Supply and Purchase Management
Supply and purchase management has become a central department in today’s business world. The primary reason being the complex nature that operations have acquired while organizations continue to operate amidst uncertainties. However, with the expertise and skills of the dedicated procurement professionals, business runs smoothly and with minimal interruption. In the world today, firms operate under various pressures and are always exposed to risks. Therefore, it necessitates establishing a well-managed supplies and purchasing department, which is significant in maximizing profitability, reducing risks, and improving societal living standards.
Inbound Logistics’ website posted an article by Thomas Derry titled “Supply Chain Management takes Center Stage” on October 2016 (Derry, 2016). In this excerpt, Derry talks about supply chain management; it functions in a fast moving world of today, and how purchasing managers are now prominent members of any company’s executive team. The article clearly avers that the Chief Procurement Officers (CPO) now work directly under the CEO as their functions and responsibilities are beyond internal purchasing operations of an organization. In addition, Derry provides that CPOs continue to be outstanding executive team members with essential responsibilities of identifying and resolving any supply and procurement issues that may create a severe crisis in the company (Derry, 2016). The article is well supported with examples of Ford Motors and Boeing airplanes businesses that have become successful due to well-articulated supplies and purchasing management departments.
After reading Derry’s article, I totally agree that supplies management has ceased from being a general clerical job to being a fundamental profession that forms an important part of any organization. For that reason, every firm should consider having an extensive procurement section since the personnel in the section have the influence, ability, scope, and skills to ensure that all company operations run smoothly to align with stakeholder interests.
Supply and purchasing management go beyond business growth to being a critical department in society. Notably, a good procurement department strives to ensure that societal infrastructure is up to date for smooth delivery of products and services. Therefore, the professionals in this section champion and advocate for well-laid foundations of community infrastructure to ease production and logistic processes. As a result, highly developed infrastructure translates to excellent road networks and transport channels, which facilitate trade operations, thus leading to low goods and service prices for the affected communities (Bisk Education, 2017). In addition, a good supply and purchase management section is significant to society as it creates job opportunities, provides minimal pollution, necessitates decreased energy usage, and always advocates for improved living standards. For instance, in 2005, through a well-managed rescue supply chain, the New Orleans residents who were faced with the Hurricane floods were able to access clean water, food and rescued from high-risk areas.
A well-managed supply and purchasing department in the business platform results in excellent customer service and ever improving profit margins. In fact, exceptional customer service means that procurement managers ensure that business is run ethically, fairly, products are delivered on time, and goods originate from legitimate sources. As such, customer satisfaction becomes the prime purpose of this department, where the dedicated personnel ensures that clients find their products at the promised location and offer after-sales services for loyalty appreciation, a situation that maximizes the profits (Bisk Education, 2017). However, it is crucial to note that active CPOs use their expertise and vast knowledge to coordinate warehouses and logistic processes and ensure that records are maintained for future references.
While supply and purchasing management is seen as a central department that promises business profitability, arguments remain that it is impossible to eliminate risks in the supply chain management process. For instance, after a power disruption in 2011, which was caused by a hurricane, the corporation had to cut its production to at least half of its normal operation volumes in the major affected manufacturing plants. What resulted was reduced profit margins by 600 million dollars from the predicted $4.1 billion after writing a 3.5 billion dollar bottom line (Chartered Institute of Purchasing & Supply, 2011). Apparently, while most risks are resolved through different strategies, it is worth noting that it is impossible to eliminate all the shortfalls, especially those related to natural disasters. Moreover, as a company tries to mitigate some of the impending issues, its investments erode at a high rate and can even halt the operations or closure of a company, especially if the concerned department is not well prepared during such occurrences.
Supply and purchasing management is a crucial department within any organization, thus, the need to have a department that is well informed and involved in all decision-making processes. Notably, procurement officers and personnel cooperate with the company to ensure that the business operates efficiently and smoothly. In addition, through this department, the surrounding communities gain tremendously as the well-developed infrastructure reduces cost while more people acquire job opportunities and access good living conditions. As a result, businesses record great profit margins since the products are delivered on time, satisfying the needs of the suppliers and customers. However, it is always crucial to note that it is impossible to eliminate all risks in business operations, especially those initiated by natural catastrophes.
Bisk Education. (2017). What is the importance of supply chain management? University of San
Francisco. Retrieved from http://www.usanfranonline.com/resources/supply-chain-management/what-is-the-importance-of-supply-chain-management/#.
Chartered Institute of Purchasing & Supply (CIPS). (2011). Risk management in purchasing and supply management: Key procurement topic. Leading Global Excellence in Procurement and Supply, 1-6
Derry, T. W. (2016). Supply chain management takes center stage. Inbound Logistics.