Wednesday, December 11, 2019
IT Procurement Challenges and Recommendations Ã¢â¬ MyAssignmenthelp
Question: Discuss about the IT Procurement Challenges and Recommendations. Answer: Introduction Every Industry faces their own procurement challenges, similarly based on the analysis done on the IT procurement in the retail industry, this paper will provide qualitative information about the challenges that the retail industry faces. The in-depth analysis will make understand about the role of the Procurement that has support the Business Strategy. () The industry contains some Organizational Structures with specific Purchasing Procedures. The legal aspect is the very important part in the industry sector, as it provides legal information about the procedure and policies that the overall industry will have to follow. Finally, the research will have an in-depth analysis about the Challenges faced through the IT Procurement. It will provide some recommendation that will be helpful to overcome the challenges. The efficiency of procurement has been recognized with various kind of trade transactions. The function of procurement works better for those industry who purchase something. If the retailer company buys goods, services or anything, they make more money with better procurement (Jain 2015). Typically, suppose the grocery retailer buys the products and services from multiple vendors. The individual who are professional in procurement handle the procuring purchases details at an optimal price (Scheer and Rubik 2017). As grocery retail is a small business, the procurement policies and procedures enables them to arrange a long-term goals and objectives of buying strategy. The manager of the procurement identifies the complete purchase orders, consider the times of delivery, review and accept the items, receive products and services from suppliers, and approve the payments of the supplier. For building a successful industry, procurement management is a key factor. The significant benefits provided by the procurement helps both vendors and customers on higher level. Through procurement management both buyers and suppliers meet their goals (Gruber et al. 2015). It increases the productivity in daily transactions for the buyer to get items faster and within time. If it increases the service quality and reduce the delivery errors, it can even achieve savings. Procurement and IT industry has to work together. If the procurement purchases the IT resources without consulting the IT department then it would not help the organization. In the similar manner if the IT department does not understand the procedures and the processes of the procurement properly for the cost effective purchases, then it will not benefit the company. So when both works together then they can understand in a more effective manner. Procurements role in supporting Business Strategy Strategy can be effective in two ways, either performing similar activities in a better way or performing activities that are different from the competitors. In either of the approach procurement provide support in a distinct manner. Today, in this competitive industry, organizations expect from the professional of procurement to develop an options for them to stay competitive (Johnson, Leenders and McCue 2017). The organization has a procured input resources that help them to develop a leverage against their competitors. With the competitive strategy of the organizations, the procurement actions are consistent. The competitive priorities of the organizations are reinforcing to design the actions of procurement. The figure below shows the linkages for procurement strategy and its component. Competitive priorities articulated the competitive strategy of an organizations. An organization competing on cost and differentiation enhance values perceived by the customers. It can be quality or speed or flexibility or cost or combination of all the four. Strategic procurement links the actions and decision-making procurement to the corporate business strategies. The formation of organizational strategies involve procurement that the top management has perceived through competitive advantages (Hingley, Angell and Lindgreen 2015). Even in one of the research it has stated that such things often depend on the importance of strategic procurement added by the total cost of the material percentage and the line of the product. It also depends on the pace of technology, supply market complexity, gauged by supply scarcity, and substitution of materials, logistics complexity or cost, entry barriers, and oligopoly or monopoly conditions. Organizational structures within the industry sector Today Grocery retail industry sector has recovered rapidly as compare to the rest of the economy earnings and profits. For every retail organization, procurement function is the center of success. The function is concern with the right material that has selected, in right quantity, from right source and right price (Witjes and Lozano 2016). This is done for the customer satisfaction and fulfil the goal of the company. The process of procurement undertaken to replenish and supply stock within the rental organizations. Which include purchase of planning, quality and quantity of the purchased items, selection and search of the supplier, financing, value analysis, purchasing, price negotiations, Disposal and other related function, contract administration of the supplier, inventory stores and control (Simon, Fischbach and Schoder 2014). Thus, these clear that the process of procurement is difficult and complex as thousands of products has involve at a more global scale. Buyers face certa in challenges in the level of professionalism. Procurement management improve their procedures while working with the organizations. The first challenge that has been analyzed was the Qualified suppliers finding and evaluation. There are so many option of purchasing. The purchasing decisions cannot be based on price alone. It paramount the levels of vendor service, application overall suitability, offering a large product, and the delivery speed. The second challenge is handling invoice variances. While staff resources are spending manually to review and scrutinize the variance and processing a purchase order of low-dollar for large number are not that cost-effective (Kurnia et al. 2015). No one has such time to find the difference between an invoice and an order that has purchased. With the use of invoice matching variance a certain threshold has match automatically with the invoice. It safe the valuable time of the Account Payable staff during the process of invoice matching. This is one of the effective procurement systems. The third challenge is reducing the cost and generating the savings. For every business function, the most common challenge is cutting a cost, but more than this spending money is the more challenging function for the core business (Bronnenberg and Ellickson 2015). The procurement manager must perform diligence in analyzing the proposals and vendors, managing entire process of purchasing, and seeking a quotes. The forth challenge is to eliminate the Un-Managed Spend (Brammer and Walker 2016). When purchasing classifications are left unmanaged, there is a vast inefficiencies and the opportunity to save money and time also lose with the increase in the level of services. The fifth challenge is proving the contribution and relevancy of the industry. Previously procurement was necessary but not a strategic component of any business operations. The challenge here is to prove that management of procurement is not just a series of necessary tra nsactions but is an integral part of the performance in the corporate. Purchasing Procedures specific to the industry sector The role of the purchasing department is pivotal for grocery retailer success. For this a clear procedure, policies and practices were applied to both the international and domestic suppliers. It has become necessary to inquire the exist of the procurement policies and the capacity of the grocery retailers to use their benefit (Mackintosh et al. 2016). The research was carried out by the researchers in order to identify, discover and describe the policies and practices of procurement that are applicable to the industry sector. Researchers has also determined the measures to prevent from the buyers unethical practices as a result of flawed practices and policies (Pedersen, Gwozdz and Hvass 2016). A study has been done on ten major grocery retailers who have resale their commodities for their personal consumption or families. The ten major retailers are Adro Foods, Stoppa Shoppa, OK Zimbabwe, Food World, Spar, Food Chain, Nyaningwe, TM Supermarket, Gutsia and Mohammed Mussa that procur e products in large volumes both internationally and locally (Franco 2017). Thus, have a complex buying process that require adherence and policy for certain practices. The study consist of purchasing executives who were mostly under the age of 40 years. The working experience of three of the manager were less than a year. Two has the degree of qualifications, one had a secondary school qualification. The formal procurement or buying qualifications were held to only two. Legal aspects that are important to the industry sector The laws of the country have abided through small business that the society expects and they owe to understand the legal responsibilities for all the stakeholders. The legal responsibilities were imposed on small businesses by all levels of the government. Any business when established for the first time, the name for that business has to be registered with the Australian Securities and Investments Commission (ASIC), unless the trading is done by their own personal name (Johnson, Leenders and McCue 2017). Patterns and trademarks were registered with the federal government body. The registration of the new name for the business require an Australian business number (ABN), and a company or partnership requires number for their own tax file. Later when the business has established in a company, then it has to registered with the ASIC (Oliveira, Thomas and Espadanal 2014). Once registered they will receive a Registration Certificate and an Australian company number (ACN) from the ASIC. T he acquisition, development, Parking Regulations and Fire Regulations will affect the location and layout of the business premises. Financial and Legal responsibilities were imposed on leasing or purchase of equipment, that have involved in contractual arrangements with equipment suppliers, banks and other financial institutions (Knoppen and Senz 2015). All businesses have Taxation laws that are required for Business Activity Statement (BAS) on a quarterly basis. In-depth analysis of IT Procurement Challenges After study the organizational structure, purchasing procedure and the legal aspects of the industry sector, it has been analyzed that every industry faces a unique challenge in their IT procurement (Parise, Guinan and Kafka 2016). An in-depth study of the multiple case study of the grocery retailers regarding the buying policies and practices was not peculiar. However, researchers were convinced about the important insight of the study that has emerge at a conceptual level. Among the ten grocery retailers three were the local household players in the business (Dias and Braga Junior 2016). Of the three, one has operated of independent retailers of grocery as a guild. The seven retailers were the newer players concentrated in Harare and three retailers have sub branches around Zimbabwe. All the ten retailers were operated using the format of supermarket. Among them two were departmental store that were spread across the country. One with two wholesale outlets. The similar patterns wer e observed in New York. Recommendations There are many challenges in the business that can be solved effectively with the tools of technology. There is no exception for the challenges in IT procurement. In a country the retailers need to engage a procurement manager well qualified in buying. The researcher gathered data which reveal that buyers had never attended any courses that aimed at improving the skills of the buyers. It is recommended to use the management software of procurement that helps the process of procurement and automate the entire requisition, reduce the un-managed spend, track the performance of vendor, gain real-time control and visibility, compare the proposals, and strong delivery of the ROI across the organization. It is also recommended to integrate the ERP solution that will help the transmission of the organizations purchasing data instantly to make it available on operational and financial reports. Conclusion From the above study, it has concluded that efficiency of procurement was recognized through various kind of trade transactions. The significant benefits provided by the procurement helps both vendors and customers on higher level. Through procurement management both buyers and suppliers meet their goals. Buyers able to get items in a faster manner and in time. The process of procurement is difficult and complex as thousands of products has involve at a more global scale. In the study it has also been found buyers face certain challenges in the level of professionalism. Procurement management improve their procedures while working with the organizations. Researchers has also determined the measures to prevent from the buyers unethical practices as a result of flawed practices and policies. Thus, the legal aspects of the industry sector have been analyzed that every industry faces a unique challenge in their IT procurement. References Brammer, S. and Walker, H., 2016. Sustainable procurement, institutional context and top management commitment: an international public sector study. In Sustainable Value Chain Management (pp. 67-86). Routledge. Bronnenberg, B.J. and Ellickson, P.B., 2015. Adolescence and the path to maturity in global retail. 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