Procurement Strategy and Sustainability

Running head: PROCUREMENT STRATEGY AND SUSTAINABILITY
Procurement Strategy and Sustainability
Name of the Student
Name of the University
Author note

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PROCUREMENT STRATEGY AND SUSTAINABILITY
Table of Contents
Introduction:....................................................................................................................................1
Role of procurement in global supply chain:...................................................................................1
Current procurement strategy of Derbyshire Fabrication Group:....................................................3
Lack of centralised business strategy:.........................................................................................3
Lack of coordination between the sites:......................................................................................4
Proposition of strategic procurement alternative strategies and a new viable strategy:..................4
Total Quality Management:.........................................................................................................5
Advantages of TQM:...............................................................................................................5
Disadvantage:..........................................................................................................................6
Centralised vs decentralized:...........................................................................................................6
Chain level strategy:........................................................................................................................7
COX matrix:....................................................................................................................................8
E-procurement:................................................................................................................................8
Krajlic Matrix:.................................................................................................................................8
Recommendation of best practice to be implemented:....................................................................9
Conclusion:......................................................................................................................................9
References:....................................................................................................................................10

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PROCUREMENT STRATEGY AND SUSTAINABILITY
Introduction:
Procurement is one of the most important strategic areas of operations in modern
business organisations. The pressing need to embrace profitability and sustainability
simultaneously has led the business organisations to form strategies to procure raw materials and
spare parts. Efficient management of procurement enables the firms to maintain lower cost of
production which ultimately raises the profit percentage. Efficient procurement strategies enable
firms to acquire high quality raw materials from global supply chain at economies of scale
(Špiler, Kvrgić & Vujadin, 2016). This importance of procurement in the profitability of
businesses have made most of the organisations form procurement strategies while others firms
consider it insignificant. The paper would explore the procurement strategies of Derbyshire
Fabrication Group, a firm which is shifting from the second group of firms to the first group of
firms. The outline of the paper would start with a discussion about the role of procurement global
supply chain strategy followed by the current procurement strategy at Derbyshire Fabrication
Group. This would be followed by suggesting of alternative procurement strategies and finally
choosing an appropriate procurement strategy from the point of view of a procurement manager.
Role of procurement in global supply chain:
Procurement plays a very significant role in global supply chain management and has
emerged as one of the strategic areas of business decision making. Yan, Chien and Yang (2016)
mention that procurement of supply of raw materials in appropriate quantity and quality plays a
very important role in ensuring the perpetual manufacturing activities in the manufacturing
companies. The supply chains as a result in the profitability and competitive advantage of
business organisations. Handfield et al.(2015) point out in this respect that in industries like
aircraft fabrication procurement plays a very important since they often require to acquire

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PROCUREMENT STRATEGY AND SUSTAINABILITY
components from supply chains located in different countries. Thus, it can be pointed out from
the analysis that timely procurement plays a very important in the global supply chain
management. Wagner and Eggert (2016) point out that the companies enter into contracts with
suppliers. This means that function of procurement is not limited to acquisition of materials of
suppliers and ensuring proper renewal of supply contracts as well. The procurement managers
have to ensure timely pay-outs to suppliers, thus ensuring revenue generation of the suppliers.
Razak et al. (2016) point out the second role of procurement strategies in management of global
supply chains which is restructuring of the supply chains to ensure that poorly performing
suppliers are removed from the supply chain. This gives the suppliers capable of supplying
materials to companies at economic rates to opportunities to serve more companies, thus
maximising the revenue generation of the latter. Jaehrling et al. (2018) mention that efficient
procurement strategy involves training and rewarding of highly performing suppliers, thus
promoting business development of the latter. Procurement managers in firms operating in
industries like aerospace parts manufacturing like Debyshire are required to obtain supplies of
raw materials like metal sheets from different countries. This means that the procurement enables
the global supply chains get access to client companies which they can supply raw materials to
earn revenue. Thus, it can be construed that procurement plays several important roles in global
supply chain. Firstly, procurement ensures smooth manufacturing of products at economies of
scale. Secondly, procurement management ensures restructuring of supply chains which gives
highly performing suppliers more business opportunities to serve more clients. Efficient
procurement strategies enable removal of poorly performing suppliers which creates more
business opportunities for superior quality suppliers. Thirdly, the procurement strategies provide
training and rewards the suppliers, thus enhancing and motivating them. Fourthly, the