Purchasing & Supply Chain Management

This report analyzes the role of purchasing and supply chain management in Asda, a UK retail organization. It details the responsibilities of the purchasing department, including supplier selection, performance evaluation, and compliance with legal requirements. The report outlines the key compo...Read More

Purchasing and Supply Chain
Management

Table of Contents
INTRODUCTION...........................................................................................................................3
TASK...............................................................................................................................................4
CONCLUSION................................................................................................................................8
REFERENCES................................................................................................................................9

INTRODUCTION
Purchase and supply chain is the chain of processes that have to be done in production of
product from purchasing till final supply (Monczka and et.al., 2015). Asda stores limited is a
retail organisation working in UK. In the below mentioned essay role of purchase and supply
chain in retail organisation is described.
TASK
The main responsibility of purchasing department is to procure supplies. Asda Ltd. Will
have to find such suppliers who will provide them the best quality products (Fredendall and Hill,
2016). On procurement will not be enough as after this company will have to evaluate the
performance of supplier with reference to the timely supply and also the cost it is charging and
most important the product should meet the quality standards that have been set by asda ltd. The
main objective of a retail organisation is to find the best products at the most reasonable and
affordable prices for that it can use various means of procuring supplies such as trade
publications can be used or it can opt for competitive bidding in which many suppliers will quote
their prices and the company will have the opportunity to choose the best among all of them who
can its all the criteria and then supplying them in the market at the best possible prices that can
be recovered for that product in the ongoing market structure by evaluating the need of
consumers that is finding out who are the potential consumers and what are their basic
requirements which are need to be met with in order provide them with complete satisfaction
(Stadtler, 2015). Asda Ltd. will have to keep in mind a very important thing while procuring
supplies that all the legal requirements in relation to purchase and supply of that product have
been complied with.
The purchase and supply chain involves various components in it which are requires to be
meet with in order to maintain a proper chain (Ross, 2016). the first main component is plan that
is to make and form a proper strategy so that resources can be managed effectively in order to
achieve the demands of their customers. Plan should be made by taking in consideration all the
relevant aspects. Then comes the next component which is the source. This level involves that a
good relationship should be build with the supplier and this is to be done after finding a reliable
supplier. Only finding a supplier is not enough but other things such as shipment, delivery and
payment methods should also be considered. Next stage is the delivery stage in which the main
task is to collect the orders from the customers and then making a delivery of the ordered goods

to the consumers. This part is usually referred to as a logistics where asda ltd. Will have to make
a proper coordination between the various aspects such as receiving the order from the customer,
then arranging for the proper warehousing, then to get the products delivered to the customers
proper pick carriers will be required. And the last stage is return in this any returns by the
customer of defective products will be dealt with and along with this any of the customers
grievances will also be solved in this stage.
Sourcing is the basic requirement in any retail business and so is in asda ltd.. for the
sourcing purpose it will have to analyse various aspects such as the total amount it is planning to
spend and then finding about the productive and non-productive costs (Schönsleben, 2016.). It
will have to develop a good supplier relation and find out the area where highest return could be
earned. For asda ltd. Being a retail organisation direct sourcing will be more appropriate as it will
enable them to take quick decision in context of buying on the basis of the demands of its
consumers. While sourcing it is very important to give importance to every aspect of sourcing so
that time and money of the company could be saved. In a proper sourcing transaction there
should be a optimum control and also visibility. By this unexpected costs can be ignored if there
will be a clear visibility in regards to the movement of cash and the products and also control
could be established by having proper collaboration with the suppliers. The retailer and their
suppliers should have a proper communication system so as to ensure visibility for the both sides
as a result of it planning could be done in a more appropriate way indirectly enhancing the
decision making power. Company will be able to select the best source which will provide it
with the best quality products at an affordable and reasonable prices.
The purchasing and supply decisions are very crucial for any organisation and they have
a financial implication also. All these decisions of buying include purchasing, transportation and
and other activities which all require finance to be completed (Emmett and Crocker, 2016). If
asda ltd. Takes proper purchasing and supply decision i.e. choose a supplier who will make the
goods available at fair prices and also transportation is arranged at affordable prices than the
finance of the company will be saved and thereby increase the overall profitability and will also
leave the funds which can be used to increase the profitability further by adding new lines to the
business or by expansing the current purchasing and selling capacity. As the productivity will
increase it will lead to reduction in cost as suppliers will provide higher quantity at lower prices
and further by reduction in the overall cost the profit level of the company will automatically go

up. By taking correct purchasing and supply decision company will be able to receive timely
payments. Hence with the timely receipt of payments the problem of shortage of finance will not
occur and so no additional funds will be required to be borrowed which led to a huge amount of
expense to be incurred. Hence due to this asda ltd. Will have savings of the additional expenses
that would have to be incurred in form of interest and by this overall cost reduction or can say
saving of finance will be there.
Marketing is very important for any organisation to grow and to divert the consumers
towards itself (Dubey, Gunasekaran and Ali, 2015). There are certain purchasing concepts which
need to be taken care of in relation to marketing asda ltd. First of all is the customer focus which
involves that marketing should be done according to customer focus that is in that area where the
customers purchasing potential is more in that area more focus should be provided while making
a marketing plan (McCormack and Johnson, 2016). The information regarding customer needs
should be continuously collected and also about the capabilities of competitors and then with the
help of this information superior customer value should be created. Exchange concept should be
followed properly as in retail business exchange of goods between buyer and seller is main basis
of marketing. Consumers always prefer goods which are available at low prices so goods should
be produced in large quantity to lower the cost. While marketing quality standards should be
properly taken care of as consumers prefer to purchase goods with superior quality, and some
unique features. Buyer will never buy a product unless they are completely satisfied about it so
seller should take initiative to promote its product on large scale and let the consumers know
about the product qualities so he can take a decision in regards to purchase that product so it can
be said that by marketing the organisation will help the consumers in making a correct
purchasing decision.
In any procurement negotiating with the supplier plays a very important role (Fahimnia,
Sarkis and Davarzani, 2015). Negotiation is the process in which favourable conditions are
created with the new supplier or with an existing supplier when the contract is being renewed by
the procurement professionals. They are generally used to decide about various aspects such as
to know the most appropriate price of the product and also about the quality standards, and the
delivery time. While having a negotiation main focus should not be on getting the cheapest
possible price rather it should be on choosing such an option which should be equally good for
both buyer and supplier so that a strong relationship could be build with the long term suppliers.

Before entering into any negotiation asda ltd. Should set certain objectives. While deciding the
objectives with regards to negotiation certain factors should be kept in mind which will include
delivery time, cost, payment conditions, quality standards, monetary value and others. While
preparing for negotiation create a list of most important factors. before putting forward
negotiation it is important to listen what the supplier has to say and then bargain to get the best
offer. A good negotiator is the one who is able to extract from the other party some relevant
information. When the supplier is willing to close the deal [present before him some of your
counter offers and also all the points should be summarised before closing the deal.
The main model in relation to purchasing and supply is CIPS purchasing and supply
management model. This model defines how process works and what are its contributions to an
organisation (Ross, 2016). Some of the external factors in this are the technological changes,
economic environment, social and political environment, legislations and competitive
environment. They all affect the organizations vision, mission and values. Various resources
such as knowledge experience, finance and all are required. Different strategies involved in this
model are distribution strategy, operations strategy, technical strategy, finance strategy, human
resource strategy, marketing and R&D strategy (Subramanian and Gunasekaran, 2015). Then
source analysis is to be done which involve process analysis involving identifying waste, extent
of opportunism and then supply base analysis involving supply portfolio analysis, then comes the
spend analysis describing who is the buying what and from whom and how often, then comes the
supply stream mapping including vulnerability analysis and identifying profit margins in
supply,then is the political analysis in which risk management, local politics are considered.
Then the next stage of this model is proactive demand management which involves managing
direct spend(production or service delivery linked goods and services) and indirect
spending(capital expense supplies and services for running an organisation), then the next level
is pre-contract acquisition which involve identification of needs, procurement plan, marketplace
development, evaluating offers and creating the contract/relationships. The last stage is post
contract acquisition involving contract/project management, asset management, receipt of
product/services and post contract lessons management.
Ethics and corporate social responsibility are very important for any business as they will
help in creating benefits for the public and will also help in improving their image and in
eradicating the negative behaviours (Ross, 2015) Mostly in corporate social responsibility buyers

are the one who engage themselves in it and to prevent the slavery in supply chain most of the
businesses have policies for it. Ethical sourcing is very important as it is the basic requirement in
case of purchase and supply mechanism so it should always be based on the set rules and ethics.
Buyers should have the complete view of their suppliers network beyond the first tier in order to
enforce the corporate social responsibilities policies properly (PROCUREMENT AND SUPPLY
CHAIN, 2017). All of this allows a business in risk management across the globe and also to
solve the complex supply chains resulting in empowerment of company with information in
regard to the person from whom they can buy and to whom they will have to supply. Buyers can
understand the networks beyond the tier one and level one with the help of Achilles' supply chain
mapping. Information is being collected on sub- suppliers by mapping function and then it links
the relationships (PURCHASING & SUPPLY CHAIN MANAGEMENT, 2016). Questions in
relation to their company such as describing relationships between the products they sell and the
from whom they buy can be asked by the suppliers.
CONCLUSION
From the above mentioned report it is concluded that the purchase and supply chain plays
a very crucial role in asda Ltd.. it describes the main components of the chain and various
requirements in relation to sourcing and supply and that this chain forms a great financial impact
too on the organisation.

REFERENCES
Books and journals
Dubey, R., Gunasekaran, A and Ali, S.S., 2015. Exploring the relationship between leadership,
operational practices, institutional pressures and environmental performance: A
framework for green supply chain. International Journal of Production Economics.160.
pp.120-132.
Emmett, S and Crocker, B., 2016. The relationship-driven supply chain: creating a culture of
collaboration throughout the chain. CRC Press.
Fahimnia, B., Sarkis, J and Davarzani, H., 2015. Green supply chain management: A review and
bibliometric analysis. International Journal of Production Economics. 162. pp.101-114.
Fredendall, L.D and Hill, E., 2016. Basics of supply chain management. CRC Press.
McCormack, K.P and Johnson, W.C., 2016. Supply chain networks and business process
orientation: advanced strategies and best practices. CRC Press.
Monczka, R.M and et.al., 2015. Purchasing and supply chain management. Cengage Learning.
Ross, D.F., 2015. Distribution Planning and control: managing in the era of supply chain
management. Springer.
Ross, D.F., 2016. Introduction to e-supply chain management: engaging technology to build
market-winning business partnerships. CRC Press.
Ross, D.F., 2016. Introduction to supply chain management technologies. CRC Press.
Schönsleben, P., 2016. Integral logistics management: operations and supply chain management
within and across companies. CRC Press.
Stadtler, H., 2015. Supply chain management: An overview. In Supply chain management and
advanced planning (pp. 3-28). Springer Berlin Heidelberg.
Subramanian, N and Gunasekaran, A., 2015. Cleaner supply-chain management practices for
twenty-first-century organizational competitiveness: Practice-performance framework
and research propositions. International Journal of Production Economics.164. pp.216-
233.
Online
PURCHASING & SUPPLY CHAIN MANAGEMENT. 2016. [Online]. Available through:
<https://www.shoreline.edu/virtual-campus/purchasing.aspx>. [Accessed on 24th April
2017].
PROCUREMENT AND SUPPLY CHAIN. 2017. [Online]. Available through:
<http://www.paconsulting.com/services/operational-excellence/procurement-and-
supply-chain/>. [Accessed on 24th April 2017].