Purchasing Management

This essay discusses the purchasing goals and needs of Dairy Farm International Holdings Ltd and provides recommendations on supplier selection criteria and technological systems to improve the purchasing system.

Running head: PURCHASING MANAGEMENT 1
Purchasing Management
Name
Course
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Introduction
Dairy Farm International Holdings Ltd (DAIR) is a local company that operates
in Singapore. They have supermarkets, hypermarkets, and grocery stores around
the country. It is a company that has got a huge interest in the retail business. They
have several brands such as Wellcome, Yonghui, Cold storage, and market place.
They have health and beauty stores, home furnishing, and restaurant. As the
purchasing manager of this organization, I am in charge of the purchasing
management department. Purchasing decisions and strategies affect how a
business grows and makes a profit. A business has to have a supplier selection
criterion. These are the values that a buying organization expects from the supplier.
Purchasing costs are the costs incurred while purchasing some of the goods and
services required in a firm. The essay below looks at the purchasing goals and
needs of Dairy Farm International Holdings Ltd. It also gives recommendations on
the best criteria when selecting suppliers and decisions made regarding the criteria
to be used. The essay also recommends an excellent technological system that can
improve the purchasing system. Lastly, the essay looks at the purchasing goals and
needs of Dairy Farm International Holdings Ltd (DAIR).
Supplier selection criteria and issues
The purchasing department has several purchasing needs and goals. Its first
goal is to purchase raw materials necessary to be used in their stores. It is the role of
the department to procure the necessary materials that are needed for the efficient
functioning of the company. Since it is a retail business, it is the role of this
department to ensure that there are always items on the stores to keep the
customers happy ("8 Benefits of Procurement Technology Tools," 2017). The
department also aims to buy products at the right price. It is one of the objectives of
the department to ensure that it evaluates the market prices and selects an item with
the best prices. The best possible price determines the revenue and the profit of a
business. It is the goal of the business to ensure that items are delivered in a timely
manner. That is, they are neither too early nor too late. Both situations may have
adverse effects on the business. If the materials are stored in the rooms for a long
time before use, they may expire hence making the company incur losses (Seuring,

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2013). If they fail to be delivered on time, they may lack the products to sell to the
customers. These are some of the goals set by the department.
The business too has various purchasing needs. First, it has to determine the
number of goods that are needed to be purchased. They have to prevent damages
to the products. To do this, we have to divide the goods into three classes based on
their economic order. The department also has a production schedule. This may be
determined on a monthly basis. These schedules are important since they enable
them to determine the number of goods that should be purchased. Lastly, it is our
role to check the quality of goods (McCue & Roman, 2012). To maintain and get
loyal customers, the business has to provide quality products. Quality is determined
through value analysis. Some of the ways that a product`s quality can be weighed
are by checking the weight, shape, flexibility, size, etc.
Being the purchase manager, I would suggest a supply selection criterion that
is efficient for the company. The company should introduce the supplier code of
business conduct. The suppliers should abide by the rules in the contract. They
should also act ethically since the company maintains high ethical standards. The
criteria should ensure that the goods are high quality, safe for human consumption,
convenient with minimal risk, and should be socially responsible. As a leader, it is my
duty to ensure that the criterion is efficient (Hajli, 2015). There should be policies set
for all vendors who would like to supply goods to the company. First, I would request
the company`s board to pass an anti-bribery policy. It is a policy that both the
employees and the vendors should respect. It ensures that all the interactions
between the employers and employees are done in an open and transparent
manner. The method will ensure that the company only deals with the best suppliers
in the market. The company should avoid dealing with cartels. The suppliers who are
willing to work with the company should not have faced criminal charges before
(Amin & Zhang, 2012). This will ensure the company does not deal with criminals
and maintains a good record.

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With such principles, the company is likely to maintain its credibility.
ICT for Purchasing Operations
In the modern day, technology can be used to make procurement more
efficient. The company has various needs and goals that technology can help meet
and solve. For example, the company`s goal is to ensure that all items stored in the
stores are safe. The company also needs faster ways of interacting with suppliers
and sourcing their goods (Editorial, n.d.). Their goal is to purchase products in an
efficient, faster mean. I would recommend the company to adopt Electronic
procurement more. It is the process of purchasing goods and services via the
internet or electronic means. It may involve sending emails, having a portal, and
making orders online. Though the company has a website, it is difficult to make
orders via this platform.
There are several ways that technology may help the company improve its
service delivery. After buying products, the storage of these products is not
guaranteed. However, installing trackers and software in these goods may help
secure them in case they are lost. It is also easy to keep track of how many goods
have been left in the stores ("Kraljic Portfolio Purchasing Model," 2019). The method
can be used to update inventories. The use of technology also helps improve the

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performance of the company. The system helps improve the efficiency of operations
in the purchasing department. It is easier to evaluate vendors and track orders via
technology. It also reduces the amount of energy and time that is required to conduct
these activities. It is an automated process hence, does not require much human
labor. The company can also introduce e-catalogs. They provide the supplier
product offerings on electronic platforms and ensure that they get an insight into
what the product should look like and its price. The suppliers then offer products that
meet the quality posted on the platforms ("Procurement Analysis ? 5 Ways to Saving
Purchasing Costs," n.d.). Use of ICT in the procurement department makes work
easier and improves internal integration. Since the company has branches in
different parts of the country, it is easier for them to communicate. They can
collaborate and add value to the company increasing its efficiency.
I would recommend E-procurement to help with global operations. Currently,
the company not only has operations in Singapore but also overseas. The system
supports foreign currencies and languages while using logistics. It is easier for the
system to translate from one language to another. It may also connect to suppliers
that are not only in the country but also those who are found overseas. This
increases the pool from which customers can pick their products from. It helps the
company have diverse products that they can provide to customers. The system will

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also increase data accuracy. When data is stored on online platforms, it is difficult to
manipulate the data. It also reduces the chances of having an error. It is also easier
to refer to past records while using electronics compared to old documents stored in
a store. However, it is important to keep physical documents in case the data is
manipulated. Lastly, one is not required to make templates each and every time.
They can be stored in electronic form and used later. This will help save time and
resources.
Purchasing Cost Analysis
In the modern day, many business are trying to ensure they get maximum
returns from their investment. Therefore, many firms are trying to reduce the
purchasing cost. To do this, they have invested in setting up purchasing departments
that can assist them enjoy maximum profit. Similarly, Dairy Farm International
Holdings limited needs to develop strategies that can enable them manage their
costs (Mikalef, et al., 2015). It will enable them analyse what happens in the
departments and ensure their inventories are at optimum levels. Since it is one of the
largest retail business in the country, the tools will only make them more efficient.
Some of the tools include cost analysis. Cost analysis is the actual cost at
which goods and services are brought. However, other costs are incurred during the

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process of delivering goods and services to the stores. Some vendors may argue
that you have to pay a deposit or advance payment before delivering their goods and
services; therefore, since some of the goods may incur a lot of expenses being
delivered. Therefore, the procurement analyst should take note of these expenses
for them to analyze the purchasing costs of the goods and services. Inventory
analysis is also an important tool that can be used to analyze the purchasing costs in
an organization. It is the costs that are incurred while storing the items. It can also be
the cost incurred for not having the goods and services while they are needed by the
customers. It cannot only be used to tell about the current inventory but also the
optimal future inventory. The optimal future inventory can be used by the
manufacturer to tell if the business will be influenced negatively.
Sometimes, the purchasing costs may be affected by the supplier. Some
suppliers are more expensive than others. To prevent this, a procurement officer can
conduct the best use of suppliers’ analysis. This tool enables the supplier to analyse
a certain group of suppliers and analyse, who is supplying what good in the market
and at which price. Sometimes, a company may depend too much on one supplier
who might exploit them. Maverick spending can also be used to analyse purchasing
costs. In some instances, the goods are available at a cheaper price in other stores.
The goods may also be of lower quality, yet others are higher quality but at an
affordable price (Mastrocinque, et al., 2013). Conducting a Maverick spending
analysis enables a procurement officer to discover such instances. The cases may
be increasing the costs of production in a company hence reducing profits. Lastly,
Delivery time analysis can be such an excellent tool, especially for Dairy Farm
international holdings Limited. Sometimes, the company receives a large number of
goods that may affect cash flow and lack of storage space. They require to be
handled with care and storage space. Analysing the time of delivery may reduce the
damage of goods, saving a lot of costs incurred.
Conclusion
In conclusion, purchasing decisions and strategies affect how a business
grows and makes a profit. Dairy Farm International Holdings Ltd (DAIR) is a local
company that operates in Singapore. It has several purchasing needs and goals. Its
first goal is to purchase raw materials necessary to be used in their stores. It also

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aims to buy products at the right price. It has to determine the number of goods that
are needed to be purchased. The company`s goal is to ensure that all items stored in
the stores are safe. The company also needs faster ways of interacting with
suppliers and sourcing their goods. The company is also trying to reduce its
purchasing costs. Some of the recommendations that can make the purchasing
department more efficient include supplier code of business conduct, an anti-bribery
policy, E-procurement to help with global operations. Some of the tools that can be
used to analyse purchasing costs include cost analysis, inventory analysis, time
delivery analysis, best use of supplier`s analysis, and maverick spending.

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References
8 Benefits of Procurement Technology Tools. (2017, July 20). Retrieved from
http://spendmatters.com/2017/07/20/8-benefits-procurement-technology-tools
Amin, S. H., & Zhang, G. (2012). An integrated model for closed-loop supply chain
configuration and supplier selection: Multi-objective approach. Expert
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Editorial, R. (n.d.). ${Instrument_CompanyName} ${Instrument_Ric} Company
Profile | Reuters.com. Retrieved from
https://www.reuters.com/finance/stocks/company-profile/DAIR.SI
Hajli, N. (2015). Social commerce constructs and consumer's intention to
buy. International Journal of Information Management, 35(2), 183-191.
Kraljic Portfolio Purchasing Model. (2019, January 17). Retrieved from
https://www.toolshero.com/strategy/kraljic-portfolio-purchasing-model/
Mastrocinque, E., Yuce, B., Lambiase, A., & Packianather, M. S. (2013). A multi-
objective optimization for supply chain network using the bees
algorithm. International Journal of Engineering Business
Management, 5(Godište 2013), 5-38.
McCue, C., & Roman, A. V. (2012). E-procurement: Myth or reality. Journal of Public
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Mikalef, P., Pateli, A., Batenburg, R. S., & Wetering, R. V. D. (2015). Purchasing
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Procurement Analysis ? 5 Ways to Saving Purchasing Costs. (n.d.). Retrieved from
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Seuring, S. (2013). A review of modeling approaches for sustainable supply chain
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