Monday, December 17, 2018
'Procurement process in small or Micro Enterprises. Essay\r'
'1. innovation\r\nThis assignment entails the study of procurement branches and the comparison of iii varied organizations that we harbour chosen Ã¢â¬ the Minimart, Online mark and favourite situation industries. Although they argon only micro organisations and retailers in the put out chain, they encompass individual fatalitys and selection criteria of their procurement attend toes.\r\nIn this assignment, we impart identify what atomic number 18 the correspondingities and conflicts in their procural-to-Pay process, their Ã¢â¬ËWhat ifÃ¢â¬Â luck factors and the mitigation undertake in overcoming the fortunes.\r\n2. truncated DESCRIPTION OF ORGANISATIONS\r\nThe third micro organisations selected are namely the Mini-mart, Online Apparel Shop and the dearie Shop. Firstly, the mini-mart act as a Ã¢â¬Å"convenient storeÃ¢â¬Â located nearly housing estates. It takes advantage of the proximity and locality and tar stops the dawn rush hour crowd such(prenomina l) as the students and operative adults. The mini-mart offers crossings like canned intellectual nourishment, drinks, tidbits, newspapers, ready-to-go aliments like parry-packed rice, finger food and desserts.\r\nAs the mini-mart deals with highly putrefi up to(p) goods, the procurement procedure volition be especial(a) to the diligence, as they exact limited shelf lives. Next, a recent trend in the fashion industry is the online stigmatise. The online rat sells apparels and accessories that the owner source from around the reality leeching on the great unwashed subtractions.\r\nThe online fail targets female consumers that love the convenience of online buy atping. Lastly, the embrace computer terminus sells front-runners and their related peaks such as cages, food and treats, preparation kits and toys. The main consumers allow for be the people who are look foring for pets and alive pet owners who get out deficiency to get the petÃ¢â¬â¢s necessities frequently.\r\n3. POSITION OF ORGANISATIONS AND TWO MAJOR PRODUCTS set All trey organisations act as retailers where consumers plenty for produces from them directly. They directly import the products themselves from oversea or obtain from local wholesalers who import them in bulk. The counseling for these triple micro organisations chosen in their procurement process will be on the strategies that they make callable to the limited space run in Singapore.\r\nIn addition, the mini-mart and pet shop catch limited shelf life age for some of the products that they carry. The ii major products we identify for minimart are the newspapers and the ready-packed food. As menti whizd, the consumers are mainly working adults and students that patronize during rush hour. Items like local newspapers and ready-packed food are in high ingest. The shelf life of these products are short, thus once un change will deem the newspaper obsolete and food stale. Next, the two major products fo r the online shop are clothing and accessories.\r\nThe online shop needs to bring in new apparels constantly. They need to catch up with the growing demands and changing savoring of the customers. A factor that contributes to these is the seasonal fashion that changes both magazine. Thus, seasonal demand should be included into foretell for inventories as this would keep on the company competitive.\r\nFinally, pet item consumers would mainly look forward to routine postulatement such as pet canned foods and grooming products. They are two major products that petshop need to constantly keep them in sufficient amount of memorial required when they affect the sale rank. As menti angiotensin-converting enzymed earlier, they are imported overseas.\r\n4. PROCURE TO PAY PROCESS proportion\r\nAppendix A\r\nThe three organisations that we fool chose know all followed this Procure to Pay process, however they defy their differences in determining these processes. For projecting , the online shop and the pet shop has less frequent level of bodeing their requirements collectible to its irregularity gross revenue of goods which depends on seasonal demand. However, the mini-mart genuinely requires daily prediction and is more volatile in their forecast. The shopkeeper take into considerations like public and work holidays before he actually consider how frequently to procure for the day worth of food and newspapers to sell.\r\nFor example, during weekends in the morning, crowds tend to be lesser and thus, lower in demand. For the clarification/requisition and provider selection process, the online shop had done their clarifications virtually through online e-mails and phone calls as close of their suppliers are all overseas. The mini-mart and the pet shop actually do face-to-face meet up with suppliers to look at the real products, whether they can add together their requirements before confirming the set and delivery. The approval and fight proces s is quite similar for both the mini-mart and the pet shop as it is done locally.\r\n subsequently identifying a supplier, they will send purchase order harmonise to demand. The online shop process is slightly different as the suppliers are mainly from overseas. Once the proprietor has identify their supplier, she will travel to the country to visit the supplier to determine the productÃ¢â¬â¢s tint, and to establish a rapport with the supplier before giving the approval. After discussing with these three organisations, we have discovered that hurt is one of the mark factors on how these three organisations measures the performance of their suppliers.\r\nThey will not want to see a explosive maturation of their be of products. However, in that respect is a difference in their selection criteria. The mini-mart factors in the timeliness of goods, the petshop factors in the brand of products that consumers elect, and the online shop focuses in the design, lineament and bulk purchase disregards.\r\n5. SUPPLIER IDENTIFICATION AND SELECTION\r\nThe law of similarity in requirement for selecting suppliers is the timely delivery. All three organisations, especially the mini-mart requires punctual delivery of newspapers and ready-packed food daily. They intrust on the supplierÃ¢â¬â¢s punctuality to crinkle up right inventories to make items procurable at the right time and place for consumers. With the Fedex Strategic sourcing process (Annex B), we are able to show their differences in realization and selection of suppliers.\r\nMinimart\r\nOnline shop\r\nPet Shop\r\n visibleness the Sourcing Group\r\nÃ¢â¬ Requires volatile changes of good supplies depending on the daily requirement. Thus, while setting the profile, the owner will prioritize familiarity and reliability with the supplier. Ã¢â¬ Requires volume discount.\r\nÃ¢â¬ Timely delivery affects forecast for seasonal demands and thus, will affect their gross sales. Ã¢â¬ Requires volumes dis counts for pets related item.\r\nÃ¢â¬ Requires credibleness and reputation of the supplier.\r\nSelect Sourcing Strategy\r\nÃ¢â¬ Has no negociate power over the products from the current suppliers. Ã¢â¬ Have picayune alternatives over suppliers as suppliers are niche and limited. Ã¢â¬ Has talk terms power when ordering goods in bulk.\r\nÃ¢â¬ An alternative centering when current supplier is unable to meet the needs, online shop owners in Singapore can go for overseas hunts to look for direct suppliers instead of normal wholesalers in Singapore. For example, Bangkok is one of neighbouring countries who is the direct supplier for apparels sold locally. Ã¢â¬ Has bargaining power ascribable to bulk purchase ability and out-of-pocket to the large supplier base, it is diffused to find alternative sources that can provide similar/better services. Generate Supplier Portfolio\r\nÃ¢â¬ Has only one source for getting the newspapers collectable to the limited newspaper in Singap ore. Ã¢â¬ However, for the food supplies, the owner will look into the rank added services such as publicity of the food items. This admirers to save the time of re-packaging and selling to the customers.\r\nÃ¢â¬ either piece of apparel is packed neatly in packaging and owners do not have to re-package themselves again. They are likewise delivered to ownerÃ¢â¬â¢s doorstep from overseas. This adds tax to the supplierÃ¢â¬â¢s service. Ã¢â¬ Selects and identify suppliers with no value added capabilities. However, main selection criteria are bulk discount and price.\r\nSelect implementation path\r\nÃ¢â¬ Very small-scale adjustment to be done on the sourcing repayable to the basic contrast model. Ã¢â¬ Many online shops sells similar items so they look for suppliers who can provide self-manufacture services and excessively bulk discounts. For example, suppliers follow designs as given from online shopÃ¢â¬â¢s purchase order. Ã¢â¬ plus bulk discount criteria to shrink t he list qualified supplier. Major product like canned foods can be stored longer, thus, storage will not start as a problem. Negotiate and select suppliers\r\nÃ¢â¬ Due to the only exist publisher in Singapore, negotiating power is very limited. However, for the food supplies, reduction of price and efficiency is viable with growth in order quantity. Ã¢â¬ Base on shortlisted suppliers, they will look into the one who can compromise the most and satisfy their requirements. Ã¢â¬ With the sourcing strategy established, they will try to bargain for more bulk discount with the suppliers. Operationalize supplier integration\r\nÃ¢â¬ Link their suppliers as a part of their operating(a) process as timeliness is an issue for sales of goods for the mini-mart. Ã¢â¬ Long-term collaboration ensures quality and efficiency when on that point is mutual trust. Ã¢â¬ Will establish relationship with the supplier and also promise loyalty if the supplier maintains their quality service and disco unts. However, they do not link the suppliers to their key processes. Benchmark the supply market\r\nÃ¢â¬ Mini-marts tend to range in bulk discounts and timely delivery in selection of suppliers. Ã¢â¬ By comparing selected suppliers, they will foreshorten experience the suppliers who can provide the most expeditious services and bulk discounts. Ã¢â¬ Does market comparison with opposite pet shops and also suppliers. They look out for cheaper suppliers and in vogue(p) pet products.\r\n6. STRESS TESTING AND RISKS MITIGATION APPROACHES\r\n6.1 intravenous feeding categories of risk of infections identified in each organization A) Minimart\r\nSupplier- cogitate\r\n guest-Related\r\n risk moderateness come\r\nDisruptions\r\nÃ¢â¬ Supplier who delivers ready-to-go food of a sudden stops their supply.\r\nÃ¢â¬ Excess fund due to forecast error, seasonal demand, wastage in food. Ã¢â¬ Lose electric potential consumers who prefer food produce by original supplier.\r\nÃ¢â¬ cho ppy emergence or decrease in demand.\r\nÃ¢â¬ break jump off source of supplier.\r\nÃ¢â¬ Proper forecast to keep the right scrutinize level required. Delays\r\nÃ¢â¬ Traffic jam breaks the delivery of morning orders.\r\nÃ¢â¬ Supplier delivers to defame address.\r\nÃ¢â¬ sink and disappoints the morning crowds.\r\nÃ¢â¬ Delay in displaying all the ready-food to sell.\r\nÃ¢â¬ amplification responsiveness of Supplier.\r\nÃ¢â¬ Look for wholesaler who can supply last minute.\r\nProcurement\r\nÃ¢â¬ Supplier is forced to increase the price of raw bodilys. Ã¢â¬ Increase in enthrall be.\r\nÃ¢â¬ Force to increase price due the strengthen of cost of goods or transport cost. Ã¢â¬ Having a surplus pool of suppliers to bench mark.\r\nSystems\r\nÃ¢â¬ SupplierÃ¢â¬â¢s order trailing system breaks down.\r\n-Suppliers food processing machine crack-up\r\nÃ¢â¬ Telephone line break down and customers cannot order via phone.\r\nÃ¢â¬ Increase flexibility in some other agency o f contact.\r\nFor example, e-mails, mobile phones, telecommunicating for urgent orders. Ã¢â¬ Alternate source of supplier.\r\nFor the Minimart, we have identified two key mitigation strategies to conduct leap out/ scanty source of suppliers and increase responsiveness. getting otiose suppliers athletic supporters to slew disruptions, procurement and archive risk. However, as we discuss further, the mini-mart might face the risk that alternate supplier cogency might not be sufficient to meet their needs. This will in turn, pose as a risk to their inventory. To reduce the risk of delay, we have proposed to increase the responsiveness of the supplier due to short life cycle of food products. It also helps to reduce both forecast and inventory risk.\r\nB) Online shops\r\nSupplier-Related\r\nCustomer- Related\r\nRisk Mitigation Approach\r\nDisruptions\r\nÃ¢â¬ Natural disasters like haze, tsunami happen and cause shipment delay.\r\nÃ¢â¬ Sudden shortfall production of cotton fab ric and raw material for making apparels. Ã¢â¬ Excess inventory due to prostitute downslope count.\r\nÃ¢â¬ Demand increases.\r\nÃ¢â¬ Increase in prices when demand is high and low in productivity.\r\nÃ¢â¬ Have alternate redundant source of suppliers to rely on.\r\nÃ¢â¬ Increasing inventory level.\r\nÃ¢â¬ Better forecast inventory due to seasonal demands.\r\nDelays\r\nÃ¢â¬ Stock delays that resulted from paucity of of import raw material e.g. fabric etc.\r\nÃ¢â¬ Distribution takes longer when delay from shipping companies. Ã¢â¬ Customer order fulfillment gets slow up\r\nÃ¢â¬ Stocking up more predictable and lower cost product.\r\nÃ¢â¬ Look for direct alternate suppliers overseas, shortens waiting time for shipping and save cost. Procurement\r\nÃ¢â¬ Increase in production costs from supplier due to shortage in raw materials or labors.\r\nÃ¢â¬ Shipping costs increases that was incurred from transportation companies.\r\nÃ¢â¬ Need to increase selling price while unable to reduce waiting time required, or even higher waiting forecast.\r\nÃ¢â¬ Customer orders gets mixed up and resulted in poor customer service. Ã¢â¬ Acquire redundant suppliers for benchmark.\r\nÃ¢â¬ Increasing responsiveness approach to meet customer demand.\r\nSystems\r\nÃ¢â¬ System sectionalization at overseas supplier side.\r\nÃ¢â¬ Online shopping website breakdown locally and technical repair takes some time Ã¢â¬ Website gets septic and not able to receive customers order.\r\nÃ¢â¬ Increase inventory level to mitigate supplier system risk.\r\nÃ¢â¬ Increase in flexibility of point of contact.\r\nFor Online shop, the main focus was to get supplies ready when needed. Having alternate suppliers is necessary when there is delay or failure in the potential supplier. Accurate forecast is important when consumer demand is different every season. Leftover items from excess inventory could have difficulty in meeting buyers and cause wastage.\r\nC) Pet Shop\r\nSupplier-Related\r\ nCustomer- Related\r\nRisk Mitigation Approach\r\nDisruptions\r\nÃ¢â¬ Local supplier has stopped supplying a hot selling product.\r\nÃ¢â¬ Health production examined a major pet canned food product contains chemical that is not suitable for consumption. Ã¢â¬ Consumers forced to go for other alternative supplies.\r\nÃ¢â¬ Retailers forced to absorb losses for existing inventories. Ã¢â¬ Increase in inventory.\r\nÃ¢â¬ Have redundant suppliers.\r\nDelays\r\nÃ¢â¬ Supplier delay delivery of promotional item by a day.\r\nÃ¢â¬ Supplier deliver wrong type of items and causes\r\nre-delivery delays.\r\nÃ¢â¬ Inadequate supplies to meet expected demand.\r\nÃ¢â¬ backbreaking shortage on particular items affected.\r\nÃ¢â¬ Increase in inventory level.\r\nProcurement\r\nÃ¢â¬ Supplier refuses the bulk discount of a certain product due to place down in purchasing volume.\r\nÃ¢â¬ Supplier increase in price when production cannot catch up with demand. Ã¢â¬ hale to increase price due to l esser sales of a product.\r\nÃ¢â¬ Consumer still enjoys usual selling rates due to competitiveness at retailer side. Ã¢â¬ Having redundant supplier so that they can benchmark their suppliers to get the best competitive price. Systems\r\nÃ¢â¬ E-order system broke down.\r\nÃ¢â¬ overseas supplier lose track of all orders due to system breakdown Ã¢â¬ Online web page is down and customers are not able to get information and order online. Ã¢â¬ Increase flexibility in having other source of chat like telephone or backup replicate of customerÃ¢â¬â¢s orders.\r\nAs for the pet shop, we reason that to gain competitiveness in pricing, they require the suppliers to issue bulk discount. Thus, they will have a few redundant suppliers to allow them to manage the prices between the suppliers, giving them a lower price. In doing so, it also mitigates on problems like disruption and delays as if any of the suppliers will fail on such a secondary will take the speculate mitigating these is sues. We must examine that when they engage any supplier, they will stock in more than enough stock setting buffer and leeching on the bulk discount.\r\n6.2 Risks Mitigation\r\nFor the above different categories of risk, there are a few similar mitigation strategies for each risk for the three organizations studied. For the risk of disruption, the key strategy for the organizations is to obtain alternative/redundant suppliers. This strategy will help to mitigate the risk of sudden stoppage of supplies. Also, it helps to reduce the procurement and delay risk.\r\nHowever, we have also concluded that as these organisations are retailers, which are subjected to the supplier capacity to provide the inventory needed. As such, if disruption from supplier were to happen, the organisations might face inventory risk. Coming to risk of delay, the pet shop and online shop are able to eliminate this risk by increasing inventory level as canned food and vesture can be stored. This will also he lp to lower disruptions and procurement risks to the organisation.\r\nHowever, for the mini-mart, the approach is different due to the short life cycle of food products and the timely delivery requirement due to daily demand. As such, it requires an increase in the responsiveness of the suppliers to ensure quality of products. For risk of procurement, we are able to conclude that all three organisations require having redundant suppliers. Mostly, for these organisations faces risk in an increase of the cost of goods and transportation cost.\r\nAs such, they require different suppliers so that they are able to benchmark their suppliers against others to get an overall competitive edge in cost saving. Lastly, for the risk of system, the organisations are facing in the main on issues like purchasing system breakdown or the organization system failure. Thus, they need to increase their flexibility in having other source of communication like telephone, mobile phones or backup copy of t heir own orders.\r\n7. CONCLUSION\r\nIn conclusion, the above analytic thinking on the three organisations helps us better understand the procurement process and the importance of considering such processes when it comes to minify costs, risks and selection of suppliers. It is also concluded that all the three organisations rely in a way or another procurement strategies to ensure normal business function in serving targeted consumer demands, making them available in the right time, right place and location.\r\nIn addition, the suppliers and the three organisationÃ¢â¬â¢s relationship in the existing market play an important use of goods and services in terms that affects the delivery to end consumers. Also, we have concluded that for micro organisations, the three most important mitigation strategies is in having redundant suppliers, and keeping and forecasting the right inventory level and having flexibility in their organisations. This will help in the organisations smooth op erating process.\r\n8. Reference\r\n1. Chopra, S., Shodhi, M.S. (2004). Managing Risks to avoid Supply-Chain Breakdown MIT Sloan Management Review, 46, 1.\r\n2. Monczka, R., Trent, R., and Handfield, R. (2005). purchase and Supply Chain Management, Thomson-South-Western, Third/Fourth strain\r\n3. Interview: Junction 168 Minimart Ã¢â¬ Mr. Tan, C.T. (2013) Ã¢â¬ Understanding the brass instrument and its Procurement processes.\r\n4. Interview: Kwong Fatt Pet Centre Ã¢â¬ Mr. Wong, K.F. (2013) Ã¢â¬ Understanding the Organisation and its Procurement processes.\r\n'