Management in the Purchasing Function - Literature review Example

Management in the Purchasing Function MANAGEMENT IN THE PURCHASING FUNCTION Introduction The purchasing function at Retrolair is one of seven key functions housed at the Organization’s head office. The function has been tasked with co-heading the organization’s new strategic direction, which involves increasing sales revenues from its civil business and cutting costs. This change in strategy has been occasioned by a fall in sales and the subsequent need to cut costs after Retrolair lost a lucrative defence contract. The function plays a vital role in procurement, outsourcing, and in sourcing and is the first element that affects production cost, deciding the profitability of the organization (Quayle 2011, p. 89). Therefore, their main task will be controlling the cost of ordered products, building strong and beneficial relationships with the organization’s suppliers, and controlling levels of inventory. To do this, however, they will have to contend with job cuts and redundancies that will impact the entire supply chain and have already decreased staff morale and fanned conflict within the firm, including a purchasing team member. The purchasing function, thus, needs to resolve the conflict within its ranks, as well as with other functions, in order to formulate an operational plan with the sales and marketing functions that will cut costs and grow their civil sector market (Quayle 2011, p. 90). This latter objective will be achieved by increasing service quality with sustainability, as well as reduction of carbon footprint by suppliers, becoming a major requirement nowadays from civil sector customers. This paper will seek to discuss how the purchasing manager can resolve conflict within his department and with other departments, as well as make an operational plan for the purchasing department with regards to the new strategic direction. Resolving Conflict within Purchasing function and with Other Departments Within Purchasing Department Conflict within an organization occurs when people working together are in a state of discord because of perceived or actual opposition of interests, values, and needs. It could be as a result of clashes within groups and with other groups regarding division of revenue, responsibility for projects and tasks, and working hours (Chunawalla 2012, p. 90). These conflicts could also occur because of jurisdictional disagreements, for example, between management and unions, departments, and individuals in the case of Retrolair. While these conflicts are inevitable because of their face-to-face nature, they do not always have to be destructive. The presence of dissenting voices may result in better understanding of problems within the function(s), leading to more creative solutions in making the operating plan. In addition, successful resolutions of the conflict lead to true interdependence between individual team members and functions, especially as members gain experience in how to deal with differences (Chunawalla 2012, p. 90). However, a constructive conflict neither alienates people who work together nor leads to win-lose resolutions. It is, thus, important, for the purchasing function’s head to keep this in mind. Collaboration One way that Retrolair’s purchasing function can resolve conflict within the group is through collaboration, which will result in a win-win solution. This will require all team members to work with one another in finding a solution that benefits all of them, satisfying the concerns of the parties involved (Chunawalla 2012, p. 91). For example, with the redundancies that seem eminent at Retrolair, a conflict could arise between the two contracts managers that, as well as among the three buyers, working in the purchasing department. While this conflict could lead to better ideas as they fight to keep their jobs, it will be important to identify underlying concerns for all the involved parties and meet their concerns, enabling them to collaborate. This will be important for the purchasing manager because the function is tasked with driving the new strategy, requiring the commitment and consensus of all parties involved. This technique will enhance the level of trust within the team and build long-term relationships within the function (Chunawalla 2012, p. 91). In addition, the technique will solve the actual problem and will lead to a win-win solution until any decisions on redundancies are made. Withdrawing & Forcing The purchasing manager may also choose to withdraw or avoid the conflict between the team members, electing not to pursue their concern by sidestepping the conflict. This may work in this situation because the issue about redundancies is a very strong possibility and is less important than the making the operational plan and executing it (Van Weele 2013, p. 60). In addition, because the compulsory redundancies will be the last action taken after voluntary redundancy and work pattern changes, this may not be the right time to handle the issue. Also, there is a chance that attempts to confront the issue will lead to hostility. The purchasing manager could also use the conflict to his advantage by using the forcing technique. In this case, he will pursue his concerns with no consideration about the members in conflict. This, however, should be used when other techniques have failed or are ineffective (Van Weele 2013, p. 60). It is especially useful when a quick resolution is needed to move on to more essential things. With other Departments Aligning Purchasing Department Strategy with other Departments The purchasing manager will also have to resolve conflict between his function and other functions in the organization (Day 2012, p. 56), which is visible from the altercation in the cafeteria where one of the purchasing members was involved. First, the purchasing manager must ensure that his function’s strategic objectives are aligned with those of the other functions. Since they will be competing with the sales and marketing functions for resources like funding, materials, and employees, the purchasing function’s policies must support the directives of the executive leadership (Day 2012, p. 56). In addition, it is important that any personality conflicts between the purchasing team member and the other culprits in the brawl are resolved separately from inter-departmental conflict to avoid creating a siege mentality. Collaboration with other Departments The purchasing manager should also seek to establish meeting guidelines in collaboration with other functional heads, while also ensuring they all agree to adhere to them (Roylance 2012, p. 55). This will allow persons from all departments to speak and ask questions, enhancing open dialogue and enabling different employees across the functions to understand each other’s perspectives. Participants in these inter-functional meetings should also be encouraged to listen and paraphrase fellow employees so as to indicate their understanding of what is said, while also focusing on the pertinent issues. In addition, there should be promotion of collaboration and teamwork in order to foster better interdependence and interdepartmental operations through activities aimed at team building (Roylance 2012, p. 55). This will help employees involved in recognizing each individual’s value in achieving Retrolair’s strategic goal to increase sales. Formation of Inter-departmental Team Finally, interdepartmental project team meetings should have a single designated facilitator and, in light of the purchasing function’s critical role in the project, the purchasing manager should be a suitable candidate (Killen & Kamauff 2013, p. 71). He should review the information from different departments and propose options and recommendations. The most important issue here will be quick decision making since the purchasing function may be perceived as holding the whole process back, especially if the manager is indecisive. This could lead to conflict with other departments as they fall further behind schedule. In addition, it is important to give details about the decision and get commitment from all functions. For instance, using Retrolair’s conference room may lead to conflicts of schedule by different functions. A point of reference for the functions will prevent the already simmering conflict from becoming bigger (Killen & Kamauff 2013, p. 71). Operational Plan for Purchasing Function The purchasing function at Retrolair needs to formulate a plan for procurement and supply chain management. The first step will be to carry out a realistic assessment of Retrolair’s readiness, which will help in developing an effective, reasonable, and sustainable plan of procurement (PotočAn 2009, p. 184). It is important that barriers and drivers in the organization that could compel action are understood, including conflict. This will aid in designing the action plans and goals of the new strategic direction. Staff with the best skills, enthusiasm, and knowledge about the process will also be co-opted to work, in an interdepartmental project team, to drive business in the civil side of business. This should ensure that there are individuals championing the project across the entire supply chain. The current contracts held with present civil sector partners would also be reviewed to assess their alignment with corporate goals. Since the organization aims to offer improved services to its customers, it would only be proper to insist that the suppliers use environmentally preferable criteria. In addition, the contracts up for renewal will be required to adhere to sustainability and environmentally friendly practices in order to improve the perception of service to customers (PotočAn 2009, p. 184). It will also be important to get full control over the supply chain, in which case purchase of all products will be purchasing function’s responsibility. This will ensure that both procured and outsourced services, supplies, and equipment will be carried out according to a standard procedure (Manente 2011, p. 32). This will be done in collaboration with the sales and marketing functions to ensure that their goals are aligned with the procurement strategies. Since the aircraft will be sold to the civil sector and according to service requirements in the leisure industry, how these products are to be marketed will directly impact on the procurements made. A review of current policies in other departments will also be carried out so as to determine whether they align to the purchase of environmentally sustainable products. The inter-functional project team members chosen from the purchasing department will also be tasked with pushing the function’s agendas across the entire supply chain (Manente 2011, p. 32). As the fundamental element in production costs, it will be essential that the policies across the entire supply chain reflect those held by the purchasing function. With the objective of ensuring that procurement practices are financially sound and have little impact on the staff, it will be crucial to work with suppliers and companies that Retrolair outsource services. Therefore, in this case, since the sales and marketing functions will be focusing on selling leisure aircraft with improved sustainable service; the purchasing manager will need to work with vendors in making the required improvements (Mcivor et al. 2009, p. 170). These will include comfortable aircraft for the long journeys and with lower carbon emissions. These claims will also be consistently validated as suppliers and out-sourcing companies will be required to provide information about production activities regularly. Reporting on the purchasing function’s operations and making data available for other functions will help in driving the project forward. Suppliers and outsourcing companies will be required to provide this data, such as use of recycled materials or those with minimal toxicity, which can then be used by the sales and marketing functions. This will also affect procurement policy as the function will only purchase products that the sales and marketing departments feel are compatible with their marketing plan and objectives (Mcivor et al. 2009, p. 170). The purchasing function will also be involved in the setting of goals and targets and the development of action plans for improvement, which are crucial to the long and short term goals of sustainable procurement programs, and integrate them achievable and meaningful inter-functional plans (Mcivor et al. 2009, p. 171). This will enable the establishment of SMART goals across the entire supply chain that will make it easier to evaluate whether the purchasing plan is working. They will also inform the inter-functional team about the success levels of purchasing performance improvement measures. This will be crucial in the purchasing function’s role concerning the cutting of costs, which will mean that the purchasing function will have to track procured products across the supply chain, measure it, and also report on it. Tracking of purchases should ensure that they meet their intended objective or goal, while also tracking operational savings and costs. In addition, it will measure satisfaction among members, which is crucial in terms of the simmering conflict between functions. Finally, it will also enable the function to report, on failures and successes, to inform their next steps. Progress and any commitments will also be communicated to the staff, suppliers, and outsourcing companies (Mcivor et al. 2009, p. 172). The key to ensuring that the purchasing function pulls its weight in this strategic change is to train and educate its members on what is required (Quayle 2011, p. 106). The reasons for the changes taken must be communicated to the suppliers and outsourcing companies, which will enable them to make required changes to adhere to new procurement and work practice changes. They will also be given continuous feedback as to whether their changes meet the objectives and goals of various functions, which is crucial since the department is at the interface between the organization and suppliers. Conclusion The recent loss of a major defence contract by Retrolair has necessitated a change in strategy, which has seen a shift towards the civil sector. However, because of the current situation, the company may be faced with job cuts and redundancies, which have hurt staff morale, while also leading to inter and intra-departmental conflict. The purchasing function, together with sales and marketing departments are best placed to lead the organization towards cutting costs and increasing sales. To do the purchasing function will first have to resolve conflict within the department which can be done by getting the members to collaborate, forcing the issue, and withdrawing. In order to work with the other departments, they will also be required to align their strategic objectives with the other functional departments, initiate collaboration with them, and form a central inter-departmental committee to inform strategic decisions. References Chunawalla, SA. 2012, Materials and Purchasing Management. New Delhi, Himalaya Pub. House. Day, M. 2012, Gower handbook of purchasing management. Aldershot, Hants, England, Gower. Killen, KH & Kamauff, JW. 2013, Managing purchasing: making the supply team work. Tempe, Ariz, National Association of Purchasing Management. Manente, M. 2011, The functions of the purchasing manager. [New York], American Management Association, Purchasing Division. Mcivor, R Humphreys, P & Mcaleer, E. 2009, The evolution of the purchasing function. Strategic Change. 6(3), 165-179. PotočAn, V. 2009, Organizational viewpoint of the relationship in supply chains. The Journal of American Academy of Business. 14(2), 181-187. Roylance, D. 2012, Purchasing Performance Measuring, Marketing and Selling the Purchasing Function. Ashgate Pub. Schul, H. 2013, A more mission-critical role for procurement. Supply Chain Management Review. 17(3), 67-76 Van Weele, AJ. 2013, Purchasing & supply chain management: analysis, strategy, planning and practice. Hampshire, Cengage. Quayle, M. 2011, Purchasing and supply chain management strategies and realities. Hershey, IRM Press. Read More