Assignment Procurement for Strategic Advantage

BUSS 3084 – Procurement for Strategic Advantage
Assignment 1 – Critical Analysis

Scenario
This critical analysis is about procurement strategies and discusses the advantages of
procurement strategies with respect to the given scenario. In this scenario, I as the
owner of one of the accommodation venues and the town in which this accommodation
is, has been cut-off due to bushfire. Though many tourists left the area before the
bushfire, still around 50% of tourists are in the town. Now when the usual transportation
routes are cut-off, it has become a challenge to provide food, beverages, and comfort to
the guests who are stranded in the town. The given scenario will be critically discussed
in relevance to procurement management plans and strategies. In the past, effective
buying practices were the subject of procurement. The important function of
procurement used to be low-cost purchases of premium materials or parts or items
completed. The complete procurement process has various aspects/elements and each
aspect has its own importance. One of the important aspects of the procurement process
is expertise. For successful procurement management, it is important that the right
people should be in procurement roles. The successful team of procurement should have
expert people who can evaluate suppliers, are good at negotiating contracts and clear
about the quality standards of the procured products. The organization’s policy
regarding procurement should be very clear and easy to understand (Afolabi, et al.,
2019). For example, an organization can have a policy of at least 3-4 bids before
purchasing a product. The organization’s system is another key aspect of the
procurement process. If the purchasing system has the technology that captures the
purchase request, has specifications of purchase, vendor selection that comply with the
company’s policies. The system includes the technology/software that captures all the
steps of procurement and purchasing that cover the complete buy process, initial
purchase request and execution, monitoring and closing. Ethics and vendor management
is also an important aspect of the procurement process. This is the process of the
selection of vendors on the basis of product, price, and performance. The selection of
the vendor should not show favoritism on the basis of any personal
relationships/inclination (Behl, et al., 2019).
Analysis of Literature
According to Ajayi and Oyedele (2018), the procurement means to have a focus on
purchasing activities which should be effective. Achieving the bottom line was the main

factor for the procurement process and to achieve the desired bottom line, the focus
used to be on low-cost purchasing. But in the era of globalization where organizations
face competition from local and international players, customers' requirements change
at a fast pace; In developing new products and services, it has become essential for
organizations to be innovative. The competitive advantage for an organization does not
come off one or several areas of excellence, but it comes from the efficient and effective
practices in the major areas which are linked to the overall business proceedings. For
example, in the discussed case study holiday destination affected due to bushfire, the
innovation in procurement such as the delivery of items by air/helicopter when the roads
cut-off. With the intense competition and rapidly changing consumer’s requirements,
the lifespan of the commodity is getting shorter (Bag, et al., 2020). With the shorter
product life cycle and requirement of innovative parts and services, the procurement
process has become challenging and costly. In various industries where the percentage
of procurement cost has become around 70 percent or more of the total cost of goods
sold, the procurement process should be taken as a strategic priority. So, there has been
a shift in the purchasing function from the traditional back-office cross-functional and
inter-agency business processes will be stronger. The procurement process has become
a main strategic transaction-based business method (Shokr and Torabi, 2018).
The advancement in information technology gave unique characteristics to the
construction industry to produce e-Procurement systems. The e-Procurement tool has
helped companies to get rid of the large volume of paperwork. Because of the life cycle
and the participation of many stakeholders, e-procurement methods are highly effective
for the construction industry. The use of information technology in the construction
industry is useful in creating a competitive advantage than the traditional method of
paper-based workings (Liu, et al., 2020). E-procurement has the benefits of cost
savings, improved efficiency and better control reduce “rogue” purchasing. It has its
own challenges as well such as implementation issues (some propel may be against the
change of traditional procurement system) and relationship with suppliers. In the given
case study (where accommodations are in remote areas), E-procurement could help in a
fast supply of food, beverages, and other materials. Procurement 4.0 strategies, are also
known as digitization, is the revolution in the procurement sector. It develops the value
propositions and integrates date across functions and value chains. In a study done in
the Nigerian construction industry, it came out that the use of the e-Procurement process
can reduce many challenges that the industry faces in the traditional goods and services