In the current era of globalization, procurement and supply chain play a significant role in the growth and success of firm. Supply chain can be termed as a flow of goods and services within and outside the enterprise. While, procurement can be stated as a business management function that makes sure regarding identification, sourcing, accessing and management of the external resources that the firm needs or may need to fulfil its strategic objectives (Bose and Pal, 2012). However, procurement applies the science and art of using external resources and supply chain management through a body of knowledge interpreted by competent practices of the management. However, one of the main difficulties faced by businesses in defining with the term procurement is that it does not deal with a single action of process. It covers the complete range of events from the identification of a need for a product or service to its disposal or cessation (Khan, Christopher and Burnes, 2008). Procurement involves activities and events before and after the signing of contract as well as general management activities linked with the business. In the present study, Sainsbury supermarket, a retail organization has been undertaken which is the second largest chain in the UK. It is essential for the company to maintain its procurement in order to gain benefits and attain lower costs, improve quality, reduce risk and add greater value.
a) Opportunities for the procurement and supply function to create savings or efficiencies or other sources of added value
It can be assessed that procurement and supply function delivers a range of benefits that not only seek to reduce the costs but also to ensure effective supply. Furthermore, it also supports strategic organizational objectives such as market expansion and product innovation so that Sainsbury can gain benefits from procurement (Molino, 2013). These are as follows:
- Security of supply
- Lowering the costs
- Reducing the risk
- Improving quality
- Adding greater value
- Increasing efficiency
- Product innovation
Furthermore, it can be assessed that supply management is very similar term which describes about the term procurement and thus, relates to add greater value to enhance the overall process captured by procurement. It is essential for firm to involve procurement and thus, improve the business performance which needs to be active to enhance the benefits of firm in the market (Porter, 2008). Therefore, it is essential for Sainsbury to develop effective procurement and supply chain function in order to create huge savings or efficiencies or other sources of added value. With the help of proper procurement and supply function of retail products, firm can save a lot of resources and thus, create efficiency to achieve greater results. Proper procurement of raw materials helps the firm to save a lot of cost and resources and thus, improve the efficiency of firm to enhance their savings and earn profits (Preuss, 2009).
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Furthermore, effective procurement assists in creating value added benefits for the firm that are as follows :-
- Best contracts
- Improved purchasing efficiency
- Customer satisfaction in both the terms (quality and service)
- Closer and more cooperative relationships with suppliers
- Reduced costs and improving quality of products
Thus, all these factors help in improving the value added categories of business and thus, provide Sainsbury a chance to increase their efficiency so that role of purchasing department can be improved to focus on new product development. Apart from this, such factors also assist in improving the value added facilities that help in contributing the purchasing department functions i.e. areas of quality, cost and time and thus, resulting in the early involvement in attaining the best results (Christopher, 2012). However, non-availability of a proper procurement strategy affects the business to increase the cost and thus, decrease the savings of firm so that it influences value added benefits of the organization. Optimizing external spending, procurement operations and other value contributions help in supporting the overall corporate agenda. It can be assessed that without a comprehensive procurement strategy, it is impossible for Sainsbury to know whether or not procurement firm is aligned with the corporate strategy to attain progress within the business (Fawcett, Ellram and Ogden, 2014).
b) Improving the profile of function
Procurement and supply chain management influence that it is essential for the firm to adopt effective functions so that they can easily reach to the consumers and thus, attain desired targets. Also, it is essential for Sainsbury to adopt effective procurement and supply function of raw material so that savings and efficiency can be created to attain added value. Moreover, company needs to develop effective supply function and thus, deliver the goods and services effectively so that sales and profitability can be enhanced (Wisner, Tan and Leong, 2015). With the help of proper functions, business can efficiently increase the delivery of goods and thus, focus upon new product development. Purchasing department of Sainsbury is required to focus upon the procurement function so that it can be improved to achieve desired objectives. It is significant for firm to adopt effective policies and practices so that supply function can be improved within the workplace to save resources and attain effectiveness (Carter and Liane Easton, 2011).
Furthermore, it can be assessed that it is crucial for firm to develop effective policies and practices so that the best procurement can be done to enhance the sales and profitability. Sainsbury management is required to adopt effective procurement function so that set targets can be attained in an effective way. However, it is significant for business to improve its profile in order to achieve desired output (Colicchia and Strozzi, 2012). With the help of improving its procurement function, firm can achieve desired outputs and thus, enhance the effectiveness so that goals can be attained. Also, Sainsbury is required to implement effective supply functions so that organization can focus upon new product development. Supply chain system assists business to develop efficient and effective management of all the activities from primary suppliers through the point of sale. Professionals associated with procurement and supply chain management should focus on achieving their roles for the development whenever possible (Geerts, 2011).
It can be assessed that primary function of supply chain may be stated as a provision of products or services that are required by the ultimate consumers. However, supply chain process needs to be improved by Sainsbury which results them to fulfil the needs of customers. Although, it can be evaluated that supply chain management is an evolving process which provides distinct information in regard to develop effective responsibility so that company can enhance dominant position within their supply chain (Hunt and Davis, 2012).
c) Creating collaboration with stakeholders to increase early engagement in the procurement process
Collaboration with stakeholders helps in increasing early engagement in the procurement process so that it ensures continuity of communications throughout the procurement process to use common tools that allow individual to work with interested parties. However, through involving numbers of procurement teams, company can assess that using collaborative procurement, solutions can be gained by the firm (Sarkis, Zhu and Lai, 2011). Also, it is significant for company to engage different stakeholders within the workplace and thus, it can improve early engagement in the procurement process. Moreover, providing access to single and definitive sources of information, online individual can bring combination of buy side and supply side stakeholders at any stage of the procurement process. Carrying out this process helps individual to work better towards service innovation and specification that refines and improves procurement in a virtuous circle (Hugos, 2011).
Following is the collaboration process in which stakeholder engagement can be done in order to increase early engagement in the procurement process. It is described as underneath :-
In this step, focus is laid on stakeholder engagement, market research and discovery. However, traditional engagement can be expensive, time consuming and also possesses major drawbacks especially if individual needs to engage with many people in different locations. It is essential for Sainsbury's stakeholders to overcome these by allowing individual to collaborate with unlimited number of people in any organization (Mackey and Gass, 2013). It helps in supporting team collaboration and communication processes at this stage that involves procurement planning, financial planning, managing work with project advisors, option appraisals and category management etc. However, such ways help in involving different interested parties at the pre-engagement stage and thus, improve the quality of business (So, Parker and Xu, 2012).
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Furthermore, during the main procurement process, this step assists in developing key priority in regard to improve the audit and communication with stakeholders. On the other hand, organization uses e-procurement portals at this stage in order to typically provide only limited supplier communication facilities (Stadtler, 2005). While, they rarely provide essential support for evaluating and conducting team communications.
It can be assessed that business is required to choose their suppliers as well as sub-contractors and thus, the most important challenge of firm is that it is essential to develop working in partnership and managing them effectively in order to ensure effective service delivery. Firm allows to carry out their functions effectively and thus, develops multi-disciplinary team so that functions can be operated effectively (Stavrulaki and Davis, 2010).
d) Need for organisational policies and procedures to implement effective procurement and supply
It can be assessed that it involves different business policies and procedures to implement effective procurement as well as supply and thus, attain desired targets. There are various policies adopted by Sainsbury in relation to implement effective procurement as well as supply and thus, drive value for money in its procurement activities through adopting effective selection of procurement option that provides value for money outcomes. Furthermore, deployment of the most appropriate processes to facilitate the delivery of optimal procurement helps to attain desired objectives (Storey, Emberson and Reade, 2005). Also, it is essential for businesses to effectively work across agency boundaries so that they can effectively achieve saving and efficiency at the workplace. It also assists in maximizing savings and reducing cost so that the best results can be attained. However, implementing policies and procedures helps in reducing duplication of work and thus, the best procurement and supply practices can be carried out so that organizational goals can be attained (Tuohy and et. al., 2013).
Furthermore, company is required to undertake effective policies and procedures to carry out the best practices in relation to procurement and supply. It also assists in understanding the requirements of market, suppliers and possesses the capability in order to deliver better outcomes so that performance of Sainsbury can be improved. Company is required to undertake effective supply chain practices so that they can become outcome focused and thus evaluate each and every procurement activity for opportunities to innovate and improve the performance of procurement activities so that set targets can be attained (Zhu, Sarkis and Lai, 2013). Moreover, Sainsbury is required to engage with their clients as they need to understand that their procurement requirements are achieved with effective and efficient outcomes.
Moreover, it also involves different policies and practices to adopt effective procurement processes and thus, advance the economic, environmental and social objectives so that results can be attained effectively. Further, it helps Sainsbury management to manage procurement appropriately and responsively through taking effective supply chain system (Eng, 2004). Also, it is essential for firm to undertake effective policies as well as practices and thus, adopt procurement requirements and achieve desired supply chain system within the firm to obtain desired outcomes. Thus, all such policies and practices help in improving the business opportunities so that sales and profitability can be enhanced to a great extent. Developing effective policies and practices assists business to fulfil objectives in an effective way (Graham, 2000).
a) Research the market of chosen category and review its size, scope and extent of competition
It can be assessed that the chosen category of procurement of a product or service within Sainsbury is food sector which has strong brand image and thus, it helps the firm to carry out its business directly by purchasing the goods from farmers. Company acquires the food items directly by suppliers and thus, attains desired objectives. Sainsbury's food market is vast and thus, it has high scope to expand the operations in order to give tough competition to rivals (Glover, 2014). Also, it is significant for business to improve the organization's working and thus, achieve high market share as it focuses on providing the best quality food items and at affordable prices. Management of the firm if focusing on providing the best training to its employees so that they can enhance the selling of food in the market. Also, it has been showcased that company is required to fulfil its duties and thus, display proper dates on meat and other food items which can face bacterial disease (Bose and Pal, 2012).
Furthermore, here Sainsbury chooses food category as it is the biggest food retailer in the market. It provides the best quality grocery products which are directly purchased from farmers and thus, saves a lot of cost in the form of middleman. It helps firm to attain maximum savings and high revenues. Firm chooses this category to expand in the market as it helps them to attain high market share and growth in the supermarket sector. Also, it provides tough competition for retail businesses so that they can provide the best quality products or services to the consumers so that set targets can be attained (Preuss, 2009). Also, food sector is required to be maintained effectively by firms as there is tough competition in the market and thus, it affects the business operations. Company is required to provide food items at attractive prices to the consumers so that they can enhance the sales and profitability in an effective manner. Thus, Sainsbury delivers the best quality food items that can be packaged and non-packaged so that company can achieve desired targets (Wisner, Tan and Leong, 2015). Following is the PESTEL analysis of Sainsbury which is as follows:-
It states that the political factors within UK possess a great influence upon the performance of Sainsbury. However, government debts and consumer debts are increasing and thus it impacts upon the customer attitudes and therefore, it assesses great pressure upon business. Sainsbury just not only requires to operate in such market conditions but also has to develop their business regularly (Hugos, 2011).
It also plays a crucial role in the retail industry and thus it affects the demand, costs, prices and profitability. However, at the time of economic slowdown, growing unemployment and inflation influences the Sainsbury and affects its performance.
It involves change in attitudes and preferences of people and thus it tends to provide relevant food items to consumers. For instance, company also focuses upon increasing female workers and thus it results in affecting the work (Hunt and Davis, 2012).
Because of technological advancements it provides a positive impact upon the business operations. It possesses a significant impact upon the growth potential and thus expand the business exponentially.
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There has been great pressure upon company to safeguard the environmental and thus it is essential for firm to reduce carbon emission or environmental pollution in order to manage the waste and optimum utilization of resources (Geerts, 2011).
It assesses that the government legislation and policies have a direct impact upon the performance of firm. However, if government introduces a new tax law regarding supply chain then it affects the company's objectives.
b) Summarise the demand and supply factors that impact on the chosen category of procurement
It can be assessed that in the chosen category, demand and supply factors influence the procurement in the market. As demand of products rises, it decreases the supply of products and thus it affects the firm to enhance the sales and profitability. Both the demand and supply factors affect the food category of Sainsbury in terms of procurement and thus, to achieve desired goals. Also, it is essential for firm to render effective products to its customers which are not available with competitors and otherwise, it will affect the firm in form of decreasing the sales and profitability (Colicchia and Strozzi, 2012). It is essential for Sainsbury to identify the needs of its customers and thus, provide them effective products or services. This in turn will enhance the sales and profitability of firm in the market. Also, procurement of food category needs to be expanded so that firm can determine the needs in the market and then, contact with more number of farmers to get the best quality products in order to satisfy the individual needs. Hence, firm effectively makes contact with consumers to influence them to purchase food items.
Demand and supply factors influence the chosen category of procurement so that supply of food items can be enlarged. It also assists in improving the facilities and thus, helps in becoming number one grocery retailer in the world. It is essential for Sainsbury to consider demand and supply chain factors so that these will not impact the procurement of services and thus, attainment of organizational goals. It can be stated that business is required to adopt skilled human resources so that they can work effectively to enhance the market share and thus, attain organizational objectives. For instance, management of Sainsbury focuses on delivering effective products or services and thus, attracts the target market so that high profitability can be gained (Geerts, 2011). Company focuses on selling effective food items that are purchased directly by farmers and thus, delivers them to end users to enhance market share of the firm. Moreover, company organizes effective marketing campaign so that they can attract large number of potential consumers in order to enhance the market size.
c) Current pricing mechanism applied to the category and assess the factors that impact on the pricing of the category
It can be evaluated that Sainsbury is required to adopt effective pricing mechanism within its food category so that large number of potential customers can be attracted. Also, it is significant for firm to undertake the best pricing strategy in order to maximize the sales and profitability and thus, attain desired objectives. Hence, implying effective factors does not impact on the pricing of food category and does not influence the business operations in the market. Also, it is crucial for firm to obtain effective pricing options in relation to give tough competition to rivals and thus, enhance the business operations in the market (Fawcett, Ellram and Ogden, 2014). Moreover, it is essential for management of the firm to adopt ethical practices so that they can carry out their business for long term and by this, it can satisfy people purchasing food items from the supermarket. Therefore, it is essential for firm to obtain effective policies and practices so that they can attract potential buyers and thus, improve the market share.
Moreover, business is required to undertake the best pricing policies so that desired objectives can be attained. Sainsbury has eliminated the middleman channel from its supermarket and directly purchases food items from farmers that helps them to save cost and attain effectiveness in order to achieve desired success. For instance, implementing effective pricing policies for food items helps in carrying out the best practices so that organizational goals can be attained (So, Parker and Xu, 2012). Therefore, it is essential for marketing team of company to develop effective campaigns and policies so that consumers can be attracted towards organization and thus, it can achieve desired targets. However, it helps the firm to obtain the best pricing mechanism and thus, influence people to buy food items from Sainsbury as well as overcome competitors. Setting effective prices aids the firm to obtain the best prices so that large market share can be attracted towards the firm and thus, it can achieve desired objectives (Stadtler, 2005). Hence, it can be identified that firm is required to set the best pricing policies so that potential customers can be attracted and thus, deliver them the best products or services.
From the above study, it can be concluded that supply function and procurement are essential parts of any business enterprise as by this, they can ascertain effective purchasing process and thus, provide benefits to the firm in form of added value. Furthermore, organization is required to involve all its stakeholders in increasing early engagement in the procurement process so that desired objectives can be attained. Also, identifying the benefits of procurement assists Sainsbury to improve its product quality by increasing savings and improving efficiency. Moreover, it is significant for business to implement effective policies and procedures so that effective procurement and supply of products can be attained. Also, firm is required to undertake the best pricing policies so that they can attract more consumers of different regions and by this, it can give tough competition to rivals. Moreover, Sainsbury undertakes food category to develop effective procurement policies and thus, deliver the food items directly to consumers. This in turn enhances the sales and profitability of firm in the market.
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