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Essay / Research Paper Abstract
This 10 page paper responds to four questions. The first discuses economies of scale and centralized procurement procedures. The second discusses change and the procurement process, emphasizing overcoming resistance. The next discusses how information technology affects supply management. The last section comments on a person moving from a job in local authority procurement to FMCG procurement. Bibliography lists 11 sources.
Page Count:
10 pages (~225 words per page)
File: MM12_PG4od2.rtf
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Unformatted sample text from the term paper:
Group (2003) wrote: In the process, procurement executives are realizing that outdated systems and inefficient procurement processes can only impede their ability to execute effectively in a changed
business environment. This problem looms even greater in large enterprises with decentralized procurement operations. ECS Limited (n.d.) reported data from benchmark studies shows that more companies "are shifting
to more centralized procurement functions to curb maverick spending and redundant efforts." The advantages of centralized procurement organizations are: * The organization can leverage supplier relationships (ECS Limited,
n.d.). * The organization can purchase in bulk quantities, thereby creating economies of scale. One estimate is that these economies of scale can reduce costs by at least 10 to
12 percent and often more (ECS Limited, n.d.). * Duplicated efforts are eliminated, thus, more money is saved. Some estimate a cost saving of 5 to 10 percent (ECS Limited,
n.d.). * Even if the company management is decentralized, procurement can be centralized (ECS Limited, n.d.). * The companys purchases are standardized in terms of component parts (ECS Limited, n.d.).
* If a companys procurement IS decentralized, they can institute certain centralized policies and activities that lead all departments to meet reduction objectives (ECS Limited, n.d.). The Hackett Group
(2003) reported some of the characteristics of what they call "World-Class Procurement Organizations": * They focus on cost optimization throughout the entire process from procurement to payment. These companies have
fewer dedicated procurement staff; they minimize the time needed for sourcing and order-fulfillment; they negotiate with suppliers for the best prices, especially for their most essential items; they leverage purchasing
intelligence in order to improve their relationships with their suppliers. Their costs average 69 percent less than the average in their industry (The Hackett Group, 2003). * They use automation
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