Importance of Purchasing for Hotels and Restaurants - Essay Example

Introduction In every organization, whether it is a restaurant or any other specific type of organization, various processes go side by side in orderto achieve a desired set of goals and objectives. These goals and objectives can only be achieved when the organization will operate its processes efficiently and effectively. If these processes are not operated in an appropriate manner, accomplishment and achievement of desired objectives can never be possible. When we talk about such processes which are essential for the achievement of targeted goals and objectives, we must talk about purchases, which is one of the most important process or function of any organization. We can say that when we need to perform any specific task regarding some sort of activity, we need to have some related goods and services available for us in order to perform that activity. And attainment of those goods and services is referred to as purchasing. Importance of purchasing for hotels and restaurants If we talk about hotels and restaurants, purchases mean to acquire those goods and services which we need to have in our hands for the purpose of successful operations of the restaurant. If these goods and services are to the management of the restaurant right at the time when they are needed, the restaurant will be able to operate its functions efficiently and effectively. But when they are not available or accessible for the management of the restaurant at the desired time, it will become very difficult for the restaurant to maintain its level of reliability and public’s confidence stable. So we can say that purchasing is one of the most important factors which are to be taken into consideration by the management of the restaurant or any other organization in order to perform all the related functions successfully. Management of the purchasing function Purchasing, in the present era, has undergone various changes and developments in several organizations. If we talk about restaurants, management of the process of purchasing has gained great importance for maintaining a stabilized level of supply to demand management. If we talk about the required set of skills and abilities for the management of a restaurant, we should say that now relatively high level pf skills and abilities are required for the successful operation of the purchasing process in any restaurant because of the factor of competition among the restaurants. Gadde and Hakansson (1993) found that purchasing is seen as one of the key strategic functions to be performed effectively by the management of an organization in order to get competitive advantage among several other organizations. Talking about appropriate structures, we should say that the process of purchasing should always be given extreme importance by the management of any organization as is given to other processes like marketing, finance, human resource management and other production processes. As we know that purchasing is now moving towards collaborate relationships between the buyer and the supplier from the traditional adversarial approach, make or buy decisions should be given special consideration because of its strategic behavior. Ford (2002) found that true cost implications should be thoroughly researched because it would make a considerable contribution towards achievement of lower costs. The most appropriate structure can be focusing on the purchasing function as an interface between the external and internal counterparts. In this structure of purchasing system, the purchasing system will work as an interface or a crossing point for external and internal functions of the restaurant. A framework can be suggested which can focus on the work of purchasing function as an interface between the restaurant’s internal functions and the suppliers. The performance of the management can be judged using this framework for the purchasing function of the restaurant. If the management of the restaurant makes significant collaboration between the internal and external functions with the purchasing function efficiently, it will mean that the current skills and abilities of the management of the restaurant is well up to the task. The recommended benchmarking process for the restaurant is competitive benchmarking. Benchmarking, as we know, is a very tough process that needs a great commitment by the management in order to get success in the market. So the recommended benchmarking system for the restaurant is competitive benchmarking because it will give the organization a will and goal to strive for. And it also provides a lot of inspiration for an organization to perform much better than ever. The competitive benchmarking metrics will enable the management to guide the strategic plans towards outing efforts in those places of the restaurant’s processes where they are most needed. The framework which can be suggested for the purchasing function of the restaurant is built on two dimensions. First one of these dimensions will be relation of purchasing function with the suppliers and the second dimension will be the relation of purchasing function with the internal functions. The relation between the purchasing system and the suppliers can be judged in a sense that the management of the restaurant will make a list of all those goods and services which are needed for the restaurant and publish it in the newspaper or any other source. Now, the suppliers will make a bid for the requested items and will fill in a tender. The management of the restaurant will now consider all the bids from different suppliers and will allow the most appropriate supplier to provide them with the required items. If we talk about relation between the purchasing function and the internal functions, we can say that all internal functions like marketing, products development are significantly related with the purchasing system of the restaurant. If the management of the restaurant works on this framework effectively, the management of the purchasing function will become much easier and will prove out to be beneficial for the restaurant. Use of IT in supply chain management Efficiency of the supply chain management processes can be greatly enhanced by using information technology because the use of information technology has enabled organizations to work more efficiently and to be more responsive and reactive to their customers. Cohen and Roussel (2005) found that the mechanisms used for supply chain management is the integration of key business processes and the purpose is adding value to customers and suppliers. Information technology reduces the use of paper based operations for the supply chain management because paper based communications was very slow in nature. Now the organizations operate the supply chain processes using computer based transactions which are more secure and fast way to operate. IT infrastructure capabilities also provide competitive business activities. The ways through which efficiency of SCM can be enhanced are electronic commerce, electronic data interchange, bar coding, data warehousing and enterprise resource planning tools. Using these ways, the management of any restaurant or organizations can really enhance the efficiency of the supply chain management process. Developing and maintaining supplier relationship Building strong relationships with the suppliers is of great importance for the success of any organization. Lamming (1993) found that successful organizations are aware of the need of building bridges between the organization and the vendor by developing and maintaining strong relationships between buyers and the sellers. In order to develop and maintain good relationships with suppliers, the management of the organization has to keep in mind the following headers. The first one is that the management of the organization should know everything about the supplier by arranging face to face meetings which will enable both the organization and the supplier fully understand each other. Next step is of placing the orders. Steingold (2007) found that proper analysis of the forecasted sales should be made in advance which is very helpful in predicting and meeting the supply deadlines. Another key towards strong relationships is that of prompt payment of dues to the suppliers. In this way, suppliers will develop trust in the organization. Another way is that the organization should make sure the suppliers that the business is also beneficial for them. In this way, they will work harder for the organization and the ties will also become stronger. Open and clear communications also play a great role in strengthening relationships between the organization and the suppliers. Vendor appraisal system If we talk about an effective vendor appraisal system for the restaurant, the suggested appraisal system would be web based vendor appraisal system. In web based system, paper based supplier assessment systems are replaced by web based systems which are also easier to be used. The manual handling of incoming questionnaire appraisals are also replaced by a rapid response electronic process. The main features of the web based appraisal system are accommodation of all types of suppliers, integration with all existing systems seamlessly, one-click re-evaluation facility in case of existing accepted suppliers and the integration of all types of suppliers’ responses. The major benefits associated with this vendor appraisal system are less time consumption due to one click execution facility of appraisals and re-appraisals, reduction of administration costs, accessibility of suppliers’ data to any employee and availability of centralized appraisal information to an integrated management system. Suitable strategies for relationships with suppliers We must say that maintaining good relationships is of critical importance for successful operations of the restaurant. When the relationship with the supplier will be good, it will prove to be very beneficial for the organization as it improves the quality of goods and services which the management of the organization buys from the suppliers. The strategies used for building and maintaining good relationships are face to face meeting with the suppliers in order to know how their business operates, meeting those people who administer the accounts in order to make sure that they could be contacted easily when required, asking about plans of developments, ordering suppliers on time, paying suppliers on time and making the business vital to the suppliers so that they work harder for the organization. If these strategies are applied, it will prove out to be very beneficial for the organization. Make or buy decisions Talking about make or buy decisions, it means the decisions regarding manufacturing an item internally or buy it from somewhere else. The need for make or buy arises when an organization ahs manufactured some parts of any specific product but now it is having problems with the current suppliers of the organization or the changing demands of the product’s specifications. The recommended make or buy decisions for the restaurant are that the management of the restaurant should keep in mind the two most important factors of make or buy decisions. These factors are cost and availability of the production capacity. All relevant costs should be included in the cost considerations while making a make or buy decision and also it should be long term in nature. If appropriate make or buy decisions are taken by the management, it will result in huge favor of the organization. Purchase of capital goods When it comes to identification and assessment of purchasing techniques, such techniques should be identified which could help the organization in purchase of capital goods from lower cost and high quality purchasing. The basic tactics for the purchase of capital goods are to know where the capital goods are available, getting involved with the sales people, segmenting the staff, use of repetition process for the purpose of supplier measurement, supplier rationalization and understanding and calculating actual total cost of the purchase of any specific capital good. The channels of distribution for the organization can be direct marketing and internet marketing. Those products which doesn’t need the participation of intermediaries will be distributed to the customers directly and internet marketing will be done for those goods which are to be distributed all over the nation or the world so that every one who makes use of the internet can see the specifications and order it through internet. Negotiations should be carried out with external parties in such a way that the items which are to be purchased could be bought at a relatively lower rates in order to save the budget available for that specific product. External parties should be informed that the party with the lowest cost and highest quality will be given the supply order. Affect of corporate social responsibility Affect of corporate social responsibility on purchaser and supplier can be known by the fact that in corporate social responsibility self regulating mechanisms are applied where organization monitors its adherence to laws. The impact of the activities is on all employees of the organization including purchasers and the suppliers. Such activities should be performed which are in huge benefit of the organization because the affects which would come as the result of those activities is also on the purchasers and the suppliers of the organization. Role of a specialist in international purchasing If we talk about the roles and services which a specialist could provide in international purchasing, we should say that such a person should be hired for this purpose that is professionally trained in international purchasing system. He should know from where to purchase any specific item and at which cost it would be available. A specialist is very helpful in such dealings where purchase is to be done from international market. Global sourcing strategies The advantages related to global sourcing strategies are an organization learns how to perform business activities in a potential market, increasing level of total supply capacity and development of various alternative vendor and supplier strategies for the purpose of stimulating competition. And if we talk about disadvantages, then some basic disadvantages are hidden costs which are related to various societies, risk of loss of intellectual sort of properties and increased level of monitoring costs that are related to domestic form of supplies. Conclusion Summing it up, it can be said that purchasing has a great influence on the success of any organization. Such mechanisms should be applied for this purpose which should be in benefit of the organization. Such relationships should be developed between the management and the suppliers which should bring a great boost in the achievements of the organization. If this key function of any company or organization is performed with huge level of skills and abilities, success of that specific organization can never be denied and all the goals and objectives would be achieved. References Gadde, L. & Hakansson, H., 1993. Professional Purchasing. London : Routeledge. Lamming, R., 1993. Beyond Partnership, Strategies for Innovation and Lean Supply. UK : Prentice-Hall. Ford, D., 2002. Understanding business marketing and purchasing: an interaction approach. 3rd ed. UK: Thomson Learning. Steingold, F., 2007. The complete guide to buying a business. 2nd ed. U.S.A: Nolo. Cohen, S. & Roussel, J., 2005. Strategic supply chain management: the five disciplines for top performance. U.S.A: McGraw-Hill, Inc. Read More