BUSS 3084: Procurement for Strategic Advantage - Assignment 1 Analysis

This report provides a critical analysis of procurement strategies in a bushfire scenario, examining the challenges of supplying goods and services when traditional transportation routes are disrupted. The analysis explores the evolution of procurement from a cost-focused function to a strategic process, emphasizing the importance of expertise, clear organizational policies, and robust systems. It reviews relevant literature, including the impact of globalization, shorter product life cycles, and the rise of e-procurement and Procurement 4.0. The report also discusses the role of supplier relationship management, waste minimization, and the significance of adapting procurement strategies to specific industry contexts. In the case study, the owner of an accommodation venue is facing supply chain disruptions due to a bushfire, the report suggests strategies like air freight and proactive procurement to ensure guests' needs are met, while also highlighting the importance of customer service and long-term strategic thinking. The report concludes by reiterating the shift in procurement from a mere purchasing function to a strategic activity that considers long-term objectives rather than just short-term profitability.

BUSS 3084 – Procurement for Strategic Advantage
Assignment 1 – Critical Analysis

Scenario
This critical analysis is about procurement strategies and discusses the advantages of
procurement strategies with respect to the given scenario. In this scenario, I as the
owner of one of the accommodation venues and the town in which this accommodation
is, has been cut-off due to bushfire. Though many tourists left the area before the
bushfire, still around 50% of tourists are in the town. Now when the usual transportation
routes are cut-off, it has become a challenge to provide food, beverages, and comfort to
the guests who are stranded in the town. The given scenario will be critically discussed
in relevance to procurement management plans and strategies. In the past, effective
buying practices were the subject of procurement. The important function of
procurement used to be low-cost purchases of premium materials or parts or items
completed. The complete procurement process has various aspects/elements and each
aspect has its own importance. One of the important aspects of the procurement process
is expertise. For successful procurement management, it is important that the right
people should be in procurement roles. The successful team of procurement should have
expert people who can evaluate suppliers, are good at negotiating contracts and clear
about the quality standards of the procured products. The organization’s policy
regarding procurement should be very clear and easy to understand (Afolabi, et al.,
2019). For example, an organization can have a policy of at least 3-4 bids before
purchasing a product. The organization’s system is another key aspect of the
procurement process. If the purchasing system has the technology that captures the
purchase request, has specifications of purchase, vendor selection that comply with the
company’s policies. The system includes the technology/software that captures all the
steps of procurement and purchasing that cover the complete buy process, initial
purchase request and execution, monitoring and closing. Ethics and vendor management
is also an important aspect of the procurement process. This is the process of the
selection of vendors on the basis of product, price, and performance. The selection of
the vendor should not show favoritism on the basis of any personal
relationships/inclination (Behl, et al., 2019).
Analysis of Literature
According to Ajayi and Oyedele (2018), the procurement means to have a focus on
purchasing activities which should be effective. Achieving the bottom line was the main

factor for the procurement process and to achieve the desired bottom line, the focus
used to be on low-cost purchasing. But in the era of globalization where organizations
face competition from local and international players, customers' requirements change
at a fast pace; In developing new products and services, it has become essential for
organizations to be innovative. The competitive advantage for an organization does not
come off one or several areas of excellence, but it comes from the efficient and effective
practices in the major areas which are linked to the overall business proceedings. For
example, in the discussed case study holiday destination affected due to bushfire, the
innovation in procurement such as the delivery of items by air/helicopter when the roads
cut-off. With the intense competition and rapidly changing consumer’s requirements,
the lifespan of the commodity is getting shorter (Bag, et al., 2020). With the shorter
product life cycle and requirement of innovative parts and services, the procurement
process has become challenging and costly. In various industries where the percentage
of procurement cost has become around 70 percent or more of the total cost of goods
sold, the procurement process should be taken as a strategic priority. So, there has been
a shift in the purchasing function from the traditional back-office cross-functional and
inter-agency business processes will be stronger. The procurement process has become
a main strategic transaction-based business method (Shokr and Torabi, 2018).
The advancement in information technology gave unique characteristics to the
construction industry to produce e-Procurement systems. The e-Procurement tool has
helped companies to get rid of the large volume of paperwork. Because of the life cycle
and the participation of many stakeholders, e-procurement methods are highly effective
for the construction industry. The use of information technology in the construction
industry is useful in creating a competitive advantage than the traditional method of
paper-based workings (Liu, et al., 2020). E-procurement has the benefits of cost
savings, improved efficiency and better control reduce “rogue” purchasing. It has its
own challenges as well such as implementation issues (some propel may be against the
change of traditional procurement system) and relationship with suppliers. In the given
case study (where accommodations are in remote areas), E-procurement could help in a
fast supply of food, beverages, and other materials. Procurement 4.0 strategies, are also
known as digitization, is the revolution in the procurement sector. It develops the value
propositions and integrates date across functions and value chains. In a study done in
the Nigerian construction industry, it came out that the use of the e-Procurement process
can reduce many challenges that the industry faces in the traditional goods and services

procurement methods. The e-procurement process offers a streamlined process for
building firms and potential buyers. In developed countries, the main factor behind
using e-Procurement is enabling to optimize cost whereas in South Korea the benefits
are increased transparency and minimization of procurement transactional cost
(Bienhaus and Haddud, 2018).
The strategic procurement process can play a significant role in reducing waste in the
construction industry with the material procurement process. Construction waste is
caused by the activities happening at all stages. Studies show that material procurement
enhances waste minimization in the construction industry. The material procurement
process has four features. They are suppliers’ commitment to low waste measures, low
waste purchase management, effective delivery management and waste-efficient bill of
quantity. If the material supplier can modify the materials to conform to the design, then
it can minimize the waste. Leftover is one of the significant reasons for waste in
construction. If suppliers can be flexible in taking back the unused material, recyclable
material, and packaging materials, waste can be minimized.
Effective delivery management with proper planning can have an impact on the waste
output of a project. Suppliers, managers at the project and other stakeholders can play
vital roles in ensuring that the breakage of material can be avoided during the delivery.
The most important measure through which materials delivery system could assist waste
mitigation is the use of Just-in-Time procurement i.e. ordering the material when it is
needed during the construction process. In this process, the material is taken to the site
only when they are required, so it prevents the excessive storage of materials. This
strategy helps prevent the waste caused by stockpiling, inefficient handling and leftover
materials (Hu and Dong, 2019).
Impact on Procurement
To make the procurement process effective and efficient, it also depends on what kind
of industry you are operating. For example, in the hospitality industry, you cannot
accumulate a large quantity of food due to the wastage problem. In the given scenario
where myself is the owner of an accommodation facility where patrons are staying, it is
very important to have a regular supply of food and beverages. In the procurement
process, we should not rely heavily on one supplier. If something goes wrong with the
supplier, then we will have a shortage of food and beverages (Bienhaus and Haddud,
2018). In the given scenario where the usual transportation route has cut off, it has

become a problem to procure food and beverages for the patrons. In this situation, it will
be best to organize the procurement of foods and beverages through the air such as
organizing a helicopter to deliver/drop food and other items. Obviously, this practice
will be expensive, but at the same time, it wins patrons’ appreciation. It is the customer
service. As we discussed earlier that nowadays the procurement is not only to source the
products cheaply, but it is a strategic thing where you always can not be focussed on the
bottom line. The procurement process has been shifted from just mere a traditional
purchasing function in the back office to be an inter-organisational business process.
The procurement by air service will be quick, though it will be expensive, some of the
increased costs can be passed to the customer by charging more for food and beverages
(Liu, et al., 2020).
Conclusion
In the era when consumers’ demands change rapidly and the product life cycle has
become shorter, the procurement process has changed to a strategic activity rather than
just a purchasing function. In the critical analysis, we discussed that relying on one or
limited suppliers can be problematic when situations are not ideal. This can be related to
the scenario when the usual transportation by road has cut off and we need food and
beverages for patrons. As the accommodation facility is in a remote area and this was
the bushfire season, the manager should have monitored the forecast and be mindful of
seasonal conditions. Being mindful of seasonal conditions, you can be proactive to
purchase food and beverage in large quantities as we discussed earlier that the
procurement process is not about the short-term profitability, it is a strategic process.

References
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Ajayi, S.O. and Oyedele, L.O., 2018. Waste-efficient materials procurement for
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