important thing to put into consideration is ensure that the modes used are the most efficient in consideration to their availability, dependability, and cost. If transporting heavy goods for longer distances, a plane might be faster but cannot carry in bulk, and it is expensive too (David, 2004). The best transportation channel, in this case, will be either train or water. On the other hand, short distance operations can utilize the cheap and reliable road transportation modes.

Delivery is another issue that requires a little expenditure before the buyer receives the purchased products. Depending on the selling organization, the delivery costs vary depending on the product and amounts delivered. Storage is a basic necessity in the operation of an organization, and it is also considered under the purchasing cost. Once the goods arrive at the destination, then they must be stored well before selling them to the final consumer. Depending on the nature of products, then the storage spaces changes accordingly (Boardman, 2008). Fresh and perishable items might require controlled temperatures and spacious rooms to ensure that they stay for as long as needed. Accessories also need a particular manner of storage to ensure for safety. However, items like clothing can take up less space since they can be squeezed without causing damage to the product. There are other products that require large-scale warehousing facilities that are costly to the organization.

It is, therefore, best for the business to invest in low-cost and efficient storage facilities that ensure for safety and preservation of the products (Weele, 2009). The different ways of preserving products largely depend on the availability, the quantities involved and expenses as well. The cost of storage should be maximized to the extent that profits are increased.

Information and communication technology plays a great role in the purchase of goods and services from an individual organization. ICT promotes the interactions between different organizations that are involved in the supply and purchase of goods. It is important to ensure that there is efficient, accurate and fast information transfer between the parties involved (Lancelot, 2003). ICT requires the development of websites, applications and software are that facilitate the efficient supply of products.

Convenience in Purchasing

In every purchase activity, the parties involved have to be connected in such a way those they can freely interact with less or no distractions. Technology has played a great role in the purchasing and selling between any business organizations (DiPietro, 2010). The retail business ensures that they can get in touch with the supply companies via the internet and plan before activities of operations. Terms and conditions of a business activity are also laid out well in the websites and business profiles over the web. The social media is a platform that facilitates the activities of advertising, ordering, and delivery. For a complete supply process, there is a need to ensure that all the required information about a particular product is displayed.

There are new applications and software’s that have been formed over the past years to ensure that purchasing is done most efficiently. These applications are a way of publicizing the supplies involved to increased demand in the market (Dubois, 2005). The retail business, therefore, tries it’s best to look through the system and acquire a contract with the most recommended company or source of raw materials. It is better to listen to the views of several people before forming a working relationship with a company. The organization uses social media to negotiate prices and quantity to ease the work of delivery and bargain on the ground (Scholl, 2012). It is therefore important for an organization to ensure that they select the best strategies of purchase. They should adopt the technological changes that are meant to make the procedure better and more efficient in the long run. In as much as it is necessary, quality and efficiency matter most in a business interaction. The companies should maintain the highest communication strategies to ensure for learning appropriate supply.

Conclusion

In conclusion, all the strategies discussed above are in one way or the other influential to the way an individual business conducts its activities. Cost influences the success or failure of an organization and must be carefully strategized to come up with the best solution. I would recommend for the retailer to ensure that all the purchasing strategies are of a positive influence to facilitate for higher profit making. All the costs involved in the process must remain lower than the selling price and use the internet and system to access such information is the best way.

References

Bhutta, K. S. (2002). Supplier selection problem: a comparison of the total cost of ownership and analytic hierarchy process approaches. Supply Chain Management:. An International Journal , 7(3), 126-135.

Boardman, A. E. (2008). Cost-benefit analysis. Pearson.

Boran, F. E. (2009). A multi-criteria intuitionistic fuzzy group decision making for supplier selection with TOPSIS method. . Expert Systems with Applications , 36(8), 11363-11368.

Boran, F. E. (2009). A multi-criteria intuitionistic fuzzy group decision making for supplier selection with TOPSIS method. Expert Systems with Applications, , 36(8), 11363-11368.

Choi, T. Y. (2006). An exploration of supplier selection practices across the supply chain. . Journal of operations management, , 14(4), 333-343.

David, R. J. (2004). A systematic assessment of the empirical support for transaction cost economics. . Strategic management journal, , 25(1), 39-58.

DiPietro, R. B. (2010). Key issues for ICT applications: impacts and implications for hospitality operations. . Worldwide Hospitality and Tourism Themes , 2(1), 49-67.

Dubois, A. &. (2005). Organising the purchasing function as an interface between internal and external networks. . In Proceedings of the 21st Annual IMP Conference , (pp. 0-11).

GCR, N. (2004). Cost analysis of inadequate interoperability in the US capital facilities industry. National Institute of Standards and Technology (NIST).

Jabbour, A. B. (2009). Are supplier selection criteria going green? Case studies of companies in Brazil. Industrial Management & Data Systems, , 109(4), 477-495.

Kahraman, C. C. (2003). Multi-criteria supplier selection using fuzzy AHP. . Logistics information management , 16(6), 382-394.

Lancellotti, R. S. (2003). ICT and operations outsourcing in banking. . Wirtschaftsinformatik , 45(2), 131-141.

Scholl, H. J. (2012). ICT-enabled city government field operations: Resiliency during extreme events. . In System Science (HICSS), 2012 45th Hawaii International Conference on , pp. 2346-2356.

Weele, A. J. (2009). Purchasing and supply chain management: Analysis, strategy, planning and practice. Cengage Learning EMEA.