Assignment Sample on Procurement and Supply Chain Management
Introduction
It has been noticed that the professionals who are involved in the construction business are always eager to understand the various methods of procurement that are practiced within the industry. Thus it becomes imperative for the construction workers to analyze the required system of procurement. The main objective of the system of procurement is to identify the basic responsibilities and the tasks which are related to every participant who is involved in the project which has been already signed. To analyze the methods of the procurement system, it is imperative to comprehend the various functions that are carried out within the construction sector. The functions of the construction industry mainly involve the aspect of designing, building, managing the operations which are inclusive of the financial operations as well. The report will analyze various methods of the procurement system along with discussing the internal and external factors that are responsible for procuring the materials. It will also discuss the benefits as well as the requirements related to the collaborative procurement systems.
The Types of Procurement Methods are as follows
It can be said that a total of five procurement systems are being followed by the industry. Each type of procurement will be discussed below:
- Traditional Method: It has been analyzed that it is the responsibility of the contractor to build the project. Apart from this the entire design and the total management of the project is conducted by either an engineer or a consultant. On the other hand, the financial aspects, as well as the operations, are expected to be carried out by the client. But the process of procurement has been a very complex topic and is expected to be pursued by the huge projects (ABAYNEH, 2019).
- Design and Build: The designing and the building functions are conducted by the contractor. The scope of the consultants is limited to only managing the contract. On the other hand, the financial aspects and the operations are handled by the clients (ABAYNEH, 2019).
- Contract Management: In this type of procurement, along with the consultant, client, and the contractor a specialized contractor also becomes a part of it. The contractor mainly manages the signed projects whereas the specialized contractors take up the building aspects which are related to their specialized fields. The client takes care of the operations and the finance part of the project. This method of procurement is mainly chosen when there is a possibility for identifying the projects in packages.
- Partnering and Joint Ventures: There have been many instances where there existed various barriers between the parties of the contract (Adamtey, 2020). Thus to reduce or even overcome the barriers the various parties established a work environment that was thoroughly based upon the common objectives, trust, teamwork as well as sharing the rewards and risks. The identification of the responsibilities of all the parties is termed to be somewhat difficult in the spheres of joint ventures.
- Private Financing Initiative: In this type of procurement the contractor is wholly responsible for the entire functionaries of the construction. After the completion of the project in a successful manner, the project is said to be transferred to the owner (Chen, Wang, Yao, and Yang, 2018).
The factors that are responsible for the selection of the procurement method are as follows
- External Factors: The external factors which influence the selection of the procurement system mainly consist of the commercial, economic, political, social, technological as well as legal factors. All these factors must be analyzed thoroughly while selecting the method of procurement.
- Internal Factors: The internal factors which are responsible for the selection of the procurement system are as follows:
- Characteristics of the Client: The adopted procurement method which will be decided by the client depends upon the experience as well as the knowledge of the client. On the other hand, the selection of the procurement will be influenced by the main culture of the said organization and the degree of desired involvement of the client (El-Sawalhi and El Agha, 2017).
- Characteristics of the Client: The complexity, the size, the said location as well as uniqueness of the project is mainly considered and this will affect the influence of time, risk, and the cost associated with the project.
- The ability to make certain changes: It is a known fact that the changes in the projects are very much inevitable. The procurement selection will depend upon the actual flexibility of the client and his inclination to make the changes in the duration of the project.
- Cost: It must be accepted that there is always a requirement of assessing the cost of the project even before the actual initiation of the project takes place. If there is a certainty in the price aspect, then the design of the project should be selected even before the construction initiates so that after the commencement of the project, the design change is minimized (Ghadimi, Wang, and Lim, 2019).
- Time: It has been already noticed that most of the projects which are pursued by investing a huge amount of capital are given a specific period to complete the task. If the project requires early completion, then the procurement process of the project becomes very much critical which will be completed by following a speedy completion process as favored by the client.
The requirements and the benefits associated with the use of the collaborative procurement systems
The collaborative procurement system may be defined as a process of collaboratively procuring done by two or more companies or organizations. It has been identified as a scenario when two or more organizations mainly agree to work together with each other. When two or more organizations work with each other, the major benefit mainly lies in aligning their purchasing power as well as the resources to deliver certain aspects such as the effectiveness as well as the efficiencies, financial savings, without damaging the objectives of the project or services (Kamble, Gunasekaran, and Gawankar, 2020). The collaborative form of procurement system has been termed as the best procurement system which can be used to procure the expertise as well as the resources which will mainly help in eliminating the duplicated effort.
Requirement and benefits of the Collaborative Procurement System
The main benefit of the procurement related to the collaborative system is that it assists every organization to gain leverage on their combined aspect of purchasing power which will help in delivering the savings and it would be impossible if they had decided to purchase it by themselves.
If the traditional process of procurement is analyzed, one will notice that the purchase is performed on a one-to-one basis between the buyer and the supplier, and both parties try to get the best deal out from each other. But in the means of the collaborative purchasing system, one or more organizations agree to purchase the required amount of materials by working with some other bodies as well, and thus this process helps in expanding the purchasing scales which ultimately brings down the cost per unit on an average (Saberi, Kouhizadeh, Sarkis, and Shen, 2019).
On the other hand, the procurement pursued by the means of collaborative procurement also helps in driving the aspect of the standardization for the best practices which will mainly help the company to be effective and efficient and also will help in improving the process of management which can save the capital in the long run. The savings of the money will be gained by the help of knowledge, experiences as well as expertise gained by the clients in their respective fields.
Apart from this, it can be ensured that the collaborative procurement will lead one or more organizations to work together belonging to the same sector by the help of forming the groups as well as sharing the information related to the suppliers as well as the market which belongs to the same sector (Wieland, 2021).
The Collaborative form of procurement is mainly useful for the smaller companies, which can form groups as well as networks that could help in developing the expertise related to procurement. This process would have been really difficult if they had pursued procurement on their own.
Additionally, it can be said that the companies who involve in dialogues with each other and who belong to the same sector as well as have a common interest in achieving the same solutions will act as a very good benchmark to measure their performance with that of its peers.
Conclusion
To summarize the entire project, one can notice that the project mainly deals with procurement methods in the construction industry. The report mainly commences with a brief introduction to the procurement system in the construction industry. The report then continues to discuss the various methods of procurement systems. Then it is followed by the factors which will be responsible while an organization aims to choose a particular form of the procurement system. Lastly, the report discusses thoroughly the collaborative procurement system, which is termed as the most important form of the procurement system and it concludes by discussing the benefits and requirements of the collaborative procurement system. This report will help the organizations to choose the best method of procurement when they indulge themselves in the construction industry.
References
Adamtey, S.A., 2020. An empirical study to assist owners in selecting the right procurement method for design-build projects. International Journal of Construction Education and Research, pp.1-18.
Chen, Y., Wang, S., Yao, J., Li, Y. and Yang, S., 2018. Socially responsible supplier selection and sustainable supply chain development: A combined approach of total interpretive structural modeling and fuzzy analytic network process. Business strategy and the environment, 27(8), pp.1708-1719.
El-Sawalhi, N.I. and El Agha, O., 2017. Multi-attribute utility theory for selecting an appropriate procurement method in construction projects. Journal of Construction in Developing Countries, 22(1).
Ghadimi, P., Wang, C. and Lim, M.K., 2019. Sustainable supply chain modeling and analysis: Past debate, present problems, and future challenges. Resources, Conservation and Recycling, 140, pp.72-84.
Kamble, S.S., Gunasekaran, A. and Gawankar, S.A., 2020. Achieving sustainable performance in a data-driven agriculture supply chain: A review for research and applications. International Journal of Production Economics, 219, pp.179-194.
Lăzăroiu, G., Ionescu, L., Uță, C., Hurloiu, I., Andronie, M. and Dijmărescu, I., 2020. Environmentally responsible behavior and sustainability policy adoption in green public procurement. Sustainability, 12(5), p.2110.
Saberi, S., Kouhizadeh, M., Sarkis, J. and Shen, L., 2019. Blockchain technology and its relationships to sustainable supply chain management. International Journal of Production Research, 57(7), pp.2117-2135.
Wieland, A., 2021. Dancing the supply chain: Toward transformative supply chain management. Journal of Supply Chain Management, 57(1), pp.58-73.
Know more about UniqueSubmission’s other writing services:
