Purchasing Management: Developing Purchasing Project 3

This report focuses on the process of purchasing management and related aspects in an organization. It discusses the main issues and problems in purchasing and provides a long term development plan to overcome them. It also includes a detailed action plan for selected development issues. The subject is Purchasing Management and there is no specific course code, course name, college or university mentioned.

PURCHASING MANAGEMENT
DEVELOPING PURCHASING
PROJECT

Contents
INTRODUCTION...............................................................................................................................3
State analysis with study of spend analysis and purchasing process with relationship to other
functions and organizations...............................................................................................................3
Main issues and problem in purchasing.............................................................................................3
Long term development plan with issues to be developed.................................................................4
Detailed action plan for selected development issues........................................................................5
CONCLUSION....................................................................................................................................6

INTRODUCTION
Purchasing management is the management of the purchasing process and related
aspects in an organization. Purchasing management includes the following expertise such as
Supplier Management. Cost and Cost Reduction Management. This report focuses on the
process undertaken by Tesco to purchase with slight focus on spend analysis with
relationship of other organizations. With that it also focuses on issues and problem in
purchasing with a focus on development plan over these issues. Apart from that action plan
has also been discusses so that decisions taken can be implemented in order to improve and
sustain the business of company for long period of time.
State analysis with study of spend analysis and purchasing process with relationship to other
functions and organizations
Purchasing done by Tesco is done on the basis of factors assessed such as getting
quality and economical products from the suppliers, believed to be the method that is
economical and meet the needs of people. This is done by maintaining relations with
suppliers at good terms. With the help of studying there spend analysis they will be able to
figure out where the financial resources of company are getting used. This will help them to
categorize and gather the data they can assess the costs involved which are not necessary so
that it can be removed and used for further expansion. Process of purchasing enabled by
Tesco involves many steps such as they assess the need first then submit the purchase order
after that accounting team review it that if or not it is under their budget. After that they send
the proposal and quotation to vendors and suppliers so that the bids made by suppliers can be
evaluated and compared. The most reasonable supplier will be selected by Tesco and they
will pass on the contract to them. All the terms and conditions are read and agreed upon and
when after everything is final they will be able to sign it that will show that deal is on with
mutual consent of both parties. Even after that company has to review the products shipped
by the suppliers so that all the goods are verified and notice can be sent for successful
delivery. Sometimes companies such as Tesco faces shortage of products and in order to keep
the stock up sometimes they borrow it from other companies which all depends on the
relations maintained with them (Dobos and Vörösmarty, 2019).
Main issues and problem in purchasing
Risk Mitigation-

Risk in supply cycle is a major threat for company as there are lot of them involved in
it such as quality, cost etc. there are other form of risks to such as adherence in policy, anti-
corruption and procurement leaders create compliance risks. If the risk is high then it will
make the process more complex, create more risks, rules in decisions that are formal (Aris,
Him and Rusiman, 2021).
Dark Purchasing-
Sometimes some people go out of the way and purchase thing outside of the terms
and conditions agreed upon leads to dark purchasing. It is a major issue for the business as it
can turn out to be very expensive. This sometimes cross up their capital or inventory in
material which starts to generate losses for them. This creates problem for them to overcome
it.
Long process cycle-
Many times purchasing is done at the last stage which creates gaps in the cycle and
tend to make the cycle longer than expected. There are many reasons involved such as delays
in preparing specifications that are technical, overlooking the schedule of purchase, extending
the timeline to submit it, increasing time in negotiation and drafting the contract.
Inaccurate data-
Sometimes the data collected, recorded or drafted is not accurate or reliable which
creates issues in the cycle of purchasing. This creates difficulties in maintaining their stock at
warehouses as per the quantity they deal in. sometimes instead of shortage the inventory turns
out to be more than the capacity they can handle and other issues which can create losses in
the portfolio of company on high level (Johnson, Leenders and Flynn, 2021).
Issues related with suppliers-
Task of managing suppliers and dealing with them is really a challenge for the
management of Tesco as they have to deal with many suppliers to get products from the right
ones at right price is difficult to analyse. It is a challenge to set one supplier and maintain
relation with others without affecting them. This in turn creates complications in the process
of purchasing.

Long term development plan with issues to be developed
In order to develop the issues they need to develop a plan of contingency which can
help Tesco to overcome it so that they can save from generating losses. In order to set a plan
of development they need to analyse every issue and the cause behind it so that they can set
up the strategy for it. It is important for them to assess these things so that they can make
their business sustainable.
In order to remove the factors of risk which can affect the business on a high level it is
important for management of company to conduct research of market so that they can assess
its demand and analyse the potential or risk involved in it which will be beneficial for them
through which they will be able to divert the risk. In order to remove the factor of dark
purchasing management will need to take effective control and enable tools which help them
to monitor strictly so that they can keep an eye on any illegal or out pf the conduct activity by
management for their own benefit and reduce this threat. In order to overcome the issue of
long term cycle they need to place their order in advance on the basis of past behaviour so
that they can place the order in advance and develop the long term cycle. In order to beat the
issue of inaccurate data it is necessary that company only relies on employees who are
trustworthy otherwise they will continue to see this issue. In the foreseeing future which will
generate losses for them and dissatisfy their customer service. Issue of supplier is the most
important which needs to be fixed and developed and for that strategy needs to be build such
as dealing with only those suppliers who are efficient and keeps up the delivery of products
as per the deal set by both of them. This way they will be able to remove the difficulty in
managing deals with them.
Detailed action plan for selected development issues
Development Issues Action Plan Duration
Risk Mitigation In order to reduce the
changes in supply and
compliance with it which
causes risk it is necessary
for them that they have to
assess external threats by
conducting the research as
implementing these steps at
the initial stage before
In order to overcome this
issue it can take up to 3 to 6
months of time (Hernández-
Montes, 2019).

making a decision will help
them.
Inaccurate Data In order to remove the issues
from this factor Tesco will
need to take the use of
effective software that helps
them to let know about the
stock they need to fill up and
remove manpower over that
through which they will be
able to find out the right
force.
This aspect is not time
consuming only the one
where they have to learn and
get used to it takes up a bit
of time.
Long process cycle In order to remove the
aspect of this pressure they
will have to reduce the time
they spend in negotiation
and for that they will have to
start giving suppliers better
deals so that this issue is
reduced.
This aspect will take time to
implement as the process set
by company identifies lot of
gap and in order to remove
those gaps it takes time.
CONCLUSION
From the above studies it has been concluded that it is important for them to make sure that
they identify the gaps that are affecting their business and in order to do that they will have to
conduct the aspect of research and development. It is important for them to make sure that
decisions are only taken by them after everything is analysed and gives more chances of
generating profits. It is necessary for them that they assess these issues because only after that
they will be able to bring development and improvement in their processes.

REFERENCES
Books and Journal
Hernández-Montes, A., 2019. Influence of human values on the acceptance of Chapingo
cheese and its intangible meanings of purchase. Agricultura, Sociedad y Desarrollo, 16(4),
pp.497-511.
Johnson, F., Leenders, M.R. and Flynn, A.E., 2021. Purchasing and supply management.
McGraw-Hill Companies, Inc.
Dobos, I. and Vörösmarty, G., 2019. Inventory-related costs in green supplier selection
problems with Data Envelopment Analysis (DEA). International Journal of Production
Economics, 209, pp.374-380.
Aris, N.S.A.M., Him, N.C. and Rusiman, M.S., 2021, May. Analytic hierarchy process in
purchasing import and local car models among first time car buyers in Malaysia. In AIP
Conference Proceedings (Vol. 2355, No. 1, p. 060008). AIP Publishing LLC.