Purchasing And Supply Chain Management - Case Study Example

Purchasing And Supply Chain Management Table of Contents Table of Contents 1 Circumvent of Purchasing Procedure 1 Risks or Ethical Problems 4 Aspects of Purchase 5 Departments that Would be of Assistance to Purchase Executive or Manager i.e Rose Silver 7 Business Expertise In The Role Of Buyer 8 References 10 Circumvent of Purchasing Procedure The activity of acquiring goods or services to achieve the demands of an individual or that of an association for a specified price is referred as purchasing. The main objective of purchasing is to preserve the excellence and worth of a company’s goods, to reduce cash tied-up in registers, to sustain the flow of outputs and support the organization’s aggressive position. Purchasing involves development and evaluation of the product specifications, reception and processing of requisitions, promotion and evaluation of bids, examination of goods, selection of suitable storage place and release. Thus, it can be said that purchasing is one of the most important decisions which needs prior assessment of various things. It is also known as buying cycle. The purchasing or buying cycle consists of five major steps (Weele, 2009). These are stated below: Purchasing cycle Source: (Weele, 2009). The first level is the need/problem recognition or identification level. This is the primary stage where an individual buyer recognizes the need or problem. After an individual realizes a need or problem then only he/she starts searching for the solution/product. The second stage is to determine alternatives or to gather information about the product or solution. Thus, after completion of searching the alternatives, next comes the assessment stage. In this step, the various alternatives are assessed carefully in order to reduce risk and maximize profitability. Subsequently, the decision making part takes place which means whether to purchase the particular product or not. This can occur only when the individual is evidently convinced about the benefits of the product. Finally, appears the post purchase evaluation stage. This is the last stage which deals with the satisfaction level of the customer after purchasing the product. Moreover, the process of purchasing also includes certain other facts into consideration. The requirement of total cost is one of the essential components which need to be accessed before purchasing. Furthermore, the selection of supplier is also evident, prior to buying as well as to search for other alternatives in order to acquire the product in reduced cost (Weele, 2009). Conclusively, it can be stated that the decision of purchasing a product needs cautious review of various aspects associated with it. According to the case study, it can be stated that Dr. Spiller is surely escaping the normal purchasing procedures. As he is the head of the radiology department, so he tries to circumvent the general procedure of asking the purchasing manager before finalizing the deal for purchase. He finalized the pact of purchasing a high intensity x-ray processor of worth $21.700 from a supplier of his choice, without searching for other alternative suppliers with a reduced cost price. Moreover, assessment of total cost, quality and the underlying benefits of the product are also avoided by him. He has himself justified the selection of the purchasing suppliers saying that they are the provider of best quality material and the same is needed by him for the betterment in the medical treatment procedure. However, as there was a purchasing department present therefore it should be provided with adequate opportunity to verify the quality and price of the stated supplier and run through the proper purchasing cycle. The purchasing department can provide suggestions to verify a certain supplier for a product in this case, the product being costly as well as important. The role of Dr. Spiller is not justified in his method of taking the entire decision by himself and asking the purchase department just to make the order materialise. Thus, it can be stated that he is evading from the normal procedure of purchasing without any proper justification. Risks or Ethical Problems The essential concept and the primary morality of accurate individual conduct are often referred as ethics. Moreover, when the above stated ideas or principals are utilized in an organization even in difficult situations, then it is related to professional ethics. From the case study, it is evident that Dr. Earl Spiller has been unethical in this particular circumstance while taking professional decisions. He finalized the agreement of purchasing the x-ray machine without prior discussion with the purchasing manager. Moreover, he reached to the conclusion of purchasing the product by escaping the general process of buying, which can lead to various risks or ethical problems. This may involve helping the supplier in finding suitable sources of supply which may create difficulties at times. Moreover, there can be possibilities of forgery by the supplier on the actual cost of the product. There can also be various types of barriers faced after purchasing the product from an unreliable or unknown vendor without proper verification (McIssac, 2008). Furthermore, the warranty or the guarantee assurance provided by the vendor may also become false, and the vendor may refuse to provide any additional product services after procurement process. Thus, it can be stated that before purchasing a product, it is necessary to compare the vendor/supplier with others. Moreover, the vendor may request for the immediate payment, which may not be possible. This may cause troubles with the management of the organization. Additionally, the vendor or supplier may not be agreed to provide actual bills for purchasing the products. This may further lead to discrepancies among the organization’s members. Furthermore, the design or the quality of the product may also be changed by the supplier in order to deceive the customer. If the quality of the product is changed, then the customer may suffer from major threats which in this case may relate to the medical treatment process (Waring & Glendon, 1998). Thus, it is always advisable to purchase products along with the purchasing manager of the organization and also from a reliable or recognised supplier. Conclusively, it can be avowed that the decision of purchasing of a high intensity x-ray processor by circumventing the general purchasing procedure is wrong in terms of ethics of Dr. Spiller towards the organization. Aspects of Purchase Purchasing is one of the important aspects in daily life. It is to attain possession of a product or security in exchange of money. According to the case study, it can be revealed that the whole process of purchasing can be considered as the area of job responsibility of Rose Silver. This is due to the fact that she worked as a purchasing manager for several years in a medium-size electric cooking utensil company and so she is experienced in the field of purchasing. The entire purchasing cycle, starting from the need assessment to final procurement of the product comes under Rose Silver’s area of responsibility. After the need of the product is recognized, then the process of searching the exact supplier or vendor starts. This is the most crucial part of the process (Lockhart, 2004). Subsequently, this is the main responsibility of the purchasing manager of the organization i.e. Rose Silver in this case. It can be easier for her to locate the exact and reliable vendor for buying the product, as she is experienced in this regard. Moreover, her experience can prove to be beneficial even in terms of the total financial expenditure of the organization. Furthermore, the benefits of the product can also be verified carefully comparing with others and also the dealing can be made in minimum cost. The purchasing manager is also responsible for considering the appropriateness of trial period or demo transactions for the equipment. Additionally, the process can be accomplished with minimum risk or confusion (Wideman, 2005). Conclusively, it can be acknowledged that the responsibility of the whole process of purchasing resides with Rose Silver. Thus, it is the morale commitment of the employees of the organization to take her decision or advice with due sincerity, which can be beneficial for the organization. Departments that Would be of Assistance to Purchase Executive or Manager i.e Rose Silver There are various departments, present in a hospital staffed by variety of healthcare professionals. The purchase manager of the hospital is responsible for purchasing materials for each and every department. Rose Silver is accountable for the purchase of any materials in casualty ward, cardiology, ultrasonography, operation theatres and also in canteens. The purchase manager is in charge of purchasing the most efficient, cost worthy and beneficial product for the organization. Thus, it can be stated that buying deals finalized according to the decisions of the purchasing manager, is expected to be favourable for the organization in long run. Due to the experience of Rose Silver, the supplier or the vendor may not be able to deceit the management. Moreover, it can be advantageous both on financial basis as well as product wise. Thus, it can be said that the knowledge and experience of the purchase manager can be utilized for the well being of the organization. The purchase manager reviews and approves, with appropriate consultation with the finance department as well as the management of the organization. The ordering and the receiving of product would be performed with the assistance of purchase department in the hospital. The installing process would be handled by the administrative department of the hospital with the technical support from the vendor or supplier of the product. Rose Spiller is responsible for final verification and approval of the product before purchase (Roodenbeke, 2004). Therefore, on the basis of the case study, it can be highlighted that the entire purchasing responsibility of the hospital is under the surveillance of Rose Silver. Business Expertise In The Role Of Buyer Purchasing is a broad spectrum within supply chain management of an organisation. Purchasing managers or buyers obtain a vast array of products both durable as well as non durable and also services for the organizations. They attempt to obtain the absolute deal for the company which takes into account the highest eminence of goods and services at lowest probable price. They accomplish these by studying sales record, inventory levels of current stock, identifying domestic and foreign suppliers and keeping abreast of changes affecting both the supply and the demand for products. The purchasing managers consider the price, quality, availability, reliability and technical support while choosing suppliers. In addition, the availability of products is also an important factor while choosing a supplier. The efficient purchasing managers are also technically sound about the benefits of the products or services. Moreover, the purchasing professionals at times use the experience of the business during purchasing. The purchase managers try to use the policy of acquiring the best product at lowest possible bid. This type of purchasing strategy can be used for the long run of the organization. This can be useful both for the organization as well as the buyer. Moreover, the purchasing manger such as Rose Silver can suggest the management of the organization to procure most innovated and advanced materials which can be beneficial for the treatments of the patients. This can enhance the reliability of the patients about the organization and in turn increase the turnover of the hospital. Moreover, various modern equipments can also augment the ways of treatments delivered to the patients. This can also boost the growth of the hospital. The modern facilities and equipments can also attract more patients towards the hospital and in turn develop the business of the organization. This can also help to improve the brand image of the hospital as compared to others. Additionally, more knowledgeable and qualified doctors can also become the member of the hospital and serve the patients. Furthermore, Rose Silver can deal with a single reliable supplier for the purchase of products in order to avail the discounts on the materials as this is possible only in case of bulk buys. As well as, if the payment of the product can be made according to the directions of the finance department of the management, then it can be proved beneficial for the organization (Monczka & Et. Al., 2010). In addition, if the discounts can be availed from the supplier, then purchasing incentives can also be attained by the purchasing department from the management. These are few of the business strategies and expertise which can be by brought in by Rose Silver in the process of purchasing. References Lockhart, A. D., 2004. Legal Aspects of Procurement. USAID-Funded Economic Governance II Project. [Online] Available at: http://pdf.usaid.gov/pdf_docs/PNADQ340.pdf [Accessed November 21, 2011]. McIssac, A. K., 2008. Vendors May Cost You More Than Your Project: How To Avoid Vendor Risks. PMI Global Press. [Online] Available at: http://www.pmi-madison.org/resources/1200.pdf [Accessed November 21, 2011]. Monczka, M. R. & Et. Al., 2010. Purchasing and Supply Chain Management. Cengage Learning EMEA. Roodenbeke, D. E., 2004. Purchasing Inpatient and Outpatient Care Through Hospitals. Discussion Paper. [Online] Available at: http://siteresources.worldbank.org/HEALTHNUTRITIONANDPOPULATION/Resources/281627-1095698140167/Chap12deRoodenbekePurchInOutPatientCareFinal.pdf [Accessed November 21, 2011]. Weele. A. J. V., 2009. Purchasing and Supply Chain Management: Analysis, Strategy, Planning and Practice. Cengage learning EMEA. Waring, A. & Glendon, A. I., 1998. Managing Risk. Cengage Learning EMEA. Wideman, M. R., 2005. Project Procurement Management. Vancouver, BC. [Online] Available at: http://www.maxwideman.com/papers/procurement/procurement.pdf [Accessed November 21, 2011]. Read More