Business Development
Purchasing and Procurement
Purchasing and Procurement both fall in the category of business. Many people interrelate these two terms but both of them have different meanings and strategies. Procurement is the systematic approach for buying good and services which are beneficial for the progress of the company. On contrary to that, purchasing is a series of activities which are involved in acquiring good and services. Both procurement and purchasing go hand in hand but their strategies vary. Procurement is certain to achieve business goals. Procurement concerns negotiation, research and source activities and purchasing deals with acquiring products order, arranging payments and enhancing the purchase rate. Every institute consists of procurement department for their business affair. The main purpose of this management is to identify the products which would yield handsome profit to the company. Procurement management focuses on the prices and quality of the products, and they have adequate knowledge about the market price of the goods. This. Department saves both time and money.
Procurement department protects the interests of the company. There are three objectives of procurement department which are cost, quality and payment. The purpose of this department is to buy the best quality products in minimum price and set the delivery time according to the needs of the company. It makes the list of contractors and suppliers with whom it establishes the business ties with them and helps the company to strengthen the relation with them. Procurement facilitates both the parties to protect their interests.
There are some steps which procurement department takes. It identifies the needs of an organization, it could be any technical or material needs. Then after identifying, it finds reliable suppliers and qualify them about their needs then it requests its proposals to the suppliers like what it needs and how it is to be. Then it negotiates with the suppliers and speaks of their strategies and budgets. Afterwards a contract is signed and after that delivery time is set. And the last step is to analyse the results that either the product is up to our expectations or not and the result of the products tests the reliability of the suppliers. If a procurement department is strong and reliable than a company will definitely progress.
Sysco companies: —
The Sysco is acronym for “System and services company. Sysco was founded by Herbert Irving, John F. Baugh and Harry Rosenthal in 1969. The company became public on March 3, 1970. Sysco is the world largest food distributor company. Six lacs clients, get stitched with Sysco from different array of fields. It has almost 330 distribution facilities and approximately 90 countries get facilitates by its services. Sysco provides its services to restaurants, for health care and educational purposes. It’s not an end, it also facilitates local people and customers. According to the stats of 2011, the average sale of Sysco was §39 billion.
Public sector of Ireland: —
The public sector deals with the services in which the government provides facilities to the local people one way or the other. The public sector of Ireland concerns the administration of the people within the government. It comprises civil service, defense service, health services, education service and local authority. The public sector of Ireland allows the people to take part in the official affairs of the government and it values the suggestions and sentiments of the people.
Public sector of Ireland and Sysco: -
The Sysco crossed the tanneries of Ireland with the assistance of Cross Food service. HOUSTON, June 12, 2012 (GLOBE NEWSWIRE) – Sysco Corporation (NYSE:SYY), Sysco announced that it has acquired Cross Food services through Pallas Food services in Ireland. The Sysco had purchased the Pallas Food service of Ireland in 2009 but it was committed that both the companies of Ireland will maintain their own identity, and they will work independently at their same place. In the early 1980s, Pallas Food was one of the renowned company based on the island of Ireland. But with its association with Sysco, it aims at providing the best quality food, good and services to different companies. There are various delivery sectors across the Ireland and with food services it also offers not-food products and other stuff. Its reliability has never been called in a question.
Importance of Clear specifications in Procurement: —
Basically, from clear specifications we meant the description of some characteristics, quality, attributes, results, strategies and design which suppliers must guarantee to be awarded a contract.
We can’t deny the importance of clear specifications in Procurement as it provides clear instructions about the contract. It determines the quality and quantity of the products. It speaks of the efficiency and capability of the suppliers. Clear specifications are essential in enhancing the productivity. It concerns with the reliability of the company and supplier. And ultimately, it deals with the validity of the products. It helps in the development and progress of the company.
Differences between public and private organizations: —
The private sector organizations are owned by individual. The government doesn’t have any part in it while the public sector organizations are managed and control by the government or the people assigned by the government.
The major difference between them is the aim of private sector organizations is to increase their profits but on contrary to that the aim of public sector organizations is to provide the best quality services to the public and help them ease their problems.
Another difference between them is the private sector organizations are not funded by the government so the individuals have to invest their own money to make stable while the public sector organizations are funded by local and central government.
The private sector organizations work independently with any control and influence of the government. But in public sector organizations, the government has full control on the organization and it can make any amendment in it.
The private sector organizations raises their money either by sharing or by taking loans from the banks. On the other hand public sector organizations issue their money from the public by tax etc.
The jobs facilities in private sector organizations are not stable and are not long-lasting. While, the public sector organizations provide the employees with the job security, stability, and they are long-lasting.
The selection of employees in private sector organizations is based on the merit. The candidates have to come up on the specific criteria to own the job. On the other hand, in public sector organizations are the selection of employees is based on the age, experience and seniority.
The private sector organizations facilitates the employees with good salary, competitive environment and incentives while the public sector organizations provide privilege to the employees by including retirement facility along with many other benefits.
Single-Sourcing in Procurement:-
Advantages of Single-Sourcing :-
The advantages of Single-Sourcing are as such, by Single-Sourcing the supplier may provide the products at cheap prices in the near future. As it develops the trust between both the parties and with the passage of time, they establish friendly relations which help them in achieving their mutual goals.
As the relation becomes stronger, then to maintain his reliability the supplier work with great devotion and loyalty to provide the company with the best quality products.
By tracking few suppliers, it becomes easy to keep an eye on their performance.
By finding fewer suppliers, the workload of the procurement department becomes less than they have to control and manage the fewer number of suppliers.
While analyzing the results, it becomes easily possible to find the problems in the products or to find the affected products.
By fewer suppliers, it becomes easy to guide the suppliers about the company needs and wants.
Disadvantages of Single-Sourcing: —
Pros and cons go hand in hand. Despite some advantages, Single-Sourcing does have some disadvantages.
The company can get collapsed if the supplier encounters any catastrophic event like accident, robbery or financial loss.
If there is only a single supplier then a company cannot compete with other companies.
By Single-Sourcing, other suppliers lose their interests in working for the welfare of their company and in competing with other companies.
The major cons is that, by Single-Sourcing it becomes hard to find new suppliers in case of any emergency.
Selection Criteria :-
Criteria is a series of some rules and regulations and attributes in which a competitor must fall to be eligible for the post and in case of business, eligibility varies, means to be capable of getting awarded by the contract.
The suppliers are the main pillars of the company which helps the company to stand and succeed. But there are some criteria for the selection of the suppliers.
One of the main aspects while choosing the supplier is his reliability. Reliability holds great significance in business. The main task of supplier is the supplier the products. Any shortcoming on the part of suppliers will be counted as company faults. It can risk the credibility of the company. So, supplier must be reliable. He should deliver the products within the time limit so the company may not run short of the specific product.
The other criteria is the quality of the products. The quality of the goods matter the most to the customer. So, supplier should be firm in his words. He should provide the best quality products.
The supplier should be experienced and in the good books of the companies he worked with. The experience on the part of the supplier, counts the most in awarding the contract to them.
The supplier should be financially strong so that it could provide the company with the best quality products and in case of any loss, on the account of the supplier, he must be able to accommodate the loss. So that, it helps the company to fulfil its needs.
The supplier must be responsible. And he should take pain for the completion of the task. Je should be strong in the communication and must have an effective negotiation with the company members. And it must understand and come up to the strategies of the contract.
Negotiation process : —
Negotiation means direct communication between the suppliers and the officials of the company to have discussed the project and understand the strategies of the contract. In selection of the suppliers, the negotiations plays an important role and it also helps in effective growth of the business.
There are some steps which much be looked on while negotiating with the suppliers. The main step is to explain your project the supplier means tell him what you need and how you want it to be.
Discuss the quality of the product and encourage them to be honest in dealings and provide you with the best quality of the products.
Cost of products is the most important thing in the business. So, negotiate about the prices of the products. Set a standard price which would both the company and a supplier.
Explain the strategies which must be fulfilled while starting the business with them. Set the delivery time, a time when you want the products to be delivered.
Sign a contract which will ensure the rights of both the company and the supplier. Signing the contract helps in trust-building and in making a valid commitment.
Evaluation Process : —
Now the question arises that how the suppliers are evaluated. Evaluation of suppliers is the mainstream in the business. It’s the suppliers who make and breaks the company.
Suppliers evaluation is the procedure to assess the suppliers according to their products, quality of the products, their delivery time, production, behaviour, cost and services.
The evaluation process is to thoroughly assess the abilities of the suppliers and provide him with the deadline to get to know that how well he comes to your expectations.
The second step is to determine that quality of the products. If the quality is the best then you can continue to proceed your business with them. So, both the parties could work and grow together.
The companies should ask the questions related to the products. The supplier should be given a questionnaire to be filled. So, if the question answered by him is up to the mark then it simply means that the suppliers is determined, responsible and reliable.
Ups and downs are the part of life. Same like, businesses also have rise and fall. So, the company must access that how efficiently the supplier accommodate the loss and risks.
The control of evaluating the suppliers must be in the hand of the senior staff member of the procurement management department.
The last thing is that don’t hesitate in congratulating and rewarding the successful suppliers and in giving warning or alerts to less successful suppliers.
Conclusions :-
Now, it’s time to evaluate our discussion. The future and development of the company is in the hand of procurement department and suppliers.
For this purpose, the procurement department must be responsible and select the suppliers consciously and efficiently and the suppliers must be firm, determined, responsible and must come to the expectations of the company. It will not only the company to flourish but also help the suppliers to achieve heights of glory. So, both should work fairly and diligently. The more reliable suppliers is the more orders he will get and the more reliable the company is than the more purchases, it will have.
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