Assignment Sample on Report on Procurement System and Supply Chain Management
Task 1
1.1 Procurement system of business
The management of procurement systems is often considered as a source to settle processes. It includes the selection, evaluation and preparation of contractual agreements and also managing the relationship with the ongoing supplier of the company. The process of procurement management includes all kinds of transactional purchasing of products and services (Suprayitno and Stendel, 2020). The procurement also includes the payable accounts for completing the source to settle process by providing all the supporting documents to assist the supplier to process the payment invoices.
- Brief on procurement system situation and strategies
As per the view of, Suprayitno and Stendel, (2020), procurement system for a company refers to the strategic purchasing system that mitigates the risk of the company. It automates the procedure of purchasing products, goods and services while maintaining inventory. The procurement management system includes:
- Sending the purchasing requisitions
- Preparing purchase orders
- Managing and selecting the vendors for suppliers
- Approving the delivered products and services
- Reviewing and rechecking the invoices
The management of procurement is being done by cloud based online procurement software to automate a repetitive task that can save time and money as well. Procurement system helps to build better relationships between suppliers and the vendors. It speeds up the purchase approvals by checking and tracking a requisition status and approving the proposal as soon as possible (Öhgren et al. 2019). Nowadays the cloud based procurement system automates and streamlines the procurement procedure which can trace all the requisition status, and show every details of the requisition status, and also approve it on the release.
1.2 Significant factors influencing the choice of procurement system
Finding the appropriate procurement system, a company should initiate the procedure by enlisting the business requirements and look for tools that match those requirements (Öhgren et al. 2019). Generally there are some significant factors that a influences the procurement system and these factors are going to be evaluated in the below section:
- Customized interface and the workflow
Every industry and organization has particular sets of requirements. Therefore, the cloud based online procurement system chosen by a company should make it very easy to create customized interfaces and workflows regarding the custom purchasing order of the company (Öhgren et al. 2019). According to which every operation related to purchasing the goods or services should be followed. Therefore, it can be stated that the customised interface and workflow generally influences the procurement system.
- Cloud based online access for quick tracing and approvals
Nowadays, every organization uses their cloud based tools beside the traditional way of procurement to track all the operations and mitigate the risk and manpower. Therefore, it has been identified that the procurement system gets also influenced by trends. As per the view of Wieland, (2021), the companies have the possession to access the real time requisition notification from anywhere, any device. It is also possible to give .quick response and approval for the different stages of the procurement process.
- Tracking of budget
For making a smart procurement decision and speeding up approvals it is important to know all the information about the products or services that a company is going to purchase (Wieland, 2021). A detailed analysis on the products during the last few months and the market performance should be judged appropriately to mitigate the risk before approval. It is important to be aware of all the important information at the time of stakeholding.
- Vendor management and price competition
Vendor management is an essential factor which influences the procurement system in business. It is important to maintain a healthy and reliable supplier-vendor relationship to continue successful purchasing. As per Wieland, (2021), the online procurement system needs a centralized database that consists of authentic information about all the vendors. It should be possible to enlist the new vendors also by using the PO Generation process across the world for saving time.
- Invoice approval automation and Flexibility
The online procurement software should have automated the invoice approval procedure by using the Three-Way invoice matching system (Patrucco et al. 2017). The tools should match and verify the purchase orders; receipts and invoices from its centralized database to cross check the authenticity of the order and make sure that there are no incompatibilities. Therefore, it is also an influential factor for the procurement system.
- Supplier’s performance management
As per the view of Patrucco et al. (2017), managing the healthy relationship with the suppliers and reducing the risk of supply chain is a significant factor in procurement. Therefore, an organization and the procurement tool should have the ability to manage and monitor the relationship and performance of the suppliers.
- Visualize the customized report
Every organization depends on the visualized and customized database report generated by the cloud based online procurement tools used by them (Patrucco et al. 2017). The tools prepare visually reliable reports on the company’s procurement process. These reports help the authority to make better and easy data driven decisions for mitigating the risks regarding purchasing goods or services.
- Procurement analysis and arbitration, dispute
A detailed analysis on the whole procurement system is one of the key factors for a successful purchase. Every organization should track all the metrics of key performance and generate the data driven customized report on purchasing goods or services to mitigate the risk in procurement (Patrucco et al. 2017). Generally, all the analysis and report for procurement is prepared by the online procurement system conducted by the companies based on a centralized database to avoid human error.
Task 2
2.1 Supply chain management (SCM)
Supply chain management (SCM) is an active management process of supply chain activity, aiming to maximize the customer-value and achieve sustainable competitive growth. SCM represents a continuous effort by the companies and the firms to run and enhance the quality of the supply chain in an efficient and effective way (Cole et al. 2019). Supply chain management covers everything including sourcing, product development, production procedure, logistics and all the information systems that needed to conduct the activities. The companies that maintain the supply chain linked through two types of flows, which are elaborated in the below section:
- Physical flow: Physical flows include the production, storage of the goods and materials, transformation and movement. The most sustainable part of the supply chain is physical flows however; the information flows play a significant role in the supply chain as well.
- Information flow: Information flows trace the co-ordination of both long term and short term plans between the supply chain partners. It helps to keep records of the flow of materials and goods that may affect the supply chain on a daily basis.
The theory of supply chain management is depended on two main concepts, such as:
- First concept:The first concept is concentrating on the products which reach the final user. In this type of product the accretive effort of multiple companies or firms is required, where these companies are referred to as the collective supply chain.
- Second concept: The second concept based on the supply chain which has existed for tenure of a long time. As per Cole et al.(2019), in this case most of the companies paid attention only to what was going on in their production house and it affected the effectiveness and the integration in the supply chain.
2.2 Advantages associated with supply chain management in construction
Supply chain management is very effective in construction organization because all the services or products reach the uses due to the third parties collaboration and working integratedly to construct a sustainable supply chain (Koberg and Longoni, 2019). Each of the supply chains varies based on company however, there are some specific components of supply chain which are going too mentioned below:
- The plan including initial supply chain
- Finding out the raw materials and services
- Process of the construction of the project
- Logistics and delivery operation
- Defective items and reverse logistics
The advantages associated with the supply chain management (SCM) in construction section are enlisted below:
- Reduce the cost and develop financial practices
As per the view of Cole et al. (2019),Supply chain management in construction involves the detailed planning, estimation of the project. In construction work, cash flow is a key aspect, insufficient finance can be the reason for failure for the project. As per the view of Koberg E and Longoni, (2019), Supply chain management can help the construction companies to identify the unnecessary expenditure and logistics costs. Therefore, the production cost can be bounded in a desirable amount and the risk of interruption in the project due to insufficient finance can be overlooked.
- High rate of efficiency
Construction projects may face different issues such as sudden increase in the price of raw materials, shortage of manpower, equipment and many other difficulties (Cole et al. 2019),. Therefore, Supply-chain management allows the companies to consider all the uncertainties and then plan and act accordingly. The planning improves the efficiency rate of the work and also ensures the project does not become over-budget and go past the project deadline.
- Improvement in communication
One of the main advantages of SCM in the construction sector is that it improves the required communication system. Construction projects are very complex and need a lot of details regarding the project work (Koberg and Longoni, 2019). The contractors, product vendors, engineers, raw material suppliers, project managers and transport companies all are interconnected in a construction project (builderspace.com, 2021). Therefore, to coordinate a project work smoothly it is important to design a SCM to have an improved communication between all of them.
- Giving more importance on quality control
Supply-chain management includes the guidelines of company’s expecting quality requirements that help contractors as well as suppliers. A company always prefers reliable contractors and suppliers to meet the expected quality requirements for getting good quality of raw materials and site work.
- Reduce waste
As per the view of Cole R et al. (2019), SCM includes the plans, detailed estimates of a construction project. Material estimate is the analytical process through which construction companies can get a clear idea about the quantity of different materials that are required for the project (Koberg and Longoni, 2019). Applying the SCM, companies can reduce the amount of waste materials which were not required in the project work.
- Delivery value to the client
The reputation of the construction companies depends on the completion of a project work between deadlines and handing it over to the clients (Cole R et al. 2019),. SCM involves the PERT (Program Evaluation and Review Technique) and the CPM (Capital Path Method) which help to manage the time for construction in a scientific manner. Therefore it can be stated that there is a significant role of chain management in construction.
References list
Cole, R., Stevenson, M. and Aitken, J., 2019. Blockchain technology: implications for operations and supply chain management. Supply Chain Management: An International Journal.
Koberg, E. and Longoni, A., 2019. A systematic review of sustainable supply chain management in global supply chains. Journal of cleaner production, 207, pp.1084-1098.
Öhgren, M., Milios, L., Dalhammar, C. and Lindahl, M., 2019. Public procurement of reconditioned furniture and the potential transition to product service systems solutions. Procedia CIRP, 83, pp.151-156.
Patrucco, A.S., Luzzini, D., Ronchi, S., Essig, M., Amann, M. and Glas, A.H., 2017. Designing a public procurement strategy: lessons from local governments. Public Money & Management, 37(4), pp.269-276.
Pettit, T.J., Croxton, K.L. and Fiksel, J., 2019. The evolution of resilience in supply chain management: a retrospective on ensuring supply chain resilience. Journal of Business Logistics, 40(1), pp.56-65.
Suprayitno, G. and Stendel, A.P., 2020. Designing a Sustainable Procurement System Model SNI ISO 20400: 2017 In SKK Migas. Systematic Reviews in Pharmacy, 11(2), pp.895-900.
Suryanto, T., Haseeb, M. and Hartani, N.H., 2018. The correlates of developing green supply chain management practices: Firms level analysis in Malaysia. International Journal of Supply Chain Management, 7(5), p.316.
Wieland, A., 2021. Dancing the supply chain: Toward transformative supply chain management. Journal of Supply Chain Management, 57(1), pp.58-73.
Wijethunga, L. and Jayaratne, P., Evaluating and Identifying Strategies to Streamline Procurement Process in Sri Lankan Educational Institutes.
Websites
builderspace.com, (2021), Benefits of Supply Chain Management in Construction, available at: https://www.builderspace.com/benefits-of-supply-chain-management-in-construction#:~:text=The%20benefits%20of%20supply%20chain,repeat%20pairing%20with%20progressive%20clients. [accessed on 5th May, 2021]
kissflow.com, (2021), The Procurement System Buyer’s Guide 2021, available at: https://kissflow.com/procurement/procurement-system/#:~:text=What%20is%20a%20procurement%20system,Sending%20purchase%20requisitions [accessed on 5th May, 2021]
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