TI 2007-091/3
Tinbergen Institute Discussion Paper
Procurement
Frank A.G. den Butter
VU University Amsterdam, and Tinbergen Institute.
Tinbergen Institute
The Tinbergen Institute is the institute for
economic research of the Erasmus Universiteit Universiteit Amsterdam. Tinbergen Institute Amsterdam Roetersstraat 31 The Netherlands Tel.: Fax: 1018 WB Amsterdam +31(0)20 551 3500 +31(0)20 551 3555
Rotterdam, Universiteit van Amsterdam, and Vrije
Tinbergen Institute Rotterdam Burg. Oudlaan 50 The Netherlands Tel.: Fax: 3062 PA Rotterdam +31(0)10 408 8900 +31(0)10 408 9031
Most TI discussion papers can be downloaded at http://www.tinbergen.nl.
This version: 19 November 2007
Procurement: the transaction
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Obviously purchase and sales play a prominent role in this orchestrating function. Against this background this paper discusses how globalisation and the increasing importance of transaction costs affect strategic decision making in supply chain management which is essential to procurement. Here, in line with the Wikipedia definition, procurement is the acquisition of goods and/or services at the best possible total cost of ownership (TCO), in the right quantity and quality, at the right time, in the right place for the direct benefit or use of governments, corporations, or individuals, generally via a contract. Simple procurement may involve nothing more than repeat
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purchasing. Complex procurement could involve finding long term partners – or even 'co-destiny ' suppliers that might fundamentally commit one organization to another. Obviously, procurement becomes a more vital element of value creation in economic activities, when (worldwide) fragmentation of production increases. In a global market procurement decisions are directly linked to sourcing strategies, so that procurement, in abroad sense, becomes an integral part of the general management of an internationally operating company or organization. The next section (section 2) discusses
In relation to this research, the global procurement co-pack team plays an important role to drive cost savings and efficiency by finding the most suitable and profitable contract manufacturers that can meet the products’ requirements and capacity from the company. This includes creating and implementing the best strategy in relation with where the products are being sold, the
Global sourcing is an important aspect to a global business, as this can significantly decrease cost as well as have access to resources, technology and expertise overseas while increasing efficiency. However, the reliance on the supplier and the quality control of the outsourcing partner is potentially a threat to the businesses reputation and ability to succeed.
Global sourcing is a technique of strategic sourcing in the global strategy, which is an effective approach as a part of organization’s procurement section. The objective of global sourcing is to develop global efficiencies in the delivery of a product or service for the firms achieving a sustainable competitive advantage and this is an important weapon have been focused in the 21st Century. The well-known organization, Hennes and Mauritz (H&M) is one of the largest international fashion retail and production house with the great deal of businesses all over the world. In the today’s competitive market and
Organisations around the world are increasingly operating in very dynamic business environments. Among the areas that are being monitored is the way raw materials for production are procured and how the finished products reach the market and eventually the consumer. This paper will provide a review of published documents on strategic procurement in organizations by providing a critical analysis of the strengths and weaknesses of their findings. The paper will present the impacts of the findings of the reviewed articles on the activities of an organisation that operates in a business to customer industry. And also a supermarket will be used in this case.
In this paper I will summarize the article, discuss the purpose intended by the authors, and discuss how this situation relates to the supply chain management theory. I will also suggest areas in offshoring where research done since its publication will enhance the findings by the author and serve as additional options for improvement.
According to our textbook, global sourcing is the practice of purchasing goods and services from the around the world wherever it is least costly (Pg 82). A strategic alliance is a partnership between two entities in which they both share their
People: The emergence of the triple bottom line has led to companies becoming more aware of how their decisions affect not only employees and customers but those within the community they operate in. To achieve this in an ever changing global world a company needs to create policies and guidelines on how to select suppliers and evaluate performance.
W.C. Benton, J. (2010). Purchasing and Supply Chain Management (2nd ed.). New York: McGraw-Hill Irwin.
Almost all purchasing decisions include factors such as delivery and handling, marginal benefit, and price fluctuations. Procurement generally involves making buying decisions under conditions of scarcity. If good data is available, it is good practice to make use of economic analysis methods such as cost-benefit analysis or cost-utility analysis.
The purchasing or procurement department can be likened to a production department in a manufacturing set up. The purchasing would be responsible for acquisition of goods for the inventory to accomplish the goals of the Triumph Trading Company. Its roles include purchase planning, specification development, standards determination, inventory control and price negotiation, disposal and other related functions. Hence, the administrative department would perform management activities that would benefit the entire organization. Some of its subdivision would be human resources unit- to ensure that the company’s employees are competent and supervise their welfare.
During 1998 the telecom market space was inefficient and fragmented because most buyers and suppliers uses traditional procurement process. The process requires the buyers and supplier to individually purchase the telecommunication equipment that are needed in expanding or increasing their performance level. The procurement decision making involves a range of technical staff, such as network administrators, and telecommunication engineers to executive management such as, Chief Executive Officers (CEO) and Chief Technology Officers (CTO) which cause the complexity over the process. The process become more complex as there is rapid change in telecommunications industry, where buyers find
Ms Smith’s supervisor noted that she seemed to know the ABC people and not people from the other companies present. He casually asked Ms Smith where she had met the ABC team previously and was amazed when she told him she had been helping ABC while on leave. She indicated her personal preference to see ABC win the contract, as she would become an employee if this occurred.
Maastricht University School of Business and Economics Maastricht, November 7, 2012 Altrock, Felix Overkamp, Sasha Course code: EBC 4107 Course Tutor: M. Peeters
We are all aware about the importance of supply, manufacturing and operations chain for any business. It becomes even more important if we are crossing the borders and entering international marketplaces as we are
Many complex and more diverse decisions confront supply chain managers on a regular basis: what would be more efficient to manufacture in-house or to outsource; what new channels to implement that it would benefit their customers and suppliers, or how all new technologies, platforms, and practices have to be aligned to enable real-time supply chains. Current information technology reduced outsourcing transaction costs drastically, enabled companies to an increased supervision and control over offsite work, and outsourcing services can deliver faster and more convenient, but technology alone is not the solution. If a company decides to embrace changes in business processes and business culture, those changes can support a long way toward delivering a better product for less money. Complex sphere of activities in many countries is not relevant anymore because a massive number of activities outsourced became commonplace, a new normal.