(solved) The Business Environment Assignment

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Added on  2020-10-02

(solved) The Business Environment Assignment

   Added on 2020-10-02

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The business environment has been reshaped during the past decade because of the emerging trends and challenges, thus creating new opportunities through which procurement can enhance the overall performance of organizations. As most companies develop new global supply chains to develop and look for expansion opportunities in emerging markets, supply chainmanagement and markets have become dynamic (Masteika & Čepinskis, 2015). It is importantto note that foreign exchange and commodity prices are more volatile in the current business environment, mainly because of increased risk of disruptions in the supply chain. With such volatility in the supply chain and market, excellence in traditional core competencies is not enough for a firm to gain agility in its operations. Procurement challenges are also on the rise dueto dynamism in supply markets. Masteika et al. (2015) notes that in order to succeed in addressing these challenges, procurement executives need to work collaboratively with strategic suppliers in decision making to streamline the supply chain from end to end. Nowadays, many procurement executives work directly with the Chief Financial Officers (CFO) and Chief Executive Officer, which indicates that purchasing is of great strategic importance to organizations.To attain agility, there is need for procurement functions to develop and employ specialized skills that ensure efficiency as they go beyond traditional cost management. This should be done to improve the whole procurement process. In MRO purchasing specifically, firms face the challenge of determining the capabilities that should be prioritized while at the same time managing and facilitating cross-functional collaboration (Alinaghian, 2015). Variousleading procurement organizations have shown that systematic approach need to be adopted when building capabilities that will result into agility in MRO procurements (Alinaghian, 2015). Most companies that have managed to address and reduce supply risks and volatility through establishment of leading-procurement capabilities have significantly improved their profit margins. Some are estimated to have increased their profitability by more than five percentage points which is a greater return on investment. Additionally, building of strategic supply chain management capabilities have led to development of innovative supplier relationships thus improving service delivery and boosting business growth rates (Teece, 2017). Advanced capabilities in MRO procurement to capture strategic value It is true that the traditional role of purchase is supply of needed products, management ofspending on procurement items, and establishment of crucial long-term supplier relationships. However, due to the rapidly changing business environment, companies demand that procurement can develop enhanced capabilities that can result in attainment of competitive advantage in the long run. To achieve this, the company requires a new approach to applying andbuilding skills. Management of organizations needs to come up with training programs that address advanced capabilities, thus capturing strategic value, especially in areas where spending is significant (Masteika et al. 2015). Additionally, since procurement involves interaction between organizational functions and external partners (suppliers), it is crucial that procurement team members develop their interpersonal skills in the process of building advanced capabilities.
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