Question

1. From the value chain perspective, all business processes should contribute value to the whole supply chain.

So, for the purchasing process, where do you think is the greatest opportunity to add value to a company? Why? Does this change from one company to another one? Please use example to show the comparison.

2. With the development of Internet technology, e-procurement becomes more and more popular. E-procurement is fast and accurate (assuming data are entered correctly). From the traditional paper-based procurement to the e-procurement, it is a big change for both the company and people who perform procurement jobs.

How does e-procurement change the procurement process? How does it affect the nature of the skills and knowledge required of the purchasing personnel? Can you think any drawbacks of e-procurement?

Answer 1

Purchasing process is part of the procurement process. In a procurement process, the value to the entire supply chain is added either by

• Reducing cost for same quality and/or features
• Increasing quality for same cost
• Increase features for the same cost

Now, one of the key contribution in the procurement process is the purchase process. It usually contains accepting requisition, submitting the purchase order and finally making the payment and receiving the products. In this regards, the value can be added by

Formalizing the purchase process: maintain proper records and details so that it can be audited and transparency maintained. This will help in saving time and complications in other departments and add value through saving cost of labor hour

Negotiate well during the purchase phase: reducing the cost of products directly impact the company’s bottom line. This will add value directly into the overall supply chain or value chain system.

Perform quality assessment at the time or receipt of order: during this phase if we can perform quality check it stays in line with the principles of TQM. This results in overall quality improvement in the organization. This reduces defect, reworks, recalls and adds value to the overall system