Purchasing Analysis and Strategy for Patrick Industries - Report

This report provides a comprehensive analysis of Patrick Industries' purchasing management practices, focusing on Kraljic's portfolio analysis. The study begins with an introduction to purchasing management, its importance, and its role within a company. The main body delves into Patrick Industries' purchasing strategies, examining how they align with the company's business strategy. It explores the use of inventory management, competitive bidding, and category management, assessing their effectiveness in achieving long-term goals. The report also examines the balance of power between Patrick Industries and its major suppliers, highlighting the importance of managing transactions and maintaining strong relationships. Furthermore, it analyzes the sourcing of strategic products and services from best-in-class suppliers, discussing the benefits and potential drawbacks. The report also addresses the percentage of purchasing requirements covered by contracts and assesses the extent to which internal operations are benchmarked against specialist suppliers. It considers potential supply chain difficulties and opportunities for collaboration with suppliers. The report concludes by summarizing the key findings and recommendations for improving purchasing management within Patrick Industries.

Purchasing Management
project 2

Table of Contents
INTRODUCTION...........................................................................................................................1
MAIN BODY...................................................................................................................................1
Purchasing strategy that support the business strategy...............................................................1
Balance of power between company and major suppliers..........................................................3
Strategic products and services sourced from best in-class suppliers.........................................4
% of purchasing requirement covered by contracts....................................................................4
Extent the internal operations benchmarked against specialist suppliers...................................5
Difficulties in supply can expected in near future......................................................................6
Opportunities exist for collaboration with suppliers...................................................................7
CONCLUSION................................................................................................................................8
REFERENCES................................................................................................................................9

INTRODUCTION
Purchasing management is that management of purchasing process and its relevant
aspects within an organization. Thus, it helps to ensure the customer satisfaction and in this,
management have this obligation in two different ways such that quality of product as well as
on-time deliveries. The chosen firm for this report is Patrick Industries whose headquarter is in
US and also helps in providing decorative panels, countertops to the customers. The entire study
will shed a light upon importance of purchasing management and its role within different
operations of a company.
Moreover, the report will present the purchasing strategy used by the chosen firm and
how it helps to meet the long term requirement. Also, report will describe the balance of power
between the company as well as their major suppliers and then determine the extent through
which internal operations benchmarked against the specialist suppliers. Apart from this, report
will also present the difficulties in supply that can be expected in near future and describe the
opportunities for product development.
MAIN BODY
Purchasing strategy that support the business strategy
Purchasing strategy is the actions that a purchasing department take to attain its
objectives and purchasing strategies aligned with corporate level business strategies with the
ability to purchasing. There are different purchasing strategy used by Patrick Industries which
includes inventory management and contracts that helps the business to buy the things and make
a record of each transaction for its smooth running.
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In accordance with the above table it has been interpreted that there are four main types
of purchasing strategy that manufacturing company may use in order to make its business
operations smoother. However, each purchasing strategy is used for product's specific needs and
for that effective actions can be taken. Quoted business uses competitive bidding in which
contracts are fall under his category (Tarigan, Siagian and Jie, 2020). This is suitable for
leverage products whose main objective is to best deal for short term and while purchasing some
heave products, company mainly uses this method of purchasing that provokes it to search for
alternative products and suppliers.
Yes, the chosen purchasing strategy helps the company to attain the long term goals in
near future because it is based upon target pricing and also reallocate the purchasing volumes
over suppliers. Thus, it can be stated that with the help of chosen purchasing strategy Patrick
Industries may able to provide the valid products to their customers and also improve the
business performance.
On the other side, company also uses category management as a purchasing strategy in
which organization may spend into areas which contain similar products that enable company to
generate the opportunities. Under this, inventory management is used that helps company to
keep an eye over the inventory so that business may focus on delivering the value to a customer.
Hence, it can be stated that through the chosen strategy company is able to meet the need of
customers and make alteration in their existing policies as well. This is mainly used by Patrick
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Illustration 1: Purchasing strategy

industries for routine products whose objective is to reduce the logistic complexity (Tarigan and
Siagian, 2021). That is why, for proper inventory management, company uses this purchasing
method in order to improve the operational efficiency as well as reduce the number of suppliers
so that business operate smoothly. With the help of category management, company is able to
delegate order handling to internal users so that effective results can be drawn along with meet
the need of a company as well.
Balance of power between company and major suppliers
Balance of power between company and major suppliers is all about to manage the
transactions so that effective results can be generated. The quoted firm is also uses or have to
ensure about the things so that there will be no negative impact identified over the transactions
and generated effective results too. It is important because if the rate of producer will be high
then the things offered by quoted business will be wasted and this in turn causes negative impact
over the brand. Moreover, the balance of power exists to protect as well as limit the action of
two sales that affect the transaction of a business.
In accordance with the power and dependency dyadic relationship model, it has been
examined that organization must develop sourcing relationship appropriate to the power and
dependency circumstances. So that it company set the price that helps to meet the requirement of
their customers (Allal-Chérif, Simón-Moya and Ballester, 2021). Further, it has been also
realized that the management of the company also have to focus upon interdependence
relationship in which supplier develop production skills tailored o the organization and develop
effective key performance indicators which assist to improve the results as well as relationship.
Among all quadrant of the model, the chosen quadrant only helps to reduce the number of
suppliers as well as number of duplicate products that assist to consolidation of purchase.
Therefore, it can be stated that with the help of balance of power between the company
and major suppliers, Patrick Industries improve the existing products. Also, improve the market
share with a better profit margin so that a strong relationship can be manged to generate the best
outcomes. Hence, it can be stated that through managing power flow between suppliers,
company have to equalize in chain. That is why, balance of power is crucial in which company
have to develop strategy that assist to maintain the relationship between members so that they
can influence the decisions easily. Along with this, it can be also analyzed that Patrick Industry
also change the price of a product when they identify the market demand is fluctuated by
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negotiating with suppliers. This in turn shows that company make decision by considering the
supplier's contract and create a positive impact by meet the need of customers as well.
Strategic products and services sourced from best in-class suppliers
Yes, Patrick industry offered strategic products and services sources from best in-class
suppliers because it helps to manage the product effectively and also stops short of the actual
purchase of and payment for goods and services. It can be stated that with the help of best in-
class suppliers company is able to provide effective retail experts that provide list of challenges
which might company may face. The products as well as services are sourced by best in-class
suppliers in which 360 degree evaluation performed in order to generate the best outcome and
also make the employees more able to solve the issues (Mulyana, Mashadi and Syahputri, 2020).
Along with this, Patrick industries already have a strong supply chain management which assist
them to overcome any bottleneck situation which new company might face. With the help of
complete evaluation, quoted company is able to offer the products that assist to meet the defined
aim and also improve the revenue streams so that effective results can be generated.
In addition to this, by using best in-class suppliers, company is able to introduce new
products and this in turn satisfy the need of customers. Along with this, Patrick Industries also
have some loopholes like it did not perform efficient market research where company is not able
to build a strong supplier management. That is why, to overcome such bottleneck situation, there
is a need to use strong strategy in order to generate the best outcome. Apart from this, it has been
also analyzed that if company sourcing products by using best in-class suppliers then it will
easily provide better opportunities to their customers and also address the gaps so that it will
easily improve the overall performance of a company (Moncef and Philipp , 2021). Hence, it can
be stated that with the help of such strategies Patrick Industries may perform the best results to
their customers and enhance the customer brand image as well. That is why, best in-class
suppliers has been used by the company in order to offer products to their respective customers
by considering all the necessary criteria.
% of purchasing requirement covered by contracts
There is no specific percentage required for purchasing when business perform contracts
because it is varied from business requirement and that is why, it is necessary to only comply
with laws so that it generate the effective results. However, it has been also identified that
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percentage is not depended upon any circumstances, but it changes by the type of contract in
which company have to signed. In US, procurement in US is subject to federal procurement
statutes which is implemented by FAR and other agency guidance. As per the laws and
legislation, it has been identified that all federal executive agencies which are covered by FAR
are also considered under the purchaser (Tannady and et.al., 2020). That is why, it can be stated
that with the help of different contracts, the purchasers or company make decision accordingly.
With the help of mutual consent, both parties may change the percentage of contracts and that is
why, it can be stated that percentage of contract is not fixed within Patrick Industries and that
might be fluctuated as per the changing requirements.
Extent the internal operations benchmarked against specialist suppliers
In the specialist suppliers, internal operations benchmarked allow the company to assess
the opportunity which they have for logistic control of number of areas and this in turn increase
the productivity, inventory accuracy and shipping accuracy. Therefore, it can be stated that
through internal operations benchmark, Patrick Industries constantly review to identify the
improvements within deficiencies eliminated (Chin and et.al., 2020). Moreover, supply chain
operations within an organization also constantly reviewed in order to determine the
improvement areas so that company may improve the performance and attain the defined goals
as well. Furthermore, there are different components used for a benchmark study in which
financial analysis, process and performance, product benchmarking and functional examination
are commonly used within a business to grab better future oppotunities.
In addition to this, Patrick Industries uses internal operations benchmarked which
compare the performance of multiple business units, functions and facilities across an enterprise.
For an example, benchmarked all the warehouse for which company required this system. That
is why, it can be stated that with the helps of internal operations benchmarked against the
specialist suppliers then company control the benchmarking data which in turn assist to pledge
for its accuracy and reliability (Internal Vs External supply chain benchmarking: The Pros and
Cons, 2018). Also, the method is less expensive in order to perform an external benchmarking
exercise. Apart from this, company also uses this method in its internal operations that assist to
supports continuous improvements and process standardization efforts.
However, on the critically note it has been identified that this does not support
innovation within its business and that is why, most of the businesses did not uses this because it
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creates a negative impact over operations. Whereas, effective planning and execution strategy
should be used within a business that helps to provide effective results by investing less time and
money over it. Apart from this, it can be stated that through internal operations benchmarked,
company is able to commence with an effective requirements so that it will assist to make
changes in their existing operations and meet the defined aim of a company as well. As Patrick
Industries operating at different states and that is why, this benchmarking process assist to
examine the range of operations that take place at each distribution centre. With the regard of
same, process will compare how each centre performed and the improvements which company
need after implementing the bench-marking results.
Similarly, Patrick Industries uses this method within inventory accuracy, shipping
accuracy and storage density which in turn results of assessment of facility. Overall, it helps
company to improve the processes at different department so that effective results can be
generated along with gaining competitive edge.
Difficulties in supply can expected in near future
Currently managing and applying the flow of data, planning executing on customer
demand, adopting AI-enabled solution and reducing the waste in supply chain are consider some
of the major issues faced by most of the companies. Also, this influence the overall performance
of the company in negative manner by affecting the sales and its productivity. Whereas, in near
future there are range of difficulties that affect the business and the brief description and their
influence over the business is as mentioned below:
Ethics and compliance issues:It is one of the biggest difficulty faced by the company
regarding supply in which company have to used advance technology in order to generate the
best relationship with suppliers in near future, this can be performed by using tools and as a
result, company faces issues (Pattnaik and et.al., 2021). However, comply with advance
technology might lead to affect the data confidentiality, this in turn causes negative impact over
the business. Therefore, it can be stated that due to non-compliance of any laws regarding supply
affect the brand image and performance of a company in negative manner as well.
Poor employee collaboration: Another difficulty faced by the company regarding supply
in which employees will be under pressure to adapt quickly changing business environment. For
that, professionals must be able to collaborate with suppliers around a world whereas many of
them operate in different manner. That is why, it is not easy to adapt the changing business
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environment and this in turn causes adverse impact over the business as well. However,
employees must possesses enough ability and competencies in order to identify the best
suppliers so that each department can work effectively.
Adopting advance technology: In near future, employees or company also faces
difficulties when adopting the advance technology due to lack of abilities and expertise. This in
turn reflected that due to change in the overall performance of a company and meet the
requirement of customers, it is necessary to smoother business operation which is possible when
implementation of advance technology performed. For example, supply chain analytic can be
used in order to become more customer centric so that company may easily predict an increasing
number of supply chain variables (Tchokogué and Merminod, 2021). This in turn also affect the
business performance in positive manner such that it will help to let company identify the new
challenges and profit for a firm.
Capture data: It becomes very difficult for the companies to capture data at multiple
points and the data must be analyzed as well as quantified within a supply chain context.
However, an organization is continuously increases the amount and values of gathering data in
order to formalize the process of a big data analysis and analytic. Due to incomplete
information, company do not perform the results in effective manner which in turn causes
adverse impact over the brand image of a company.
Opportunities exist for collaboration with suppliers
Collaborating with suppliers can bring range of opportunities to company and it also
carry about lower cost by simplifying product design and enhance standardization. There are
many opportunities exist for collaboration with suppliers which include improvement in quality
of products, lead time reduction, development in products and innovation. This in turn causes
positive impact over the business company is able to generate the best outcomes in near future.
In addition to this, it has been also analyzed that collaboration with the best suppliers assist
company to improve the sales and enhance the customer experience by improving its supply
chain (Riikkinen, Kauppi and Salmi, 2017). For example, Patrick Industries make a list of
different suppliers and before finalize the collaboration, it ensures that the chosen supplier have
effective management and identify whether it can meet the requirement of customers or not.
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In addition to this, collaboration with suppliers always assist the company to put the
same at right track so that it might increase the revenue and sales performance. Along with this,
opportunities identified by collaborate with supplier is such that quality of product can be
improved and company will be able to meet the defined aim and requirement of a customer as
well. Another example from the top manufacturing firm is Toyota which is considered one of the
top example of supplier collaboration whose success is actually depended upon the supplier-
performance metrics. In addition to this, company built into contracts which hold suppliers who
are accountable for continued improvements in quality, cost and delivery performance.
Beside this, it has been also identified that with the help of all stakeholders, Patrick
Industries make decision where collaboration with suppliers has takes place. Also, it can be
stated that through this, company grab better opportunities by collaborating with suppliers in
which time saving is common. Through this, it will be easy for the company to grab attention of
different customers because the quality of the products will not compromise and that is why, it
will be better for the business to meet the defined aim (Stek and Schiele, 2021). Thus, having a
cost transparency between the supplier and buyer will also assist to meet the defined aim and
lead to good as well as long term relationship with customers too. So, it will be beneficial for the
company to collaborate with suppliers and this in turn generate the best outcomes as well.
CONCLUSION
By summing up above report it has been concluded that purchasing management plays
an important role in order to improve the quality of products and manage strong relationship
with other suppliers. Through the above report, it has been summarized that Patrick Industries
uses competitive bidding and category management as a purchasing strategy in order to attain
the long term requirements. Also, with the help of balance of power between company and
major suppliers, company is able to manage the supply chain management. The report also assist
to identify that the best in-class suppliers are used by quoted firm in order to meet the
requirement of customers. There will be different challenges faced by the company regarding
supply which includes poor employee collaboration, ethics and challenges, adapting advance
technology and these create a negative impact over the business performance. Lastly, study
concluded opportunities exist for collaboration with suppliers like improvement in quality that
raise brand image of a company.
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REFERENCES
Books and Journals
Allal-Chérif, O., Simón-Moya, V. and Ballester, A. C. C., 2021. Intelligent purchasing: How
artificial intelligence can redefine the purchasing function. Journal of Business
Research. 124. pp.69-76.
Chin, T.A. and et.al., 2020. Green Purchasing Practices and Environmental Performance. Int. J
Sup. Chain. Mgt Vol. 9(1). p.291.
Moncef, B. and Philipp, B., 2021, June. Exploring purchasing managers’ influence tactics
towards their internal clients: the case of non-production related items. In Supply Chain
Forum: An International Journal (pp. 1-13). Taylor & Francis.
Mulyana, M., Mashadi, M. and Syahputri, A. W., 2020, May. Determinants of Millenial
Consumer Purchasing Decisions in Bukalapak. In 2nd International Seminar on Business,
Economics, Social Science and Technology (ISBEST 2019) (pp. 113-115). Atlantis Press.
Pattnaik, C. R. and et.al., 2021. A fuzzy multi-criteria decision-making method for purchasing
life insurance in India. Bulletin of Electrical Engineering and Informatics. 10(1). pp.344-
356.
Riikkinen, R., Kauppi, K. and Salmi, A., 2017. Learning sustainability? Absorptive capacities as
drivers of sustainability in MNCs’ purchasing. International Business Review. 26(6).
pp.1075-1087.
Stek, K. and Schiele, H., 2021. How to train supply managers–necessary and sufficient
purchasing skills leading to success. Journal of Purchasing and Supply Management,
p.100700.
Tannady, H. and et.al., 2020. Enterprise Architecture Using Zachman Framework at Paint
Manufacturing Company. Technology Reports of Kansai University, 62(4), pp.1869-1883.
Tarigan, Z. and Siagian, H., 2021. The effects of strategic planning, purchasing strategy and
strategic partnership on operational performance. Uncertain Supply Chain
Management, 9(2), pp.363-372.
Tarigan, Z. J. H., Siagian, H. and Jie, F., 2020. The role of top management commitment to
enhancing the competitive advantage through ERP integration and purchasing
strategy. International Journal of Enterprise Information Systems (IJEIS), 16(1), pp.53-68.
Tchokogué, A. and Merminod, N., 2021. The purchasing department's leadership role in
developing and maintaining a preferred customer status. Journal of Purchasing and Supply
Management. 27(2). p.100686.
Online
Internal Vs External supply chain benchmarking: The Pros and Cons. 2018. [Online]. Available
through: <https://www.benchmarkingsuccess.com/internal-external-supply-chain-
benchmarking/>.
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