Procurement Management Assignment

The provided document is an assignment on procurement management, covering various topics such as project procurement management, public-private partnerships, and procurement process approvals. It includes case studies from different organizations, including Cadbury's Kenya Limited and MONUSCO. The assignment also touches upon the importance of initial risk-management capability in qualitative construction performance. It is likely a part of a course on supply chain management or procurement processes.

PROJECT PROCUREMENT
MANAGEMENT

Abstract
Study is based on ABC food firm which imports its raw material from Greece and conduct
operation globally. It offers quality food products and services to consumers. Report discusses
about significance of procurement management in the organization and potential risk which are
associated with the entity when it has supply raw material from outside countries. Study has
resulted that supply partnership is the great approach that supports in effective mutual planning
and resolving problems effectively. Purchasing raw material from other nation s benficial in
expansion of entity.

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
CONCLUSION ...............................................................................................................................8
RECOMMENDATION...................................................................................................................8
REFERENCES................................................................................................................................9

INTRODUCTION
Procurement management is related with supplier relationship management where
companies try to build strong relationship with its potential suppliers. Project procurement
management is the term which concentrates on acquiring goods and services from outside the
firm or called suppliers in order to meet needs of potential buyers. Project procurement managers
have to make connection with providers during project life process (Larson and Gray, 2013).
They have to develop strong relationship with suppliers so that entities can get quality material
on time within its designed budget plan. Present report is based on ABC food firm which source
food material extensively from Greece. Cited firm imports raw material from Greece and
conduct operations globally. Current study will discuss importance of procurement for global
organizational operations. Furthermore, study will describe risk faced by companies when it has
to deal with outside suppliers or have to import material from outside country with reference to
ABC food firm.
Importance of procurement for global organizational operations
Procurement management has become the essential part of business units. Procurement
management supports entity is making sound decision related to purchasing. This can help in
getting quality material at low price. By this way organization can provide goods to consumers at
affordable rates (Larson and Gray, 2013). This can help in attracting more consumers and
increasing their satisfaction level to great extent. ABC food firm is operating its business well, it
purchases raw material from Greece. This procurement management is beneficial for the cited
firm in getting goods as per the needs of clients. Through this management strategy, entity can
make the right decision of purchasing right items from the correct suppliers (Phillips, 2013).
Furthermore, project procurement management is very important for the business because
by this way corporation can manage its cash flow and can reduce cost of operations. With the
assistance of this strategy company can reduce its maximum time of purchasing the raw material
manually. It handles direct and indirect purchasing which supports managers to effectively
utilize resources and improve efficiency level (Schwalbe, 2015). Procurement management helps
in developing strong relationship with suppliers which assist in reducing expenses and increasing
revenues.
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Objective of ABC food firm is to enhance its profitability and sustain in the market for
longer duration. For achieving this objective company is required to concentrates on its
purchasing decision. This is possible through procurement management that will support the
organization in meeting with its objectives. Importance of procurement management are as
following:
Expansion of business unit
Procurement management is the great management strategy that supports firms in
developing relationship with the external suppliers those who can provide quality products at
affordable rates (Marius, 2017). This gives chance to expand business across the world. This
expansion can help in increasing brand image of the corporation and raising its revenues as well.
ABC food firm is purchasing raw material from Greece, strong relationship with its suppliers can
help the entity in entering into Greece’s market which will give the corporation global presence
(Perrenoud and et.al, 2017).
Increasing risk assessment tactics
Procurement management is the beneficial tool which supports in increasing risk
assessment tactics of the entity (Mouraviev and Kakabadse, 2015). Many times, suppliers do not
provide quality material to the companies, due to which risk gets increased. Procurement
management supports the ABC food firm in looking at the various suppliers and comparing the
cost of each providers. By this entity can make sound decision of purchasing the raw material at
affordable rates. In this way, economic risk of the organization can be reduced to great extent
(Seppälä, Kyläheiko and Jantunen, 2014).
Improving quality and quantity of products
Procurement management is the great method which supports an organization in
purchasing quality material at affordable cost. Quality goods helps in producing quality food for
customers which can satisfy needs of them and can make them loyal towards the brand.
Reducing operational time and save cost
It is advantage of procurement management, with the help of this management strategy
ABC food firm can reduce its operational time and can buy raw material in minimum time
period. It reduces time of purchasing material manually. Apart from this procurement
management pay attention on cost of each purchased material and compare it with other
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suppliers. By this firm can buy goods from the right suppliers which can help in reducing cost of
the entity as well.
Risk in business from supplier's relationship
As per the view of Burke, (2013) project procurement management is the systematic tool
that helps in building relationship between purchasing department and suppliers for conducting
the business in smoothly (Project Procurement and Materials, 2017). Aim of this process is to
ensure timely delivery of goods. ABC food company is planning to expand its business across
the world. For that it needs to develop bonding with Greece suppliers. By developing
relationship with these providers cited firm will be able to meet with the requirements of
consumers to great extent.
According to Thairu and Chirchir, (2016), changing environment is the major risk to the
business. If market condition gets changed then it may create problem to the business because
then company will not get quality material on time at right cost. Either they have to pay more
amount or have to compromise with quality. In such condition, overall business operations get
affected. Technology is getting updated, in such condition it has become very difficult for the
firms to manage their operations well (Kosgei and Gitau, 2016). They have to modify their
operations process in order to sustain in the market for longer duration. In order to resolve the
risk of delay, firms are now taking support of advanced technology so that time of manual
purchasing can be minimized and corporations can improve their services by providing
satisfactory products to customers.
procurement management makes effective planning it makes contract with suppliers, plan
delivery dates, decide standard documents, plan for constrain that may take place while
purchasing the raw material, develop scheduling and identify the perfect seller for the
organization who can provide quality raw material at low cost (Project Procurement and
Materials, 2017). technological risk is the major issue in the project. It can take place when
supplier feel unable to find solution as promised and use sub-optional technology. If ABC has
chosen particular technology then it may be difficult for the cited firm to shift trajectories. This
may be difficult for organization to complete procurement tasks effectively (Thairu and Chirchir,
2016).
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According to Mouraviev and Kakabadse, (2015) market risk is the main issue in the
procurement process. Demand and supply are two main elements that can impact on the business
sustainability and profitability to great extent. If demand is high and firm is unable to meet this
demand then it may help in improving operations of the organization (Varajão and et.al, 2014).
ABC food firm is private organization and planning to purchase raw material from the Greece. If
demand of foods material of entity is high then it would support in sustaining in the market for
longer duration. This demand can be influenced by economic condition, income status of public
etc . If people have sufficient job opportunities then they will like to go to restaurants and hotels.
But if they have no income sources then it will be difficult for them to live such life. In such
condition demand of the products get reduced. Labour risk is another risk which can affect the
overall business operations to great extent. If employees do not have adequate skills then they
will not be able to produce quality foods for customers. This may affect the overall process of the
organization (Project Procurement Management: 5 Steps of The Process, 2011).
As per the view of GRACE MUTANU KILONZO, (2012), Complex projects are
difficult to handle. Project managers have to deal with complex projects and have to set their
delivery times so that material can be supplied by the suppliers on time. Procurement team share
their ideas with the providers. That helps in arranging the facilities for transportation and others.
They have to decide priorities of each equipment so that they can meet with the deadlines. In this
process, logistic team contributes well to the project manager and explore ways through which
transportation timing can be minimized and goods can reach to warehouse on time (Varajão and
et.al, 2014). This helps in building trust on suppliers and developing strong relationship with
them.
Procurement functions in managing business activities (Theories and practices of project risk)
Supply chain management is the most important part of business units. If companies
handle this activity well then it may help the organization in sustaining in the market for longer
duration. Procurement is directly related with the success of business units. If firms do not tackle
is well then, they may face huge loss. Supplier relationship plays significant role in this respect.
If suppliers are delivery goods with required quality on time then company will buy products
with it for longer duration (Larson and Gray, 2013). Firms have to deal with many risks, all these
issues not only impact on business operations but also affect its sustainability as well. In the
absence of effective management entity can get failed to sustain in the market for longer
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duration. As per the view of Schwalbe, (2015), agency theory is most famous model of
procurement management. Most of the organizations are applying this model in its workplace in
order to resolve their issues related to supply chain management. When entity has to supply raw
material from outside then it is essential to examine the goods well so that no further
complications take place. Transportation cost is the biggest factor that can raise cost of the
organization to great extent. Agency theory is completely based on two major factors inquiry and
namely (Perrenoud and et.al, 2017). It is the duty of manager that to collect all relevant
information about agent and principal before making contract with the providers. In the case of
ABC food Ltd, entity is purchasing goods from Greece, if it does not inquire about the suppliers
properly then it may be possible that it does not get delivery on time and does not get required
raw material. This may increase burden on the organization and it can get failed to meet with the
demand of customer.
According to Marius, (2017) positivist agency theory is the great concept that helps in
identifying shortcoming of the supply chain process and supports in resolving these issues. This
model is made by involving concepts of political science, expert agency, sociology and law of
agency. It suggests ways to identify the problems and make effective control over the
shortcoming. By this way entity can build strong relationship with its suppliers and can globally
expand its business. Kosgei and Gitau, (2016) stated that hidden information model is great
framework related to supply chain management. That helps the organization in running its
business smooth. It explains two main elements that create problem in purchasing of goods and
supplying it on time. Adverse selection of supplier, lack of efforts, poor delivery information etc.
are some hidden details which an impact on the corporation to great extent. It is essential for the
project manager that to pay attention on all these data before making contract with any supplier.
After gathering all these details, they have to enter into contract. This may help in getting timely
delivery of goods and providing quality food products as per the need of customers. Kosgei and
Gitau, (2016) argued that it is difficult to observe actions of agent. In such condition, principal
needs to pay attention on risk by its agent. Hidden action models are the great tool which is
generally applied in such condition when moral hazard issues are taking place in the business.
With the help of this framework managers can make the agent understand for taking appropriate
action to minimize complex conditions. By this way purchaser will be able to get timely delivery
of all material and this will support in building strong relationship with the suppliers.
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As per the view of Schwalbe, (2015) resource dependency theory is the great framework
that helps in measuring the effectiveness of resources and utilizing them impressively. This
theory explains that manager has to deal with resources properly. If these resources are not being
used properly then it may create big risk in the supply management process of the organization.
Procurement process deal with supply chain management directly and indirectly. Thus, with the
help of this model individual can utilize the resources well. That can help in minimizing cost and
reducing timing. ABC food firm has to face many risks such as technology risk, moral risk,
economic risk, political risk etc. These theories are able to handle these issues effectively. On
other hand Seppälä, Kyläheiko and Jantunen, (2014) has argued that company has to depended
on resources. If suppliers do not deliver goods on time or any other complication arise then all
resources such as transportation etc. would increase cost of the company and individual will fail
to get right material at right time. This may affect relationship with suppliers to great extent.
According to Mouraviev and Kakabadse, (2015) procurement process needs to be
followed by organization effectively. This can help in managing risk well and handling issues
properly. This model defines basic requirements which need to be taken into consideration when
goods is purchased from other country's supplier. Requisition request helps in determining the
cost that may occur so managers can plan to work properly so that goods can be reached to
warehouse within stipulated time duration. In the next phase buyer has to request for quotation
and then have to select vendor (Larson and Gray, 2013). This process is helpful in minimizing
deal and getting quality goods within stipulated budget. In the next phase buyer has to order the
process and need to track order time to time. Invoice receipts and verifications details need to be
completed effectively and payment should be done after that. This process helps in minimizing
errors and developing confidence on suppliers as well. Suppliers also have to support the buyer
so that raw material can be get by the firm on time. On other hand Marius, (2017) has argued that
it is not always possible for the organization that to keep track the goods which is supplied by the
vendor. In such condition company may get failed to get material on time sometimes due to poor
lack of requisition requests cost of the operations gets increased.
ABC food business is sourcing material from Greece, if there is economic slowdown then
company can provide goods at lower price but in opposite situation entity has to face the issues
where it may have to pay high amount for getting the material). Agency theory is much more
applicable in this aspect where cited firm have to gather all necessary detail related to agent. That
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would help in identifying the capability of the vendor to deliver the products on time. That would
develop relationship between agent and principle and it will give global expansion to the
organization.
Case study example
Procurement management is an effective tool that supports in the growth of the
organization to great extent. INVESCO is the firm which is growing well and its purchasing
demand is increasing rapidly (GRACE MUTANU KILONZO, 2012). Despite of debt crises,
economic instability cited firm is sustaining in the market. Most of the competitor brand of
INVESCO has faced huge loss whereas cited firm has experienced unprecedented success. On
other hand EMS has used procurement management tool in most of the construction firms of
Sweden. These firms transfer their environmental goal to suppliers and they made commitment
to provide environmental friendly products to its buyers. Green procurement process is being
used by these construction firms (Project Procurement Management: 5 Steps of The Process,
2011). This process has supported the organization in handling chemical products and
minimizing issues. In the tender process, company has described its necessary elements this has
helped in buying the raw material from right suppliers.
Cadbury's Kenya limited is the best example of procurement management. Risk
management, planning and supply chain management are best practices of procurement. Each
firm has to ensure that they meet with the criteria (GRACE MUTANU KILONZO, 2012). This
can help in conducting operations in smooth manner and accomplishing goal of the firms. Cited
firm was facing the huge loss in the initial phase. But later on, entity has improved its operations
by making changes in its procurement process. Organization has faced challenges such as
changes in technology, political condition, tax rates etc. These modifications were creating
trouble for the firm and it was unable to get the raw material within its designed budget amount.
After that entity has focused on best procurement practices which has supported the firm in
meeting with its objectives. Insufficient finance, lack of skills of employees, poor allocation of
resources was creating problem for the organization. But later on, Cadbury's Kenya limited has
paid attention on obtaining required goods from the correct suppliers who can meet the needs.
Supply performance of the entity has been improved by reducing the lead time and improving
quality of products. By this way corporation become able to fulfil needs of customers.
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CONCLUSION
From the above report, it can be concluded that procurement management is a great tool
that can help in improving performance of business unit and can support in reducing cost of the
organization. Effective allocation of resources, close monitoring can aid in meeting with the
organizational requirements. That will support in meeting with needs of customers. Supply
partnership is the great approach that can help in effective mutual planning and resolving
problems effectively.
RECOMMENDATION
 From the above study it can be concluded that if ABC food company develop strong
relationship with its suppliers then it will be beneficial for its expansion and growth.
 It should apply TQM approach this will support in minimizing errors and improving
relationship with suppliers.
 Company should build effective risk management strategies in order to minimize risk due
to cross country connection.
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REFERENCES
Books and Journals
Burke, R., 2013. Project management: planning and control techniques. New Jersey, USA.
Kosgei, R. C. and Gitau, R., 2016. Effect of supplier relationship management on organizational
performance: A case study of Kenya Airways Limited. International Academic Journal
of Procurement and Supply Chain Management. 2(2). pp.134-148.
Larson, E. W. and Gray, C., 2013. Project Management: The Managerial Process with MS
Project. McGraw-Hill.
Marius, G. O., 2017. Procurement process approvals and their contribution to high quality market
driven products: a case of the united nations organization stabilization mission in the
democratic republic of Congo (monusco) entebbe support base. International Journal of
Supply Chain Management. 2(1). pp.57-79.
Mouraviev, N. and Kakabadse, N. K., 2015. Public–Private Partnership’s Procurement Criteria:
The case of managing stakeholders’ value creation in Kazakhstan. Public Management
Review. 17(6). pp.769-790.
Perrenoud, A. and et.al., 2017. Using Best-Value Procurement to Measure the Impact of Initial
Risk-Management Capability on Qualitative Construction Performance. Journal of
Management in Engineering. 33(5). pp.04017019.
Phillips, J., 2013. PMP, Project Management Professional (Certification Study Guides).
McGraw-Hill Osborne Media.
Schwalbe, K., 2015. Information technology project management. Cengage Learning.
Seppälä, J., Kyläheiko, K. and Jantunen, A., 2014. Revealing hidden motives behind outsourcing
decisions: a case study relating to public information technology services. International
Journal of Procurement Management. 7(5). pp.520-542.
Thairu, J. and Chirchir, M., 2016. Implementation of the Youth Preference and Reservations
Policy in Public Procurement: The Case of State Owned Enterprises in
Nairobi. International Journal of Supply Chain Management. 1(1). pp.1-18.
Varajão, J. and et.al., 2014. Critical success aspects in project management: similarities and
differences between the construction and software industry. Tehnički vjesnik. 21(3).
pp.583-589.
Online
GRACE MUTANU KILONZO, 2012. Procurement best practices and organizational
performance: case study of Cadbury’s Kenya limited. [Online] Available through:
<http://erepository.uonbi.ac.ke/bitstream/handle/11295/74741/Kilonzo_Procurement
%20best%20practices%20and%20organizational%20performance%20case%20study
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%20of%20cadbury%E2%80%99s%20Kenya%20limited.pdf?
sequence=4&isAllowed=y>. [Accessed on 27th October 2017].
Project Procurement and Materials. 2017. [Online] Available through:
<https://www.slideshare.net/sakariya88/pgpm13-project-procurement-and-materials>.
[Accessed on 27th October 2017].
Project Procurement Management: 5 Steps of The Process. 2011. [Online] Available through:
<http://www.mymanagementguide.com/project-procurement-management/>. [Accessed
on 27th October 2017].
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