Supply Chain Management Case Study

This assignment focuses on analyzing a specific case study related to supply chain management within the context of local government. Students are tasked with examining the challenges faced by the local government in managing its supply chain and evaluating potential solutions or strategies that could be implemented to improve its efficiency and effectiveness.

Procurement and Supply
Function

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
a) Opportunities for the procurement and supply function to create savings or efficiencies or
other sources of added value..................................................................................................1
b) Improving the profile of function.......................................................................................3
c) Creating collaboration with stakeholders to increase early engagement in the procurement
process....................................................................................................................................4
d) Need for organisational policies and procedures to implement effective procurement and
supply.....................................................................................................................................5
TASK 2............................................................................................................................................6
a) Research the market of chosen category and review its size, scope and extent of
competition.............................................................................................................................6
b) Summarise the demand and supply factors that impact on the chosen category of
procurement............................................................................................................................7
c) Current pricing mechanism applied to the category and assess the factors that impact on the
pricing of the category............................................................................................................8
CONCLUSION................................................................................................................................9
REFERENCES..............................................................................................................................11

INTRODUCTION
In the current era of globalization, procurement and supply chain play a significant role in
the growth and success of firm. Supply chain can be termed as a flow of goods and services
within and outside the enterprise. While, procurement can be stated as a business management
function that makes sure regarding identification, sourcing, accessing and management of the
external resources that the firm needs or may need to fulfil its strategic objectives (Bose and Pal,
2012). However, procurement applies the science and art of using external resources and supply
chain management through a body of knowledge interpreted by competent practices of the
management. However, one of the main difficulties faced by businesses in defining with the term
procurement is that it does not deal with a single action of process. It covers the complete range
of events from the identification of a need for a product or service to its disposal or cessation
(Khan, Christopher and Burnes, 2008). Procurement involves activities and events before and
after the signing of contract as well as general management activities linked with the business. In
the present study, Sainsbury supermarket, a retail organization has been undertaken which is the
second largest chain in the UK. It is essential for the company to maintain its procurement in
order to gain benefits and attain lower costs, improve quality, reduce risk and add greater value.
TASK 1
a) Opportunities for the procurement and supply function to create savings or efficiencies or
other sources of added value
It can be assessed that procurement and supply function delivers a range of benefits that
not only seek to reduce the costs but also to ensure effective supply. Furthermore, it also supports
strategic organizational objectives such as market expansion and product innovation so that
Sainsbury can gain benefits from procurement (Molino, 2013). These are as follows-
 Security of supply
 Lowering the costs-
 Reducing the risk
 Improving quality
 Adding greater value
 Increasing efficiency
 Product innovation
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Furthermore, it can be assessed that supply management is very similar term which
describes about the term procurement and thus, relates to add greater value to enhance the overall
process captured by procurement. It is essential for firm to involve procurement and thus,
improve the business performance which needs to be active to enhance the benefits of firm in the
market (Porter, 2008). Therefore, it is essential for Sainsbury to develop effective procurement
and supply chain function in order to create huge savings or efficiencies or other sources of
added value. With the help of proper procurement and supply function of retail products, firm
can save a lot of resources and thus, create efficiency to achieve greater results. Proper
procurement of raw materials helps the firm to save a lot of cost and resources and thus, improve
the efficiency of firm to enhance their savings and earn profits (Preuss, 2009).
Furthermore, effective procurement assists in creating value added benefits for the firm
that are as follows-
 Best contracts
 Improved purchasing efficiency
 Customer satisfaction in both the terms (quality and service)
 Closer and more cooperative relationships with suppliers
 Reduced costs and improving quality of products
Thus, all these factors help in improving the value added categories of business and thus,
provide Sainsbury a chance to increase their efficiency so that role of purchasing department can
be improved to focus on new product development. Apart from this, such factors also assist in
improving the value added facilities that help in contributing the purchasing department
functions i.e. areas of quality, cost and time and thus, resulting in the early involvement in
attaining the best results (Christopher, 2012). However, non-availability of a proper procurement
strategy affects the business to increase the cost and thus, decrease the savings of firm so that it
influences value added benefits of the organization. Optimizing external spending, procurement
operations and other value contributions help in supporting the overall corporate agenda. It can
be assessed that without a comprehensive procurement strategy, it is impossible for Sainsbury to
know whether or not procurement firm is aligned with the corporate strategy to attain progress
within the business (Fawcett, Ellram and Ogden, 2014).
b) Improving the profile of function
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Procurement and supply chain management influence that it is essential for the firm to
adopt effective functions so that they can easily reach to the consumers and thus, attain desired
targets. Also, it is essential for Sainsbury to adopt effective procurement and supply function of
raw material so that savings and efficiency can be created to attain added value. Moreover,
company needs to develop effective supply function and thus, deliver the goods and services
effectively so that sales and profitability can be enhanced (Wisner, Tan and Leong, 2015). With
the help of proper functions, business can efficiently increase the delivery of goods and thus,
focus upon new product development. Purchasing department of Sainsbury is required to focus
upon the procurement function so that it can be improved to achieve desired objectives. It is
significant for firm to adopt effective policies and practices so that supply function can be
improved within the workplace to save resources and attain effectiveness (Carter and Liane
Easton, 2011).
Furthermore, it can be assessed that it is crucial for firm to develop effective policies and
practices so that the best procurement can be done to enhance the sales and profitability.
Sainsbury management is required to adopt effective procurement function so that set targets can
be attained in an effective way. However, it is significant for business to improve its profile in
order to achieve desired output (Colicchia and Strozzi, 2012). With the help of improving its
procurement function, firm can achieve desired outputs and thus, enhance the effectiveness so
that goals can be attained. Also, Sainsbury is required to implement effective supply functions so
that organization can focus upon new product development. Supply chain system assists business
to develop efficient and effective management of all the activities from primary suppliers
through the point of sale. Professionals associated with procurement and supply chain
management should focus on achieving their roles for the development whenever possible
(Geerts, 2011).
It can be assessed that primary function of supply chain may be stated as a provision of
products or services that are required by the ultimate consumers. However, supply chain process
needs to be improved by Sainsbury which results them to fulfil the needs of customers.
Although, it can be evaluated that supply chain management is an evolving process which
provides distinct information in regard to develop effective responsibility so that company can
enhance dominant position within their supply chain (Hunt and Davis, 2012).
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c) Creating collaboration with stakeholders to increase early engagement in the procurement
process
Collaboration with stakeholders helps in increasing early engagement in the procurement
process so that it ensures continuity of communications throughout the procurement process to
use common tools that allow individual to work with interested parties. However, through
involving numbers of procurement teams, company can assess that using collaborative
procurement, solutions can be gained by the firm (Sarkis, Zhu and Lai, 2011). Also, it is
significant for company to engage different stakeholders within the workplace and thus, it can
improve early engagement in the procurement process. Moreover, providing access to single and
definitive sources of information, online individual can bring combination of buy side and supply
side stakeholders at any stage of the procurement process. Carrying out this process helps
individual to work better towards service innovation and specification that refines and improves
procurement in a virtuous circle (Hugos, 2011).
Following is the collaboration process in which stakeholder engagement can be done in
order to increase early engagement in the procurement process. It is described as underneath-
 Pre-market engagement- In this step, focus is laid on stakeholder engagement, market
research and discovery. However, traditional engagement can be expensive, time
consuming and also possesses major drawbacks especially if individual needs to engage
with many people in different locations. It is essential for Sainsbury's stakeholders to
overcome these by allowing individual to collaborate with unlimited number of people in
any organization (Mackey and Gass, 2013). It helps in supporting team collaboration and
communication processes at this stage that involves procurement planning, financial
planning, managing work with project advisors, option appraisals and category
management etc. However, such ways help in involving different interested parties at the
pre-engagement stage and thus, improve the quality of business (So, Parker and Xu,
2012).
 Procurement- Furthermore, during the main procurement process, this step assists in
developing key priority in regard to improve the audit and communication with
stakeholders. On the other hand, organization uses e-procurement portals at this stage in
order to typically provide only limited supplier communication facilities (Stadtler, 2005).
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While, they rarely provide essential support for evaluating and conducting team
communications.
 Delivery- It can be assessed that business is required to choose their suppliers as well as
sub-contractors and thus, the most important challenge of firm is that it is essential to
develop working in partnership and managing them effectively in order to ensure
effective service delivery. Firm allows to carry out their functions effectively and thus,
develops multi-disciplinary team so that functions can be operated effectively (Stavrulaki
and Davis, 2010).
d) Need for organisational policies and procedures to implement effective procurement and
supply
It can be assessed that it involves different business policies and procedures to implement
effective procurement as well as supply and thus, attain desired targets. There are various
policies adopted by Sainsbury in relation to implement effective procurement as well as supply
and thus, drive value for money in its procurement activities through adopting effective selection
of procurement option that provides value for money outcomes. Furthermore, deployment of the
most appropriate processes to facilitate the delivery of optimal procurement helps to attain
desired objectives (Storey, Emberson and Reade, 2005). Also, it is essential for businesses to
effectively work across agency boundaries so that they can effectively achieve saving and
efficiency at the workplace. It also assists in maximizing savings and reducing cost so that the
best results can be attained. However, implementing policies and procedures helps in reducing
duplication of work and thus, the best procurement and supply practices can be carried out so
that organizational goals can be attained (Tuohy and et. al., 2013).
Furthermore, company is required to undertake effective policies and procedures to carry
out the best practices in relation to procurement and supply. It also assists in understanding the
requirements of market, suppliers and possesses the capability in order to deliver better outcomes
so that performance of Sainsbury can be improved. Company is required to undertake effective
supply chain practices so that they can become outcome focused and thus evaluate each and
every procurement activity for opportunities to innovate and improve the performance of
procurement activities so that set targets can be attained (Zhu, Sarkis and Lai, 2013). Moreover,
Sainsbury is required to engage with their clients as they need to understand that their
procurement requirements are achieved with effective and efficient outcomes.
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Moreover, it also involves different policies and practices to adopt effective procurement
processes and thus, advance the economic, environmental and social objectives so that results
can be attained effectively. Further, it helps Sainsbury management to manage procurement
appropriately and responsively through taking effective supply chain system (Eng, 2004). Also,
it is essential for firm to undertake effective policies as well as practices and thus, adopt
procurement requirements and achieve desired supply chain system within the firm to obtain
desired outcomes. Thus, all such policies and practices help in improving the business
opportunities so that sales and profitability can be enhanced to a great extent. Developing
effective policies and practices assists business to fulfil objectives in an effective way (Graham,
2000).
TASK 2
a) Research the market of chosen category and review its size, scope and extent of competition
It can be assessed that the chosen category of procurement of a product or service within
Sainsbury is food sector which has strong brand image and thus, it helps the firm to carry out its
business directly by purchasing the goods from farmers. Company acquires the food items
directly by suppliers and thus, attains desired objectives. Sainsbury's food market is vast and
thus, it has high scope to expand the operations in order to give tough competition to rivals
(Glover, 2014). Also, it is significant for business to improve the organization's working and
thus, achieve high market share as it focuses on providing the best quality food items and at
affordable prices. Management of the firm if focusing on providing the best training to its
employees so that they can enhance the selling of food in the market. Also, it has been
showcased that company is required to fulfil its duties and thus, display proper dates on meat and
other food items which can face bacterial disease (Bose and Pal, 2012).
Furthermore, here Sainsbury chooses food category as it is the biggest food retailer in the
market. It provides the best quality grocery products which are directly purchased from farmers
and thus, saves a lot of cost in the form of middleman. It helps firm to attain maximum savings
and high revenues. Firm chooses this category to expand in the market as it helps them to attain
high market share and growth in the supermarket sector. Also, it provides tough competition for
retail businesses so that they can provide the best quality products or services to the consumers
so that set targets can be attained (Preuss, 2009). Also, food sector is required to be maintained
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effectively by firms as there is tough competition in the market and thus, it affects the business
operations. Company is required to provide food items at attractive prices to the consumers so
that they can enhance the sales and profitability in an effective manner. Thus, Sainsbury delivers
the best quality food items that can be packaged and non-packaged so that company can achieve
desired targets (Wisner, Tan and Leong, 2015). Following is the PESTEL analysis of Sainsbury
which is as follows-
 Political- It states that the political factors within UK possess a great influence upon the
performance of Sainsbury. However, government debts and consumer debts are
increasing and thus it impacts upon the customer attitudes and therefore, it assesses great
pressure upon business. Sainsbury just not only requires to operate in such market
conditions but also has to develop their business regularly (Hugos, 2011).
 Economic- It also plays a crucial role in the retail industry and thus it affects the demand,
costs, prices and profitability. However, at the time of economic slowdown, growing
unemployment and inflation influences the Sainsbury and affects its performance.
 Social- It involves change in attitudes and preferences of people and thus it tends to
provide relevant food items to consumers. For instance, company also focuses upon
increasing female workers and thus it results in affecting the work (Hunt and Davis,
2012).
 Technological- Because of technological advancements it provides a positive impact
upon the business operations. It possesses a significant impact upon the growth potential
and thus expand the business exponentially.
 Environmental- There has been great pressure upon company to safeguard the
environmental and thus it is essential for firm to reduce carbon emission or
environmental pollution in order to manage the waste and optimum utilization of
resources (Geerts, 2011). Legal- It assesses that the government legislation and policies have a direct impact upon
the performance of firm. However, if government introduces a new tax law regarding
supply chain then it affects the company's objectives.
Porter five forces
 Competitive rivalry- It is high as there are wide range of rivals available in market and
thus companies are trying to get into such sector to earn profits. Sainsbury possess high
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market share. Tesco, Asda and Morrison are the major rivals and thus they can give tough
competition to Sainsbury in order to serve larger customer base.
 Barriers to entry- It is high as companies trying to enter in the market requires huge
investment. Further, retail is also at an advanced stage within the UK and thus new
entrants to establish themselves (Molino, 2013).
 Threats of substitutes- Threat of substitutes in the food retail industry is low because
consumers view it as a necessity and thus increasingly developing in the emerging
market.
 Buyer power- It is high in this industry and thus because of presence of various
competitors selling the same products. It is differentiated in price and consumer loyalty
and increasingly to attain results. However, the switching cost is low for consumers
(Christopher, 2012).
 Supplier power- It is high as suppliers are very powerful and thus business needs to
maintain relationship with suppliers so that set targets can be attained.
Kraljic model
Such matrix helps firm to gain insight into the working methods of the purchasing
department and analyse how they are spending their time upon different products. Following is
the model that is based upon two dimensions such as-
 Profit impact- It is defined from low to high. Here, Sainsbury aims to maintain its
strategic significance of the purchase of certain materials. Further, it also signifies the
added value that helps in delivering in the production line and what effect do the costs of
these materials have \upon the business profitability (Colicchia and Strozzi, 2012).
 Supply risk- Further, it is also defined from high to low. Further, to what extent is supply
complex within Sainsbury. Also, it is essential for firm to identify the updation of
materials and possess latest technology so that best results can be attained.
b) Summarise the demand and supply factors that impact on the chosen category of procurement
It can be assessed that in the chosen category, demand and supply factors influence the
procurement in the market. As demand of products rises, it decreases the supply of products and
thus it affects the firm to enhance the sales and profitability. Both the demand and supply factors
affect the food category of Sainsbury in terms of procurement and thus, to achieve desired goals.
Also, it is essential for firm to render effective products to its customers which are not available
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with competitors and otherwise, it will affect the firm in form of decreasing the sales and
profitability (Colicchia and Strozzi, 2012). It is essential for Sainsbury to identify the needs of its
customers and thus, provide them effective products or services. This in turn will enhance the
sales and profitability of firm in the market. Also, procurement of food category needs to be
expanded so that firm can determine the needs in the market and then, contact with more number
of farmers to get the best quality products in order to satisfy the individual needs. Hence, firm
effectively makes contact with consumers to influence them to purchase food items.
Demand and supply factors influence the chosen category of procurement so that supply
of food items can be enlarged. It also assists in improving the facilities and thus, helps in
becoming number one grocery retailer in the world. It is essential for Sainsbury to consider
demand and supply chain factors so that these will not impact the procurement of services and
thus, attainment of organizational goals. It can be stated that business is required to adopt skilled
human resources so that they can work effectively to enhance the market share and thus, attain
organizational objectives. For instance, management of Sainsbury focuses on delivering effective
products or services and thus, attracts the target market so that high profitability can be gained
(Geerts, 2011). Company focuses on selling effective food items that are purchased directly by
farmers and thus, delivers them to end users to enhance market share of the firm. Moreover,
company organizes effective marketing campaign so that they can attract large number of
potential consumers in order to enhance the market size.
c) Current pricing mechanism applied to the category and assess the factors that impact on the
pricing of the category
It can be evaluated that Sainsbury is required to adopt effective pricing mechanism within
its food category so that large number of potential customers can be attracted. Also, it is
significant for firm to undertake the best pricing strategy in order to maximize the sales and
profitability and thus, attain desired objectives. Hence, implying effective factors does not
impact on the pricing of food category and does not influence the business operations in the
market. Also, it is crucial for firm to obtain effective pricing options in relation to give tough
competition to rivals and thus, enhance the business operations in the market (Fawcett, Ellram
and Ogden, 2014). Moreover, it is essential for management of the firm to adopt ethical practices
so that they can carry out their business for long term and by this, it can satisfy people
purchasing food items from the supermarket. Therefore, it is essential for firm to obtain
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effective policies and practices so that they can attract potential buyers and thus, improve the
market share.
Moreover, business is required to undertake the best pricing policies so that desired
objectives can be attained. Sainsbury has eliminated the middleman channel from its
supermarket and directly purchases food items from farmers that helps them to save cost and
attain effectiveness in order to achieve desired success. For instance, implementing effective
pricing policies for food items helps in carrying out the best practices so that organizational goals
can be attained (So, Parker and Xu, 2012). Therefore, it is essential for marketing team of
company to develop effective campaigns and policies so that consumers can be attracted towards
organization and thus, it can achieve desired targets. However, it helps the firm to obtain the best
pricing mechanism and thus, influence people to buy food items from Sainsbury as well as
overcome competitors. Setting effective prices aids the firm to obtain the best prices so that large
market share can be attracted towards the firm and thus, it can achieve desired objectives
(Stadtler, 2005). Hence, it can be identified that firm is required to set the best pricing policies so
that potential customers can be attracted and thus, deliver them the best products or services.
CONCLUSION
From the above study, it can be concluded that supply function and procurement are
essential parts of any business enterprise as by this, they can ascertain effective purchasing
process and thus, provide benefits to the firm in form of added value. Furthermore, organization
is required to involve all its stakeholders in increasing early engagement in the procurement
process so that desired objectives can be attained. Also, identifying the benefits of procurement
assists Sainsbury to improve its product quality by increasing savings and improving efficiency.
Moreover, it is significant for business to implement effective policies and procedures so that
effective procurement and supply of products can be attained. Also, firm is required to undertake
the best pricing policies so that they can attract more consumers of different regions and by this,
it can give tough competition to rivals. Moreover, Sainsbury undertakes food category to develop
effective procurement policies and thus, deliver the food items directly to consumers. This in
turn enhances the sales and profitability of firm in the market.
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REFERENCES
Books and Journals
Bose, I. and Pal, R., 2012. Do green supply chain management initiatives impact stock prices of
firms?. Decision support systems. 52(3). pp.624-634.
Carter, C. R. and Liane Easton, P., 2011. Sustainable supply chain management: evolution and
future directions. International Journal of Physical Distribution & Logistics
Management. 41(1). pp.46-62.
Christopher, M., 2012. Logistics and supply chain management. Pearson UK.
Colicchia, C. and Strozzi, F., 2012. Supply chain risk management: a new methodology for a
systematic literature review. Supply Chain Management: An International Journal. 17(4).
pp.403-418.
Fawcett, S. E., Ellram, L. M. and Ogden, J. A., 2014. Supply chain management: from vision to
implementation. Pearson.
Geerts, G. L., 2011. A design science research methodology and its application to accounting
information systems research. International Journal of Accounting Information Systems.
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Porter, M. E., 2008. Competitive advantage: Creating and sustaining superior performance.
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Preuss, L., 2009. Addressing sustainable development through public procurement: the case of
local government. Supply Chain Management: An International Journal. 14(3). pp.213-
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Sarkis, J., Zhu, Q. and Lai, K. H., 2011. An organizational theoretic review of green supply chain
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Wisner, J., Tan, K. C. and Leong, G., 2015. Principles of supply chain management: a balanced
approach. Cengage Learning.
Zhu, Q., Sarkis, J. and Lai, K. H., 2013. Institutional-based antecedents and performance
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Online
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circle-of-procurement>. [Accessed on 2nd June 2016].
Graham, G., 2000. Supply-chain management across the Internet. [PDF]. Available through:
<http://www.icesi.edu.co/blogs/logisticawww131/files/2013/02/InternetSupplyChain.pdf
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