Purchasing Operations and Management †Free Samples to Students

Question: Discuss about the Purchasing Operations and Management. Answer: Introduction The retail market is very competitive and dynamic and requires quite a lot of business muscle to stay afloat. Many retail giants are on the brink of collapse; case in point is the Nakumatt supermarkets that were once a household name in the Kenyan and East African market at large. Empty shelves are now a typical picture associated with this once giant retailer in the region. This essay will focus on the aspects to increase efficiency of doing retail business. The three main issues to be discussed will include supplier selection criteria, ICT for purchasing operations and purchasing cost analysis. Recommendations will be made on the best practices surrounding these three issues. This essay will focus on another giant retailer; Walmart supermarkets that are a household name in America and a global brand in some respect. Walmart stores deal in a variety of products including household goods for example utensils, furniture, electrical appliances and fresh food and fruits. Almost all kind of goods will be available in these stores. Walmart is a global brand and hence its business implications are felt in the global economy (Gereffi, 2009). The market is distributed from the Americas to Asia (South Korea and Japan) and across Europe (Germany). Competitors in the market include KMart Super Centre, Supervalu Inc, Croger among many more. Many of the competitors are also targeting the global market. Most of the goals and strategies of Walmart are focused on sustainable profitability. These strategies are aimed at maximizing profitability but at the same time factor in social and environmental responsibilities (Cohen, 2017). Supplier Selection Criteria Supplier selection and monitoring of their performance is key to efficient business operation. Devising the best supplier selection method and evaluating the performance of the supplier goes a long way to ensure benefits of the goods purchased are felt later in the chain as cost effectiveness, quality, dynamicity and creativity (Nair, 2015). Being a retail entity, Walmart seeks to maximize profit on their varied products while maintaining a low cost on their products compared to its peers in the market. Maintaining competitive prices for its products will help it have an edge on the customer base and hence boosting the sales. There has to be an understanding between the supplier and the client to purchase products at the cheapest and most favorable prices ever. This will enable the client to develop a competitive price structure in the market. In his study, Sen postulates that decisions to be made on coming up with the ideal supplier are very challenging and include inadequate information, imperfect choices and more qualitative methods applied (Sen, 2008). Over the last 30 years, a lot of academic research has been undertaken to devise a consistent approach in choosing an ideal supplier. Data mining methods, problem establishment methods, multi-criteria decision aid and mathematical programming are some of the methods to be applied in supplier selection discussed by Sen. The following phases are consistent with most supplier selection strategy (Sen, 2008): Defining the problem Establishing a method Assessing suitability of qualified suppliers Choosing the most preferred supplier Measuring endurance of a supplier in most cases is dependent on quality of the products, price, service and delivery. From an analysis of the literature by academicians in this field, qualitative and quantitative supplier selection framework will be preferred here. In this method, two algorithms are applied to select the supplier. As discussed in detail by Sen, the following pointers are key according to Sen (2008); Establishment of a cross-functional group. This is because the supplier selection affects many other activities and decision makers in the team. It includes production strategy teams, cash flow controllers, and inventory managers, among others. Therefore a consensus should be sought. Data mining to come up with varied supplier selection methods. This will help to come up with new and more efficient strategies. Arrange the selection methods into a preferred flow Calculation of percentage and relative importance degrees for the main and subclasses Importance is then sought for buyer-supplier integration steps The first algorithm is applied to establish total rating of transformation to higher integration level The buyer-supplier integration is then calculated using the second algorithm These listed steps can be practically applied to search for an ideal supplier among competing supplier candidates. The level of integration is key in this method to establish both qualitative and quantitative selection of ideal suppliers. Qualitative and quantitative attributes to be selected on include reliability, technology, cost effectiveness, high quality, and quality service among others. This method has been shown to work in the retail market and recommendation is hereby made to apply it in the Walmart case to gauge its feasibility and tolerance (Sen, 2008). ICT for Purchasing Operations With the dramatic shift of the global patterns towards embracing ICT over the past few decades, discussing ICT integration in purchasing operations becomes vital. ICT has become an important function of our lives and many people world over are computer literate. Emergence of online shopping platforms adds concrete to this course (Grillitsch, 2013). People can now access preferred goods and services of debatably the same best quality from the comfort of their homes and from the click of a button. These developments are worth marveling to and their implications to the market are strongly felt. The competitive bar has been raised much higher and the earlier retailers incorporate ICT in their services, the better for their competitive muscle. For a retail giant like Walmart, it is arguably almost compulsory to embrace ICT in its purchasing operations and even retail operations. Looking at the immensely large number of suppliers handled by this retailer necessitates ICT incorporation (Grillitsch, 2013). For better record keeping and inventory management, paper work is not even an option. However, incorporation of ICT in purchasing operations is a diametric factor. This is because it cuts across the supplier and the buyer. Therefore the operations have to be on both sides. This would not easily prove a challenge also because most of the Walmart suppliers are big brands that you expect have integrated ICT in their operations. This section will however discuss selected factors in implementing ICT in purchasing operations. Some of these factors include cost of ICT infrastructure and ICT implementation, retailer vision and goals and staff ICT skills (Francis, 2017). The cost of ICT infrastructure is a hindering factor towards full incorporation of ICT in purchasing. Incorporation of ICT has been shown to cut costs on manpower as one individual can operate the computer and do a number of transactions at the same time. The same way the suppliers can be found on the internet much easily compared to the past where websites were not available. However the entire cost of acquisition of the tools to ensure full operationalization are quite expensive (Francis, 2017). These costs include hardware appliances, software, upgrades and maintenance and development costs. Investing in ICT can also be viewed as not a primary objective of a retailer thus making the decision makers hesitant in going full out on this venture. I t is imperative that a balance be struck between the business goals of a retailer and the economic realities. Retailer vision and goals are also vital to the implementation of ICT in purchasing. Studies have shown that many institutions had actually purchased the necessary equipment and facilities to enable ICT operations but have not yet implemented them effectively because of a lack of a proper plan and vision (Francis 2017). This scenario can be avoided by striking a balance between the business goals and economic realities as stated above. To also realize the actuality of integrating ICT in purchase will also need the decision makers to own the policy individually. A foundation has to be lain first to ensure smooth transition into the purchasing operations using ICT. Such will include ensuring that the staffs have the necessary training and qualifications to enable successful operations. Adopting ICT for purchasing operations will also enable employment of persons with disability that is not usually a norm in this sector (Giannoumis, 2015). This is because automation of the sector operations makes it easier for people with such limitations. This will contribute to trying to achieve striking a balance between the social and business responsibilities of Walmart. The implications towards achieving an all equal society will go a long way in building the reputation of the Walmart brand. As a result, its competitiveness in the market will be enhanced. To be on the right side of history also calls for Walmart to fully appreciate the 21st century developments which include the robust ICT sector. History will judge the retailer on the basis of such actions as this (Grillitsch, 2013). A lot of innovations currently also emanate from the ICT sector and to be placed in a better position to enjoy such benefits, Walmart has to embrace ICT in its purchasing. Innovative minds could also rise through the ranks within the employees that can be able to provide breakthroughs in the difficulties of implementing this venture. The most important thing is for the decision makers to embrace this initiative. Rice suggests that reputable retailers such as Walmart in the European market needs to keep its goals in tandem with the goals of the European commission that seek to improve the level of accessibility in mainstream ICT services using the public procurement laws and performance standards ( Rice, 2015). Such legislation will require a full operational shift in the use of ICT for purchasing. This will also go a long way in enabling access to procurement ICT services to people with disabilities. In a nutshell, it has been shown in this section that the hurdles faced in achieving full operationalization of purchasing using ICT are not supposed to derail implementation of the same. This is because the benefits of this achievement outweigh the costs. Efficiency that comes with implementing ICT for purchasing is so real and cost effective (Mukhopadhyay, 2016). ICT for purchasing operations is thus fully recommended. Purchasing Cost Analysis Purchasing costs for any business entity keen on making profit like Walmart need to be optimized. The optimization aims at enabling purchases to be made at the most affordable or lowest prices. When goods are purchased from the suppliers at the lowest possible prices, they will be retailed at competitive prices in the retail shelves (Anderson, 2016). This will go a long way in ensuring that Walmart is competitive enough to outmuscle its peers in the market. Such an arrangement is in tandem with the goal of Walmart of achieving an all-day low price for its products. However this task is not easy to accomplish due to its multifactorial nature. To achieve the above goals, the purchasers and suppliers need to develop and understanding that is honest and would allow both parties to make profit from the business without aggrieving either of the parties. Another important aspect of this discussion would be create a competition between the suppliers of a purchaser such that the suppliers strive to offer the best deal to the purchaser (Anderson, 2016). The best deal would be in terms of the lowest prices from the same goods offered by the different suppliers. When this is achieved, the purchaser would go with the best deal and establish a partnership with the supplier. The supplier also needs to be assured of their job security (Gupta, 2011). Assuring the suppliers long term contracts based on performance is a motivation to them and will go a long way in creating a rapport between the parties. This can be accomplished through structured and consistent discussions between the parties to achieve the best business goals while keeping a close eye on the market trends. Also an evaluation needs to be consistently done of the suppliers of the purchaser to ensure that the trends in the market are catered for. It is important that the business incorporates creativity and dynamism in this current competitive market. Consistent consultations with the supplier on these issues will anyhow be key in achieving this goal. PCM Inc that is a marketer of technological products in its report emphasizes the need for retailers not to allow themselves to be left behind in the market trends (PCM, 2015). Having robust data mining departments can also help keep tabs on the market needs and trends. Evaluation of the supplier also need to be done to establish if the supplier will be able to meet the needs of the retailer effectively and especially in the high seasons. A balance must also be struck in the high and low seasons. Once the above discussed factors are implemented, it becomes easy to achieve the ultimate goal of lowering the purchasing costs (Mehlawat, 2013). T his will of course increase competitiveness of the retailers products. Its competitive muscle will also be enhanced in the market. Conclusion Decision makers in such reputable retailers as Walmart are faced with multiple hard decisions to make on a daily basis. Most of these decisions are strategic and very key to the business objectives of these entities. In a nutshell supplier selection has been discussed and recommended basing on the qualitative and quantitative model details to which have been availed. ICT for purchasing operations has also been strongly recommended to increase efficiency and cost effectiveness. Finally the purchasing cost analysis factors have been discussed with the aim of achieving the lowest prices for purchased good. 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