The Importance of Sustainable Purchasing and Supply - Coursework Example

The Importance of Sustainable Purchasing and Supply Table of Contents Introduction 3 Concept of Procurement 3 2.Benefits of Effective Purchasing and Supply 5 3.Importance of Good Purchaser and Supplier Relationship 5 4.The Concept of Competitive Advantage 7 5.Selection of a Reliable Supplier in Creating Competitive Advantage 8 Conclusion 9 References 10 Bibliography 12 Introduction In the modern day context, every business process undergoes purchasing and supply chain activities from the utilisation of raw materials to the management of waste materials. Purchasing and supply generally emphasises upon pricing, sourcing and most importantly buying the products and supply to different locations at correct time period. In this similar context, it can be stated that the procurement managers belonging to any organisation are much capable of recognizing the opportunities for improving the quality of the products that are purchased from various market places in order to enhance its business or operational productivity. It can also be stated that purchasing and supply operations on a long term basis enable the organisations to gain greater stability and generate substantial profits. The paper intends to discuss the perception of procurement and the benefits of effective purchasing and supply in a business. Various aspects like the significance of the association between a good purchaser and a supplier, the notion of competitive advantage and how the selection of a reliable supplier is such an important issue in generating competitive advantage will also be discussed in the paper. 1. Concept of Procurement Procurement is the process of obtaining new products or services. It is often regarded as a strategic role for different organisations belonging to both public along with private sectors. It has been viewed to be a dynamic process that covers several significant activities relating to supply chain that comprise generating contracts, purchasing and performing logistical functions (Bower, 2003). It has been apparently observed that the procurement process includes certain fundamental inputs in the form of physical structure like raw materials that is required for preserving the product standards and maintain greater product reliability supporting the organisations to accomplish superior competitive position. The process of procurement also consists certain other wide ranging aspects that include storing, receiving and inspecting among others. The process also signifies the requisition as well as the acquisition of materials. The perception of procurement generates a logical meaning that indicates to supply the right materials to the correct person and at a precise time. It can also be viewed that an effective process of purchasing or procurement assists an organisation in decreasing the costs and maintaining the quality of the products along with mitigating the risks linked with supply chain management. Moreover, effectual procurement would also enable the organisations to generate greater productivity, broader availability of raw materials and mitigate the risks relating to inventory levels of products (Altekar, 2005). In this similar concern, the aspect of sustainable procurement can be considered as a significant aspect as a form of business activity in this modern day context. It is regarded as a process through which considerable savings can be done with respect to decrease in the waste materials, increase in the efficiency of the business along with gaining greater competitiveness. Various oil companies have generally adopted sustainable procurement programs such as investing much upon transportation facilities and networking with the intention of competing with their major market competitors. It also develops the economy by offering employment facilities and sourcing organisation (Mahadevan, 2010). 2. Benefits of Effective Purchasing and Supply Effective purchasing and supply can be principally determined as one of the imperative elements in the process of supply chain management. The benefits of effective procurement can be identified in several aspects like broader availability of raw materials, standardised process transactions, development of contract compliance, minimisation of inventory levels and reduction of processing along with material costs (Li, 2005). From the above mentioned benefits, it can be affirmed that an effective purchasing and supply helps in the determination of appropriate level of staffing of employees of a particular organisation. The resources that are used in the process of procurement are highly productive that assists the organisations like oil and gas companies to accomplish their expected business targets by a greater extent. The resources are to be collected efficiently by the suppliers to deliver the final products to the customers (Monczka, & et. al, 2010). One of the imperative benefits of purchasing and supply is that it assists in conductive collaborative performances between buyers and sellers within a specific organisation, enhances communication with the customers in the business market and increases productivity organisation at large. These can be experienced with raising sales volume and lessening product along with operational costs (Li, 2007). 3. Importance of Good Purchaser and Supplier Relationship Efficiency in a business can be noted under the dimension of making effective interrelation with different involved parties associated with the procedure of supply chain within any particular organisation. In this regard, it can be stated that effective purchasing and supply can be determined in the supply chain process through implementing Just in Time (JIT) system. Organisations applying this particular system are able to come in close connection with the suppliers in the business market while supplying the products. It has been apparently observed in this circumstance that the location of the suppliers, scheduling of production and transportation of goods by the suppliers in the markets are the necessary conditions that largely assists an organisation to meet the requirements of the customers by a considerable level. Thus, on the basis of the above discussion, it can be affirmed that the success of an organisation depends upon the association between the buyers and the suppliers (Donaldson & O’Toole, 2007). The responsible suppliers in different organisations are required to identify that the dispatching of the final products are carried out efficiently to minimize the level of inventory and enhance the profitability of the organisation by delivering quality products to the customers. The suppliers delivering qualitative products in the business market within the time limit facilitates enhancing the productivity of the organisations at large. Qualitative products according to the requirements of the customers enhance customer satisfaction as well as enable to generate greater profits for the organisations (Longenecker, & et. al, 2006). An effective interrelation between the purchasers as well as the suppliers is quite crucial for any organisation as it enables organisation to mitigate the risks relating to inventory and unnecessary storing of products. These particular risks might generate extensive losses organisation and impose unfavourable impact upon the sustainability as well as the business reputation of the organisations by a significant level organisation (Longenecker, & et. al, 2006). 4. The Concept of Competitive Advantage The significant concern of attaining superior competitive advantage is much vital for an organisation as it would support them to sustain in this competitive business market environment. In this regard, competitive advantage can be obtained by an organisation through emphasizing upon effective utilization of resources and identifying the challenges prevailing in the business markets from the standpoint of the competitors. It has been viewed that the organisation organisations mitigating the challenges are able to gain superior competitive advantage and enhance their profitability (Miltenburg, 2005). Relating to one of the foremost oil and gas companies in the world i.e. British Petroleum (BP) that has been mentioned in the case, it has been viewed that the company possesses an effectual supply chain management system through it sources its products through various methods like refining, extracting and distributing gas and oil. In this regard, the operations relating to supply chain is needed to be handled effectively in order to accomplish superior competitive advantage. Specially mentioning, the oil and gas companies are required to identify the challenges organisation and act accordingly by manufacturing large quantity of products and deliver them as soon as possible at cheaper rates to the interested parties. Thus, it can broadly be affirmed that the organisations maintaining their respective supply chain process effectively are able to gain greater competitive advantage that eventually results in maintaining greater profitability and at the same time sustainability (Slack, & et. al, 2010). 5. Selection of a Reliable Supplier in Creating Competitive Advantage Several large-scale companies have been viewed to focus on the idea of PSM (Power System Manufacturers) for improving their supply chain process and most importantly selecting reliable suppliers to attain superior competitive advantage. Competitive advantage is gained through precisely deploying the available resources and other extensive factors quite efficiently and maintaining sustainability (Moser, 2006). In the context about how the selection of a reliable supplier is regarded as an important issue in generating competitive advantage, China can be taken into concern as an example. In this similar concern, sourcing in China is considered as an important determinant in various organisations for gaining competitive advantage apart from cost efficiency. The supply chain management in an organisation is required to perform its functions efficiently by improving the networking of suppliers that can be taken as a challenge for most of the organisations. The suppliers purchasing raw materials for making final products are required to take assistance from the management regarding supplying products in the business market. In this context, if the decision- making process is handled effectively by the buyers in the local markets, then it would be quite easy towards satisfying the demands of the customers at large. It is the suppliers who had to be selected by the organisations on the basis of their effectiveness as well as the capability towards smoothly conducting different operational functions for the motive of accomplishing superior competitive advantage (Budde, & et. al, 2008). Conclusion After acquiring a brief idea about the perception of procurement and supply and its functions, it can be comprehended that sustainable purchasing and supply is an important determinant in the supply chain management and needed to be handled quite efficiently. Organisations are needed to manufacture products that are qualitative at cheaper rates in order to attain superior competitive advantage. The organisations need to select reliable suppliers on the basis of their effectiveness as well as the ability to perform different operational functions in an effective manner for the purpose of raising productivity and gaining greater competitive advantage. Moreover, it is the business managers of any organisation who are also required to perform different functions relating to effective purchasing and supply of products for attaining sustainability. References Altekar, R. V., 2005. Supply Chain Management: Concepts and Cases. PHI Learning Pvt. Ltd. Budde, F. & et. al., 2008. Value Creation. John Wiley & Sons. Bower, D., 2003. Management of Procurement. Thomas Telford. Donaldson, B. & O’Toole, T., 2007. Strategic Market Relationships: From Strategy to Implementation. John Wiley & Sons. Li, L., 2007. Supply Chain Management: Concepts, Techniques and Practices Enhancing Value Through Collaboration. World Scientific. Longenecker, J. G. & et. al., 2006. Small Business Management: An Entrepreneurial Emphasis, Volume 1. Cengage Learning. Moser, R., 2006. Strategic Purchasing and Supply Management: A Strategy-Based Selection of Suppliers. Springer. Miltenburg, J., 2005. Manufacturing Strategy: How to Formulate and Implement a Winning Plan. Productivity Press. Mahadevan, B., 2010. Operations Management: Theory and Practice. Pearson Education India. Monczka, R.M. B. & et. al., 2010. Purchasing and Supply Chain Management. Cengage Learning EMEA. Slack, N. & et. al., 2010. Operations Management. Pearson Education Limited. Bibliography Dibb, S. & Simkin, L., 2008. Marketing Essentials. Cengage Learning. Read More