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Strategic Procurement - Issue Of Supplier Relationship Management - Essay Writing Assessment Answer

December 08, 2018
Author : Ashley Simons

Solution Code: 1AACH

Question:Strategic Procurement

This assignment is related to ”Strategic Procurement ” and experts atMy Assignment Services AUsuccessfully delivered HD quality work within the given deadline.

Case Scenario

Issue of supplier relationship management from strategic procurement perspective .

Assignment Task

The essay needs what the research has found ? data? What do they think ?

How does the procurement influences the issue ?

How can the procurement improve the issue?

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Solution:

Introduction

The supplier relationship management is involved across organisations within functions of business and thus claims of rightful ownership those are spread among them. Any organisation without any customer fails to stand as a successful one. However, many such organisations have focused on the importance of customer relationships along with their managing perspectives and the procedures to facilitate them. The study involves the facts related to the issue that came to the supplier relationship management, because of a procurement decision, along with the measurements taken to solve them, through a procurement decision, from a literature point of view.

Issue of supplier relationship management from strategic procurement perspective

The Supplier Relationship Management deals with an approach to procuring management and capture the post contract value from the business key relationship. In order to operate successfully at a strategic level in coordination with the adaptation of more collaborative approach developing the business relationship the supplier relationship is managed in terms of efficiency and innovation. The above-mentioned facts though being more time consuming, thus the sole responsibility of managing directors should be to focus on their relationship with their targeted audiences or their customers in order to stay in the market competition. As mentioned by Seuring (2009, p.223), the issue of supplier relationship management from strategic procurement perspective can be further understood based on The Supplier Relationship Matrix model.

Supplier Relationship Matrix

The above-mentioned model deals with the four basic types of supplier namely, acquisition, security, profit, and critical. However, from this model following are the facts that include, reduction in capital requirements, reduction in cost, reduction in time taken, innovative products, services along with outsourcing and joint design. As mentioned by Cox (1996, p.55), the customer of any organisation is always positioned according to their nature of the response. Thus in the above context, there are many levels of customer preferences observed by an organisation among them the general division lies as at the extreme left bottom lies those customers that create the nuisance and spend less and thus accordingly the level of customers increase. However, the top right end lies those customers who spend more for a particular organisation and are considered the key accounts that are good to work along. In order to strategize the procurement perspective by the supplier relationship management, there are some key facts that need to get the hold on by any organisation. As mentioned by Li et al.(2006, p.108), SRM also affects an organisation’s profit as seen from the strategic procurement perspective because as the strategic significance of purchasing levels up, the measures taken for performance result to be morequalitative, rendering more non-financial factors being involved in creating barriers. In many big deals or contracts, the initial setup costs deals in taking months to get completed. However, by concentrating on the establishment of long-term relationship the costs can make to be offset, in order to avoid any unnecessary costs that may arise from negotiating to exit existing contracts early. Through better relationship and interactions, an organisation leads to fewer incidents or issues for being poor in their performance rather they lead to lower costs for managing and reducing costs from relationship failures. As mentioned by Hoejmose et al.(2013, p.590), the more a supplier provides their customer, the more will be their mutual understanding with the company to get established in market or business in order to proceed, thus allowing high integration of business to take place. On the contrary, the price volatility against volumes, length and importance of the received products or services to the buying company requires careful weighting. Many companies establish the exact volatility. Thus, as a result, the suppliers will commit to being more modest and flexible in pricing models for long-term contracts so that they can decrease the level of risks and exposures. As mentioned by Monczka et al. (2015, p.125), any organisation in order to manage the supplier relationship, understands the products and services that are increased. In return to which, the suppliers develop an increased knowledge for their buyer’s need. The above mentioned thus allows both the buyer and the supplier to go hand in hand for further establishing a strong satisfaction chain.

Nowadays every company or an organisation are aware of the fact that they need to integrate and stay collaborated with their suppliers to remain in their market competition and also to step further towards excellence in procurement. Though being a new topic, supplier management has always been the stepchild for the function of procurement. According to Liker and Choi (2004, p.105), as the supply relationship management highly puts an impact on the profits as concerned from the strategic procurement perspective, it increases the competitive pressures, thus by overloading the needs for the new products and services. As mentioned by Ulaga et al. (2006, p.120), although an organisation is always aware and convinced by the SRM benefits, there are certain difficulties faced by the same organisation for their development, operating partnership and implementation. The challenges faced by an organisation may comprise of the following such as, the cost reduction that is too much focus on costs instead of value. The value drivers for sustainability, innovation and legality require a long-term preparation for those that are conflicting with the short focus on errors, as procurement so far has always been responsible for running projects from sources. The strategic objectives of supplier and buyers are incompatible, thus if the buying organisation develops a partnership the supplier are focused on exploiting the customers. As being devoid of executive sponsorship and business case, an organisation thus faces this problem as their hurdles to overcome. There are other issues or hurdles faced by strategic procurement perspective consist of, lack of training, devoid of harmonised way of working, an absence of Supply Relationship Management strategy and objectives. Thus, in order to solve the issue of Supply Relationship Management through the strategic procurement perspective involves the following key factors.

Measures to the issues of Supply Relationship Management

The Supply Relationship Management of an organisation procured by strategic presentation scores their own firm based on three SRM competencies, namely, Relational competencies, Technical competencies and Development Competencies. (Refer to appendix for the elements of SRM)As mentioned by Nagati et al, (2013, p.181), the relational competencies deal with the leadership style of project and programme management, process and design the organisation, solving issues and any personal relationship emphasising the behavioural pattern. The Technical competencies, whereas, deals with the negotiation and sourcing management, analysing the supply market, operational excellence, management of cost, along with risk and supplier management. Moreover, as indicated by Li et al.(2006, p.109), the supplier has less opportunity to change their buyers, by investing a huge resource in order to produce a particular product provided to the organisation, thus creates huge loss at a go for the firm itself. The Developmental competencies deals in the sustainability of the firm focus on the continuous improvement strategies, along with the management of information and production capacity of the company. As mentioned by Shin et al. (2000, p.318),the optimisation of goods and services plays an important role in the organisation that in return puts a direct impact on the profitability of an organisation. The strategic procurement and sourcing deals in not only on the procurement activity itself but also emphasises on maintaining and developing the relationship with suppliers. As indicated by Farrington et al. (2006, p.214), procurement plays a vital role in optimising the whole supply chain including the supply relationship management as an inherent part (www.cips.org, 2015).

Key Challenges faced in Managing Supplier Relationship

Thus by following the mentioned key facts the procurement perspective to Supplier Relationship Management focuses on, face-to-face interaction, electronic procurement technologies, management, automation, integration and much more. There are many previous studies of public sectors in collaboration with networks referred to relational perspective in the below-mentioned contexts, such as the Strategic alliances networks delivery in social service. Moreover, as stated by Liker and Choi (2004, p.107), the buyer captive arises as and when the buyer gains source to purchase, as there is only a single supplier or manufacturer for the concerned products or services. The organisation thus suffers the loss as devoid of having only one outlet for their respective services and products.As mentioned by Baumet al.(2000, p.268), collaboration is used as the strategy for enhancing networks in management programs, the economic aspects of relationships in organisations related to strategy formation and governance in public agencies, along with the networking capabilities in the firms. As mentioned by Gligor et al. (2012, p.297), the theoretical view, sheds lights on the four potential enablers of relational rents—the investments in relation-specific assets, substantial knowledge exchange, combining scarce resources and capabilities, along with the government effectiveness on mechanisms that results in lower transactions in costs.

Need to focus on Supplier Relationship Management

As mentioned by Ranganathan et al.(2011, p.534), the relational barriers to collaborative procurement are identified in the literature, briefly discussed as the interconnectedness of asset, dealing with the difficulties, while competing over resources. The Institutional environment deals with the distance in geographic areas, along with analysing the difference in the way of working of an individual, along with the Partner scarcity, deals with the inequity of pain along with the gain derived from sharing. As mentioned by Mena et al. (2013, p.60), the very key fact of partner scarcity does not hinder the procurement in the public organisation.

Conclusion

The above study in relation to the Supply Relationship Management from strategic procurement perspective based on the literature review sheds lights on the very fact that the collaboration procurement is hindered specifically as being devoid of the common system of coding, along with the consideration of the market supply, resistance supplier and lack of strategic buying. In order to make the relationship between supplier and buyer a meaningful one, an organisation often holds formal quarterly meetings without any appropriate representation in a vast majority of time spent on information based on best-provided communication forums.

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