Purchasing Issues in Communication Technologies - Term Paper Example

Purchasing issues in communication technologies Introduction The telecommunication sector is one of the most rapidly progressing areas of technologyoften exhibiting highly unpredictable growth curve. The British telecommunication company is recognized across the world for their highly aggressive marketing operations and also high efficient procurement mechanisms. In addition the product diversification by acquiring other majors in the related business domains forces B.T. to search for innovative operational systems. The advantage often enjoyed during the processes of such takeovers is the very weak state of the acquired organizations which have helped British Telecom managers to set up better and well established B.T. operations module. Also, on the customer relationship management B.T have set benchmarks of operations. The extensive data mining exercises undertaken by its customer relationship management team always brings out newer information of the shift in preferences among the product use in the customers. Thus being a very large global enterprise, the future investments made by them would be quite high. Hence, the large quantities of purchase would normally be completed at an early stage and hence sudden change in the market preferences would be a serious problem for the company. On the service support that B.T offers, majority of the call center operations are outsourced to countries like India on the cost advantage offered at these places. This strategy has helped B.T. to cut down large amount of purchase and maintenance of information technology products required for the domestic call centre units. In this way the B.T. undertakes a wholistic assessment on its strategy to expand the business not alone on one particular operation. The strategies evolved from the broad policies set by the chief management team where the efficiency of every department is assessed by a long-term policy creation (Singh, 2003). British Telecom have the most favored brands in the information and communication technology segment across UK and other major European countries. Since its formation B.T. was offering its customers high quality products and services. The reasons for its success during all through these years was due to the competitive strategy it had adopted by recruiting, training and retaining highly competitive staff who are knowledgeable, friendly to customers and also highly committed to the profession. The business strategy too is beyond the revenue and enhanced sales volume. They take extra care to see that their customers are able to complete the particular task for which the B.T products were purchased. Issues ahead The rapid growth in telecommunication systems is taking place expecting large-scale demand from the developing countries especially in the Asian subcontinent including India. The large scale investment made by major telecommunication players like Vodaphone, Aircel, NTT DoCoMo, Telenor forces the other players also to take appropriate strides to retain their market dominance. In the race, British telecom cannot afford to remain isolated and hence would have to device appropriate steps to establish their presence by expanding the product portfolio and business volume. Also, the studies have also shown the huge market base for high-end technology users in the mobile phone market space. It is expected that large number of customers who are presently using internet enabled handsets are the prospective customers for broadband subscription and advanced technologies like 3G. It is anticipated that the if cost of mobile phones turn to a figure lower than the cost of personal computers, the demand for broad band service on mobile phone is expected to increase and the high end mobile phone would have large takers. Thus the companies currently in this sector need to evolve appropriate strategies in the procurement management systems and purchase procedures to have easy shift over to such scenarios. The major problems faced by the British Telecommunication are the severe purchase shortcoming experienced by majority of the newly introduced technology and products. This have led to a situation of huge purchases made with an assumption of better sales and business but later experienced a slump in the sales and culminated in new problems. The hype created in the market on the potential of advanced communication technologies to eliminate the growing sick population, problems with poor educational levels, overall improvement in the global living standards and capable of ensuring the global peace are the major misguiding philosophies in the market place. Of course, the communication technological progress could have an influence on the overall progress achieved on the betterment of societal objectives, they being promoted as panacea of all the ills sends disturbing signals. Thus the growth of the technology and hence the business of products related to technology being forecasted on this evaluations, the companies tend to over invest and hikes their product procurements anticipating a sudden jump in sales forecast. Thus even though people might realize the importance of information and the economic gains they might be able to achieve the promises made by the high end technological products that lack the economic power for the purchase resulting poor convertibility of concepts into the business Thus the business forecasts might predict a high growth potential based the afore mentioned predictions and propose large scale purchases of products and materials for the product development or manufacture. But the late realization of poor sales would cause severe financial loss to the company. The prevailing economic climate forces the management to take a very cautious approach in the day-to-day operations of the business. The costs are being tightly controlled and thorough review on all the major suppliers are being undertaken. Still, the currency movements and the appreciation of Euro have indirectly influenced the margins generated from the business. Exploring the possibility of re-sourcing the materials and identifying the opportunities for better margin are underway against the backdrop of this situation. The board members dont expect a sudden change in the business climate but are confident that the robust model on which the British Telecom operate would help to sail through the not-so-favorable period quite successfully. They are also optimistic that company could generate healthy return during the remaining period of the current year and also during early next year with the help of innovative strategies developed them Evaluation of purchase strategy The purchase strategy evaluation of any business proposal can be very complex and cumbersome exercise. The major factors considered in the process are - assessment of any suitable advantages, evaluating the operational assumptions to be realistic, availability of necessary competence, resources and attitudes, an evaluation of risks and uncertainties, flexibility in operations and provision of proper time allocation (Allan, n.d.). In the assessment of suitable advantages the evaluation process must be able to bring out comprehensive SWOT analysis of the operations planned. This must be in connection with the capabilities of the proposed business system. The realistic assumption is a factor normally ignored in most of the business policies. A case of assuming availability of traditional work force to undertake a task that involves more drudgery but is very cost-effective may not work if better opportunities are available to the targeted work force (Allan, n.d.). On proper allocation of resources, even though required financial resources might have been arranged, it might not have considered the need for skilled and competent employees. Further, the manager must also be able to ensure a compatibility in the operational styles with the other departments and units in the same organization. The creation of an environment for consensus and acceptability of ideas across the group need to be present for a viable strategy for the business. A clear judgment on the time allocation for various processes like market analysis, product generation, test marketing and final launch must be carefully position to prevent the loss in the advantageous position that the company might have had initially (Allan, n.d.). Due to all these reasons the strategy evaluation often tends to be very complex and sensitive exercise. Factors influencing innovative organizational practices The factors that promote the organizational innovation are behavior of the individuals in the organization, internal characteristics of the organizations and also the market factors. The presence of participative and interactive leadership tends to spread high tolerance to ambiguity and uncertainty and hence create a fertile ground for innovative purchase initiatives in the organization (dnaglobal.com, n.d.). The important organizational characteristic is the establishing a pro-innovation culture within it. It could be by encouraging the large scale participation of its people, having freedom of expression and also establishing the performance standards. At the same time implementing centralized and formalization of activities is found to retard the innovative initiatives, especially purchase operations, within any working unit. Implementing specific norms for quality and quantity in connection with the organizational practices too could promote the innovation. The external factors like highly uncertain environment would demand dynamic attitude with in the organization and hence lead to innovative practices in the organization (dnaglobal.com, n.d.). Different types of models have been proposed to explain the innovations in the organizations. It varies from simplified linear model to complex staged or process models. The linear models primary has three stages namely discovery stage, development stage and deployment stage. All the three stages are linearly connection and one succeeds the other in the order (Read, n.d.). The stage models are similar to linear models but have the flexibility for feed back control. The different stages could be identified as strategic planning, concept planning, design and production and marketing etc. The research have confirmed that the continued organizational innovation is necessary to maintain sustained growth of organizations .In the case being considered here, the purchases are made more efficient at the large organizations like British Telecommunication by selecting exclusive vendor partners for their components required in the equipment o products sold by them. British Telecommunications have chosen Huawei has their exclusive vender partner in this connection. The strategy developed is by having the replacement of the top officials into their partnering organization. In this particular case, British Telecom CTO Matt Bross took over as the Huawei global CTO (Gerwig, 2009). New initiatives As the forecasts have shown slightly decreasing level of sales volume during the periods during 2009-10, the full capacity of operation of the existing facilities are not required. Hence, reasonable levels of capacity estimation need to be undertaken for supporting the expected business volumes to be generated. This capacity forecasting is necessary because of the following reasons (Beasley, n.d.). The purchase of raw materials and their procurement process is to be analyzed properly to estimate the stock required to be maintained at each of the production locations. Thus the control on the inventory, planning the production process and its schedule all depends on the capacity that is available. This could also help the sales and logistics to plan their operations to ensure the support systems to meet the target volumes set from each plant. This could also help to give the feed back of possibility of future expansion or necessity in the reduction of the production for the overall operational efficiency. Capacity forecasting would also help the human resources department and financial department to ensure the allocations of resources at specific time to ensure smooth flow of operations. Also this would help to review the operations and help the top management to take strategic decisions that are vital for viable performance of the company. B.T. support for efficient processes The purchase management at British Telecom has evolved into a product for supply chain management operations particularly for small and medium enterprise operations. The online support systems that helps organizations to issue purchase orders, invoices, ship notices, functional and purchase order acknowledgment is being promoted by B.T. This gives the glimpses of the effective purchase management systems being sued at the British Telecom (edipipeline, n.d.). In an effort to improve the overall performance of business operations, a suitable net-based tool called NetSuite is being promoted by B.T. with focus on easing of purchase practices (NetSuite, n.d.). With large volume of sales to happen over the internet, the procurement management in the companies need continual updation. B.T. and have considered this demand and have resulted in convergence of variety of operations like accounting, sales, customer support and relationship management with the purchase processing. Thus the warehouse managers could effectively monitor the inventory and also help to manage the stock flow subjected to the dynamic demand arising from the market. Hence, the final outcome would be better profitability and highly productive employees resulting in better cash flow rates (NetSuite, n.d.). Ethics in operation Most of the complicated solution and efficient services needs better equipment that are very expensive but appealing to many customers. . The advancement of technology have helped in the rapid progress towards developing products that are mostly beyond the human imaginations. Besides the high investments required, these equipments demand not only very high operational and maintenance cost but also well qualified and competent professionals to support their effective management. In the context of making the technologies affordable, to propose these equipments and devices to operate at lower cost would not be a viable proposition considering the overall organizational operational sustainability. Further, during the period of poor business operations, it is common judgment that most of the institutions might resort to unethical means of exploitation might prevail. Thus to have better credibility of operations it is desirable that the information communication is a necessity. The detailed list of equipments and their frequency of operations across different situations would give a better credibility towards their business practices. Further, the detailed list of situations under which each equipment or device is most desired need to be conveyed through appropriate information creation exercises. It could be made available on their web sites and these steps would also help the customers to have a prior knowledge on the technologies and products and expenses that could be expected in the process. A prior forecast of the expense in the process could make give them more flexibility in the purchase decisions and also reinforcing the credibility in the business process. Concluding remarks The purchasing process is a very important activity in any commercial organization. Various innovative interventions are necessary to make the effective purchase management operations the prime factor for growth in every organization. These approaches could help in the reduction of total delivery time of the products and improves the cash flow rate. The tremendous growth experienced in the Information and Communication technologies have made the companies in this sector to explore innovative practices for improving the business turnover time. British Telecommunications is one such group creating stronger presence in this domain with significant transformations in the operations management. The techniques like exclusive vendor relationships, buyers agreement with premier supplier companies are some of the initiatives that B.T. have adopted in this direction. With large potential in the telecommunications sectors said to remain untapped, the steps taken to improve their operations would have significant impact in the years to come. 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