Best Practices from SCM, Procurement, and Procurement Systems

Best Practices from SCM, Procurement, & Procurement Systems

By:

Professor

BUS 437: Project Procurement Management

Best Practices from SCM, Procurement, & Procurement Systems

Supply Chain Management:

Supply Chain Management is defined in our book as, “a set of approaches utilized to efficiently and fully integrate the network of all organizations and their related activities in producing/completing and delivering a product, a service, or a project so that system-wide costs are minimized while maintaining or exceeding customer-service-level requirements” (Morris & Pinto, 2007). SCM has two main components which are inbound and outbound. Inbound components are composed of suppliers of basic raw materials, along with transportation links and warehouses, and it ends with the internal operations of the company (Morris & Pinto, 2007). The second component, outbound, which begins where the organization delivers its outputs to its immediate customer (Morris & Pinto, 2007). Which can include, wholesalers, distribution centers retailers, and transportation companies, and it ends with the final customer in the chain (Morris & Pinto, 2007).

As mentioned in the first lecture of week six, there are five benefits of Supply Chain Management that include; dramatic reductions in inventory, increased on-time deliveries to customers, reduced supply chain costs, higher profit realization, and higher market share (Week 6, Lecture 1). In order to achieve these benefits, they must focus on five critical areas, customers, suppliers, design and operations, logistics, and inventory (Week 6, Lecture 1). Customers are the driving force behind SCM, companies must have a clear understanding of their need and value expectations, in order to meet them. Suppliers play a critical role in building partnerships that benefit both company and supplier (Week 6, Lecture 1). Next, is the design and operation of supply chain, it recognizes the need for flexibility in the network, in order to change with the competitive environment. Logistics deals with the transfer, warehousing, and handling of inventories within the supply chain. Lastly, is inventories that represent significant costs to product based organizations. Efficient management of inventories is balanced by the need to meet customer service levels, or having the right product, in the right place, at the right time (Week 6, Lecture 1).

In my opinion the single best practice in Supply Chain Management is inventory management. Without managing your inventory you will have unsatisfied customers which could cause your business to fail. You have to find that happy medium in inventory management between customer demand and supplier supply, so you do not have an excessive amount of inventory costing you money. As mentioned on page two-hundred and thirty one of our textbook, there are three reasons inventory control is crucial. One, they represent a significant portion of the supply chain costs for a lot of companies. Second, the level of your inventory at various points in the SC will have a big impact on the level of customer service. Third, cost trade-off decisions in logistics, depend on inventory levels and related costs.

Procurement:

Effective procurement is critical for effective project management; if a project manager is not managing procurement, then they are only managing fifty percent or less of the project as a whole (Morris & Pinto, 2007). Procurement involves all activities that are vital in getting goods or services that enable and organization to complete a project for a customer, and involves activates associated with decisions on whether an item will be produced in-house or purchased from an outside vendor (Morris & Pinto, 2007). Procurement has two complementary processes, one, customer buying and two, vendor selling.

In my opinion the single best practice in Procurement is control. Without control over, product quality, production, spending and creating you have no chance for success. You need to take control of spending, by setting up central controls on localized buying with an automated approval system to ensure negotiated rates are used (Sharman, 2018). It is important to remember that one size does not fit all in procurement.

Procurement Systems:

The single best practice for Procurement Systems is known as best-practice procurement, which involves the relinquishment of lowest capital cost as a value comparator and includes the involvement of specialist contractors in the design from the outset (Morris & Pinto, 2007). There are six goals mention in the book (Morris & Pinto, 2007):

How can they all work together:

1. Finished products delivers maximum functionality, which includes delighted end users.
2. End users benefit from the lowest optimum cost of ownership.
3. Inefficiency and waste in the utilization of labor and materials is eliminated.
4. Specialist suppliers are involved in design from the outset to achieve integration and buildability.
5. Design and construction of the building is achieved through a single point of contract for the most effective coordination and clarity of responsibility.
6. Current performance and improvement achievements are established by measurement.

Supply Chain Management, Procurement, and Procurement Systems are all interrelated in their functions. Supply Chain Management looks at ways and methodologies in which products are going to be acquired from a supplier to a company. Procurement however, involves putting in place ways purchased products from suppliers are going to be paid and how customers as well are going to pay for the perceived goods. Procurement systems consider the development technologically that deals with the issues during procurement in a system instead of manually (Morris & Pinto, 2007). Essentially, they all work together to form a cohesive system.

Conclusion:

Supply Chain Management, Procurement, and Procurement Systems are all three very important parts within product-based and project-based organizations. The three best practices I have mentioned are not the only practices involved in these three systems. Understanding these three concepts and their contributions in each industry is crucial in achieving success for your company. Ultimately, failing to understand these concepts and best practices will result in failure.

References:

Morris, P. W., & Pinto, J. K. (2007). The Wiley Guide to Project Technology, Supply Chain & Procurement Management (Vol. 4). Hoboken, NJ: John Wiley & Sons.

Sharman, R. (2018, November 26). 5 Steps to Procurement Best Practice. Retrieved from http://www.claritum.com/5-steps-to-procurement-best-practice/

Week 6 Lecture 1: https://blackboard.strayer.edu/bbcswebdav/institution/BUS/437/Week6-1116/Lecture1/player.html