Purchasing and Supply Chain Management

purchase and Supply twine Management Assessment 1 Nessas Bar Report Course Code BS1D75 Student quash 08154619, 09046100, 09030883, 09046577, 09047735 Contents Page 1. 1. 1 hassle short Organisation on buy and Supply.. 1. 1. 2 Solution Poor Organisation. 1. 2. 1 Problem Purchasing Policy Procedures. 1. 2. 1 Solutions Purchasing Policy Procedures 1. 3. 1 Problem Poor Management. 1. 3. 2Solution Poor Management.. 1. 4. 1 Problem cost/ Expenses. 1. 4. 2 Solution cost/ Expenses.. 2. 0 Recommendations.. 3. 0 expiration. 4. 0 References. 5. 0 Bibliograpgy 1. 1. 1 Problem Poor Organisation on Purchasing and Supply The business suffers from poor organisation in the procure of supplies. The purchase of goods and function for the business use is known as Procurement. in that respect are three passenger cars who all participate in the purchase of items distributively person purchases items they think necessary often leading to double distinguishs or items not beingness b ought at all.There are several suppliers employ some of which deliver while others operate a cash and withdraw policy, causing partners to use their own transport. Although several suppliers are utilised, the lack of constant custom by the union causes lack of interest by the suppliers and so the caller- divulge misses out on priority service and possibly verity bonuses sometimes reach outed by these outlets designed to encourage repeat custom. Webster and wind (1972) argon concerned with sellers being aware of what buyers whitethorn be doing but also it should be important that buyers are aware of what seller are apt(predicate) to do.A signifi bottom of the inningt amount of neckcloth is atrophied due to the overemotional means of computer storage control. The company likes to have a well alter freezer to protect against low stock levels or unavailability of items, which in turn ties up capital unnecessarily. 1. 1. 1Solution Poor Organisation A crystallizent to thi s problem could be the hiring of a trained buyer who would control purchases irritate by the company. The advantage of this would be a single buyer would not order double quantities and excessive or superfluous stock would not be purchased.As a result stock control would be easier to manage. Organised purchasing would help to keep stock levels steady and unnecessary goods would not be stock piled, thereby releasing capital allowing property to be utilize competently and cost effectively. Hiring an expert may search expensive but could save signifi abidet amounts of mvirtuosoy and time. Possibly one of the managers could take part in a purchase preparation computer program to gain the skills as they already have inside understanding of the company and how it is run. This would prove cost efficient and save notes on outsourcing.To solve the problem, the organisation could hire trained buyers to take over the three managers buying work. The advantages of hiring experts on buyi ng stock for the organisation are that when there is only one person managing the buying, stock would be clearer and coincide or lack of stock would be avoided. This could release the capital as stock would be much organised and money would be used more than efficiently. However, hiring experts might be expensive and would be costly efficient for the organisation.In this case one of the managers could go on purchasing training program to gain skills in terms of buying, meaning the company entrust have a buying expert, who also knows the business well, and the company forget not be wasting capital on hiring an external expert. 1. 2. 1Problem Purchasing Policy Procedures The company experiences problems with paper work not matching the goods purchased. This has resulted in some suppliers banning the buyers from their establishment and refusing credit facilities as payment may have been overlooked or invoices mislaid and no payment being processed.The reputation of the company ha s been spoiled as non payment of invoices has caused it to be brand untrustworthy, subsequently it is not given priority as a prise business would be. Some suppliers expect cash on receipt of goods and this can cause a cash flow problem. Negative word of brim may be passed around trade fairs or board meetings, which exit have a negative impact on suppliers considering entering in to business with Nessas Bar. 1. 2. 2Solutions Purchasing Policy Procedures A solving to this problem could be a change in the purchasing procedure of the company. In a mechanistic structure, authority is centralised at the altitude of the managerial hierarchy and vertical authority is use to control gentle and material resources. Mechanistic structures operate most effectively in shelter environments. (Lysons, P158) A management structure unavoidably to be established in which everyone understands their role within the company. Also a system for dealing with paperwork needs to be organised so tha t a good relationship can be developed between the company and its suppliers. 1. 3. 1Problem Poor ManagementThe company wastes a great deal of time on low observe goods. Security is very expensive but necessary. The bar employs its own change stave and purchase cleanup position materials as needed but these go from the stockroom as there is no inventory method in place to control the use of these items. All members of faculty have memory access to the stockroom and as there is no organisation there is no stock checking system. This ultimately leads to confusion with the buying of items as the company is unwitting of the exact inventory of goods available for use and what needs to be purchased. . 3. 2Solution Poor Management To solve the problem, the organisation could introduce VMI (Vendor Managed Inventory) VMI is a collaborative strategy between a client and supplier to optimize the availability of products at a minimal cost to the two companies. (Baily, P 181) Suppliers take obligation for managing the stock which is constantly monitored and updated. (Baily, P181) snip could past be utilised on other jobs rather than being spent on low think of goods.This could be a problem as the supplier then controls the stock rather than the company, but any shortfalls would again be gravel the responsibility of the company. Acronyms for VMI accept CRP (continuous replenishment programs), SAIM (supplier-assisted inventory management), SAIR (supplier-assisted inventory replenishment), ECR (efficient consumer response). (Lysons, P357) The organisation could outsource cleaning and security measure to professional companies as they would be more skilled and knowledgeable than the staff in the organisation. Outsourcing as The strategic use of outside resources to perform activities traditionally handled by internal staff and resources. (Baily, P115) It can be considered that outsourcing both cleaning and security could be expensive and there is no guarantee as to the standards of the work carried out, but the training of staff to carry out these services could cost even more. By outsourcing the little important work more time would become available to be spent on bosom business operations.However there are disadvantages to outsourcing as Lacity and Hirscheim point out that the employee culture is too fragmented or hostile for the organisation to come back together (Lysons, P402). The employees from the outsourcing company might have a tough employee culture or different work ethics and find it troublesome to fit into the workings environment of Nessas Bar. 1. 4. 1 Problem Costs/ Expenses The majority of expense faced by the company are rent, staff wages, beverages, food and other consumables. The bar spends approximately ? 00k per annum on beverages with a and ? 60k being spent on foods and other consumables. 1. 4. 2 Solution Costs/ Expenses A possible solution to these problems would be the reduction of staff diligent at the business. Should cleaning and security be outsourced then the staff before long employed to carry out these tasks are no longer ask and could be laid off. Well managed stock would save the company money as would developing a better relationship with suppliers who might offer discounts on goods and better delivery services. requiring production when, and not before, a customer requires something, and the pursuit and elimination of waste in production and associated planning and purchasing (Baily, P177) JIT can keep the stock level to be low in the organisation, which can prevent unnecessary capital to be stuck as stock. The engagement of a VMI system for stock control could prove to be more cost effective for the company as the supplier takes responsibility for stock management. Suppliers have more experience of this kind of system and would ensure the inactive running of the stockroom.The company would receive higher levels of service as less time would be spent on low set goo ds and as there would be less stock wastage the company would achieve alter revenue. (Baily, P182) 2. 0 Recommendations 3. 0 Conclusion Currently there are problems with Nessas bar as it operates on an inefficient and disorganised system. Basic errors including order duplication, failing to pay suppliers, wasting time on low value goods, and a lack of purchasing knowledge has resulted in a exhalation of money, time and stock.Also the non payment of invoices has given the company a no-good reputation with suppliers. The company could hire a professional buyer who specialises in purchasing goods thereby eradicating the possibility of mistakes being made when goods are ordered. Time would be saved by orders not being duplicated, items overstocked, or wasted on low value goods. If this is not a viable economic option then one of the three managers could be trained to convey the role and take on the responsibility for these tasks.One person would then make decisions, an advantage wo uld be that they already have a working knowledge of the company and they are also known to the other managers from the outset. A centralised approach with just one national supplier would make purchasing easier and more cost effective for the company as they pull up stakes reduce the amount of paperwork by receiving one invoice rather than several. This pull up stakes assist ease of stock control and management. 4. 0 Reference Baily P. Purchasing Principles and Management, Financial Times/Pitman Publishing (Tenth edition) Lysons K. 2000) Purchasing and Supply Chain Management (5th Edition), Financial Times/Pitman Publishing Webster F and waver Y (1972) Organisational buying behaviour, Prentice Hall, New York. American marting Association. (1995). Market research. Available http//dis. shef. ac. uk/sheila/marketing/research. htm. Last accessed 28. Febuary 2010. R. Srinivasan. (1988). disfigurement Accounting-An Emerging Concept. Available www. londonmba. org/ /Brand%20Accounting- An%20Emerging%20Concept_by%20R. %20Srinivasan. doc. Last accessed 1 March 2010. 5. 0 Bibliography Kotler, P. &038 Armstrong, G. (2000) Principles of Marketing (9th edition) Prentice Hall.