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05/15/2012

Research Proposal - An Examination of the Operational Benefits of Integrating Procurement Functions in Strategic Management of Organizations


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An Examination of the Operational Benefits of Integrating Procurement Functions in Strategic Management of Organizations

 

Introduction

Various enterprises have long struggled in the issue that centers on the procurement processes and associated functions. The procurement functions and appropriate management is believed to optimize and continuously improve the supply costs and performance of an enterprise. The procurement operations within an organization are an application that represents the strategic management that can give a competitive advantage for the entire enterprise. 

Background and Problem Statement

As part of the corporate strategy, the creation of the ideal organizational changes can be the answer to drive the appropriate operational methods even if there are market pressures. The impact of globalization and outsourcing can push a new kind of frontline in corporation. Procurement operations and its compliance can be an effective strategy in any organizational structures. Procurement functions do not only centralized in the processes but also in the necessary actions that can accelerate the business’s goals and policies, enhances the compliance, improves the management, and deliver most of the supply costs and performance advantages (Fitzgerald, 2005). Because of these operational benefits that can be gained through exercising the procurement functions, how can an organization ensure that the application of strategy delivers the advantages in the organization?

Research Aim and Objectives

The main aim of the study is to examine the operational benefits of procurement functions as part of the strategic management in an organization. In order to achieve this aim, there are three objectives that should be considered. First is to examine the nature of procurement processes and functions in most of the organizations. Second is to determine the advantages and disadvantages of procurement functions in the organizations. And third is to investigate and recommend other possibilities that can be applied in the procurement process to strengthen its operational benefits.

Literature Review

Aside from the use of business models, the organizations are also applying the necessary interventions to create unique process standardization and operational efficiencies. Through the enhanced knowledge there is also a sharing and analysis of the successful procurement that can be the fundamental of operational and supply costs, and performance advantages (Fitzgerald, 2005). The procurement function, regardless of the industry, is part of the strategy in the management that can deliver a significant impact. The increase in competitiveness, cost-efficiency, and utilization of the technologies are the common effects of procurement process. Having the uniform quality processes is very ideal in the organization (Cooper, 2007). For the past years, the managerial efforts towards achieving the corporate strategy resulted in various operational benefits. A thorough analysis of companies regarding the activities crafted the tactical purchasing and procurement system. This made the companies understand that the current skills of purchasers and effective supply strategies can be the foundation towards the future success of the organization. However, there are operational benefits that can be experienced through the contribution of procurement. The most desirable benefit that an organization can achieve is to reduce the total life cycle, costs, and services. Other than that, the improvement on the internal customers and services can help the organization discover the essential value on supply chain. There is also an indication of a strict compliance on procurement and purchases within an organization. Because of the concept of creating the value for the company, the areas of planning, execution, and administration of goods and services procurement are emphasized. Through the continuous practice and support of the essential procurement process, the tactical activities can be discovered and later target the primary goals of the organization. It is advised that the leadership within an enterprise should be clear bearing the strong messages and supports even if there are transformation in the organization. Within the procurement functions, the operational knowledge, functional skill and company objectives are important to give a strong start towards the new implementation of the procurement system (Danza, 2006).

Methodology

The applied method in the study is the use of comparative case studies which centers in the procurement processes and functions. The case studies are good examples of real-based processes done by the organizations that managed the procurement in their enterprise. The use of comparative case studies can deliver the appropriate procurement process in various types on organization. The materials that can be used are the business reports, case study of the organization, and other investigative report done in an organization that centers in the strategic management and operations.

References:

Cooper, W.M., (2007) Building a Strategic Procurement Function, Accessed 02 Aug 2010, from http://www.cacubo.org/pdf/2007/University%20Missouri%20System%20%5BBuilding%20Strategic%20Procurement%20F.pdf

Danza, M., (2006) Building Supply Management Skills, Managing the Skills Transition from Purchasing to Supply Management, Accessed 02 Aug 2010, from http://www.ht2.org/conference/pdf/110.pdf

Fitzgerald, K., (2005) Center-Led Procurement: Organizing Resources and Technology for Sustained Supply Value, AberdeenGroup Inc. Accessed 02 Aug2010, from http://www.sap.com/solutions/business-suite/srm/pdf/BWP_AR_Center-Led_Procurement.pdf

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