Retail Purchasing and Supply Chain Management

This essay provides a detailed analysis of retail purchasing and supply chain management, focusing on ASDA as a case study. It explores the role of purchasing and supply in retail organizations, evaluates the financial implications of purchasing decisions, and discusses sourcing and supply requirements. The essay also delves into the relationship between purchasing and marketing, negotiation procedures in procurement, and theoretical models within the UK retail sector. Furthermore, it highlights the significance of ethical sourcing and corporate social responsibility. The analysis uses Cadbury's chocolate as a specific example to illustrate these concepts, concluding with a summary of how ASDA can leverage these strategies for profit and effective supply chain management.

Retail Purchasing
and
Supply Chain
Management
Marketing
1

TABLE OF CONTENTS
Introduction .....................................................................................................................................3
Role of purchasing and supply in retail organization...................................................................3
Evaluation of purchasing and supply chain along with implementation of management. ..........5
Sourcing and supply requirements of retailing organizations......................................................5
Evaluate the financial implications of purchasing and supply decisions ..................................6
Purchasing selection with relation to the marketing of retail organization .................................6
Knowledge and skill of negotiation procedures in procurement..................................................7
Theoretical models and concepts of purchasing and supply within the UK retail sector............7
Significance of the role of ethical sourcing and corporate social responsibility in purchasing
and supply ...................................................................................................................................8
CONCLUSION ..............................................................................................................................8
REFERENCES ................................................................................................................................9
2

INTRODUCTION
In today's scenario, due to technological advancement organizations need to fulfill the
requirement of customer while moving forward to global economics. Such advancement
increased the buying preference of the customer (Christopher, 2016). For the providing best
things to customer the organization needs to develop the supply chain management. Purchasing
and supply chain management marketing provides the guidance about the supple/value chain.
Such things includes various methods in which company identify the initial raw product and
services required for producing the product or services along with delivering it to customer.
Management needs to enforces in customer relation, logistic, procurement, production and
sourcing in order to fulfill the supply chain management. For such activities the management
requires the collaboration along with coordination with their other business partners for
purchasing and supply. Such business partner may include customers, intermediaries, service
provider and suppliers. Every organization has recognized importance of purchasing the product
in professional ways.
ASDA Stores Ltd is supermarket retail sector and part of Walmart's and was founded in
the year 1965. Company sales it product online and offline stores. ASDA is known for it
purchasing and supply chain market (Monczka and et.al., 2015). The company has largest supply
chain business in UK. Suggested work comprises of details about the role of purchasing and
supply in ASDA. Evaluation of main components of it, financial implementation and various
concept involved in purchasing and supply decision. Moreover, theoretical model and other
concepts along with ethical and corporate social responsibilities are being evaluated and
appreciated.
Role of purchasing and supply in retail organization
Retail organization in UK as estimated to have 46million transaction daily. More than
97% of food is sold offline in which 2/3 is sold at supermarkets. ASDA is having 17% of grocery
market. ASDA have more than 570 stores. The role of purchasing and supply management is
require in order to understand the core business activities which involves various models, which
are reflected in organizational structure. PSM help the organization in understanding more value
added in the supply and purchasing chain. Lets discuss about the particular product that is being
3

sold by ASDA in their stores which is Chocolate. ASDA stores contain different brand
chocolates in which some of them are from Hershey's and Cadbury's. Cadbury's is being
purchased by ASDA from their manufacturing plants on the demands of the customer. For
purchasing the various product of the Cadbury's ASDA deals in terms of prices, offers and many
more things which can attract the customer (Stadtler 2015). The role of purchasing in ASDA is
performed by purchasing department which is done when the Cadbury's chocolate stock is less in
the company. It role is order placing and strategies made for purchasing the product in
economical ways. Now a days purchasing is often part of supple chain management. Main
responsibilities of purchasing are to identify the source supply and purchase them. In ASDA it is
done through direct approach to the Cadbury company or through source suppliers. Identification
of actual price, product along with dealing with suppliers to bring that product to store is key part
of purchasing department. Then comes bidding as every organization motive to is to earn profit.
Prices of Cadbury's chocolates are decided as purchase made by ASDA is in bulk for there all
stores. Moreover, the purchase made is evaluated by the quality control and performance. IN
ASDA such things include the cost, delivery time, performance and quality. The product are
supplied through certified suppliers with proper protection as the chocolates may get affected due
to climate condition. ASDA makes the purchase of Cadbury's chocolates in large delivery size,
order online, pays on time and ensures the lowest cost from distributors and manufactures. The
company fully ensures the legal contract before making the purchase and is followed by
primarily contract law. In terms of supply chain management the main aim of there is to boost
customer services, reduces the operating cost and improve the financial position. Boosting the
customer services in ASDA is done through delivery of product at right time, sale support,
delivering correct product in accurate quantity. Company completely rely on the supply chain to
deliver the product as the demand for such things are more in customer. ASDA supply
management assure that the product delivered must be through reliable delivery and actual cost
of the supply too be covered through the delivery. They also focus on the reducing the price by
increasing profit leverage, increase in cash flow and decrease in assets.
4

Evaluation of purchasing and supply chain along with implementation of management.
The main components of purchasing and supply chain management in ASDA is followed
through this process:
Planning: Company makes relative strategies about the resource management which are required
by the customer. For purchasing the product the company identifies the availability of the
product. For this purpose the company prepares analysis in order to monitor the supply chain for
distributing high qualities and values to customers (Fernie and Sparks, 2014).
Sources: Purchasing of the product is made directly from the company. The product delivered
through the suppliers are very carefully chosen by ASDA. Managers employed in company
needs to create set pricing for supply system including delivery system.
Make: In retail sector the SCM needs to schedule those parts which are needed for the testing
and preparation for delivery.
Delivery: For the case of chocolates Cadbury and ASDA coordinate the receipts of orders along
with carrying the product to the store and build network of warehouse.
Return: If the company found the quality and performance of the product unjustified then they
are returned. For this reason both the firms have flexible and responsible network system.
Sourcing and supply requirements of retailing organizations
Sourcing is done in order to evaluate the the organizational process required for
purchasing goods and services. Steps included in the sourcing process are supplier assessment,
contract negotiation, scoring and selection. Along with it contains details about the design
collaboration, procurement, source analysis and planning. ASDA performs sourcing in order to
achieve following benefits: 4. evaluate the
 More economics can be received when order made are aggregated.
 Using effective procurement transaction have made reduction in cost of purchasing.
 This also build coordination with the suppliers, as they find effective procurement
process.
 Contract like Buyback can reduce the risk of overstocking.
All things help the ASDA in order to make large and continuous transaction with Cadbury. This
build the relation between both the companies along with product delivery in time with
affordable price.
5

Evaluate the financial implications of purchasing and supply decisions
The purchasing and supply chain management also develops great relation with the
finance. Supply chain financing was beneficial for the organization like ASDA as they are large
buyers of such product which makes the reduction in overall price of the product. This build the
buyer-supplier relationship along with building stronger partnerships between the supply chain.
Moreover it can be seen in building the infrastructural in nature and increasing the operational
efficiency of the company. This reduces the account payable terms. Payment are made through
online transaction which provide greater liability to buyers and sellers. Through this there is
improvement in the cash flow and more stable liquidity to the suppliers. This provides great
profit to the ASDA as they will have cash flow forecasting, more rugged reconciliation process
and simplified payment terms.
Purchasing selection with relation to the marketing of retail organization
For purchasing the product the marketing team have to build the deep study about the
preference of the customer choices. This analysis are recorded and the time period in which this
product range reduced are recorded. Now for purchasing the product from the Cadbury's the
related product are made purchased in the required quantity. Like the product of Cadbury's dairy
milk silk and dairy milk large pack are more sold and those product like marvelous Creation of
dairy milk have not reached expected sales so the management will identify this product and the
order made by the organization will be related to preference of the customers. Though the other
product will also be purchased by the company but maximum investment will be made on the
product which have maximum customer requirement and for selling the other product which are
not purchased by the customer then both the organization decides to either make sales of those
product or find other alternatives (Wisner, Tan and Leong, 2014). Such purchasing selection are
made by the manager and with their coordination the final purchasing is done. Marketing of the
product is done when both the organization get profit as they may offer the sales, provide
different vouchers, gift cards and other offers. This may also be like offers available of
Cadbury's only on the stores of ASDA which will make the marketing of both the company. Such
purchasing plans are build in order to make the business effective and have high customer rating.
6

Knowledge and skill of negotiation procedures in procurement
Before making the purchase of the product the company need to identify the total product
cost, time for making the sale and how customer can be influenced to purchase the product. For
making any negotiation in the prices the company needs to build the relationship with the other
company. For this purpose various factors are helpful such as online payment, payment done on
time, having direct delivery from the manufacturing plant, building relation for the future and
having product supply continuation. Through this efforts ASDA can negotiate the price of the
Cadbury's product. As ASDA requires multiple product and that too in large quantity so they can
easily make negotiation. Such knowledge and skills are required in order to earn profit. For
negotiation of the prices the company too needs to thing on behalf of the sellers. Such key factors
reduces the prices up to certain limit but when purchasing in large quantity this comes out to be
in large numbers.
Theoretical models and concepts of purchasing and supply within the UK retail sector
There are various theories and concepts of purchasing and supply which are mentioned
below:
Transaction Cost Economics: This is done in order to reduce the price while making the decision
related to the purchase of the product. This is done by considering three factors which are assets
specificity , degree of uncertainty and frequency of transaction. As Cadbury's product are sold
every day in large quantity. So there is requirement of transaction cost economics.
Network perspective: This is related to building the relationship with the supply chain in order to
reduce the price of product, ASDA makes purchase of Cadbury's product in large quantity which
reduces the price of the overall product (Ross, 2013).
Resource Based view: this is required to build the core competencies in order to achieve the
market competition. Through this way ASDA identifies the requirement of further resources.
Above theories helps in making purchasing and taking effective decision about the supply chain
management.
Significance of the role of ethical sourcing and corporate social responsibility in purchasing and
supply
The role of ethical sourcing is done in order to produce the long-term sustainability of the
premium product in the stores (Kozlenkova and et.al., 2015). Through this the customer are
7

ethically purchasing and the responsibility to produce the product in the sustainable ways. The
product purchasing is done in such a way that both the organization can have the long term
relationship. Moreover corporate social responsibilities help the organization in making effective
decision in order to purchase the product or not. ASDA and Cadbury both the organization are
having high CSR values and both the organization focus on their staff members in order to gain
high market profit and achieve their goals.
CONCLUSION
Above essay provides the information regarding the relation of purchasing and supply
chain management in the ASDA. Various factors are being evaluated and are discussed.
Moreover the financial implications along with sourcing and supply requirements are being
discussed in terms of ASDA. One of the product of ASDA i.e. Cadbury's dairy milk is being
discussed. Purchasing of the above product and strategies required to reduce the prices along
with making promotion has been discussed in the above essay. Using the above methods,
theories and skills ASDA can make high profit and can easily make purchasing and supply chain
management.
8

REFERENCES
BOOKS and GENERALS
Christopher, M., 2016. Logistics & supply chain management. Pearson UK.
Monczka, R.M. and et.al., 2015. Purchasing and supply chain management. Cengage Learning.
Stadtler, H., 2015. Supply chain management: An overview. In Supply chain management and
advanced planning (pp. 3-28). Springer Berlin Heidelberg.
Fernie, J. and Sparks, L., 2014. Logistics and retail management: emerging issues and new
challenges in the retail supply chain. Kogan Page Publishers.
Wisner, J.D., Tan, K.C. and Leong, G.K., 2014. Principles of supply chain management: A
balanced approach. Cengage Learning.
Ross, D.F., 2013. Competing through supply chain management: creating market-winning
strategies through supply chain partnerships. Springer Science & Business Media.
Kozlenkova, I.V. and et.al., 2015. The role of marketing channels in supply chain management.
Journal of Retailing, 91(4). pp. 586-609.
Fernie, J., 2014. 02 Relationships in the supply chain. Logistics and retail management:
Emerging issues and new challenges in the retail supply chain, p. 35.
Rushton, A., Croucher, p. and Baker, p. , 2014. The handbook of logistics and distribution
management: Understanding the supply chain. Kogan Page Publishers.
Ellram, L.M. and Cooper, M.C., 2014. Supply chain management: It's all about the journey, not
the destination. Journal of Supply Chain Management, 50(1). pp. 8-20.
Flint, D.J., Lusch, R.F. and Vargo, S.L., 2014. The supply chain management of shopper
marketing as viewed through a service ecosystem lens. International Journal of Physical
Distribution & Logistics Management, 44(1/2). pp. 23-38.
Hingley, M., Lindgreen, A. and Grant, D.B., 2015. Intermediaries in power-laden retail supply
chains: An opportunity to improve buyer–supplier relationships and collaboration.
Industrial Marketing Management, 50, pp. 78-84.
Mangan, J., Lalwani, C. and Lalwani, C.L., 2016. Global logistics and supply chain management.
John Wiley & Sons.
Ross, D.F., 2016. Introduction to e-supply chain management: engaging technology to build
market-winning business partnerships. CRC Press.
9