Purchasing management

Effectiveness of Purchasing Management Aspects
Name
Institution

Effectiveness of Purchasing Management Aspects
Introduction
A purchasing manager plays a crucial role in ensuring that a company gets the best deal in terms of raw material purchase. They ensure that the company minimizes the cost of production for their products so as to maximize the profit they get. Apart from cost minimization, they also ensure that they get the best quality of raw materials required by their company. In this paper, we will take an in-depth analysis of the Harris Tea Company. We will look at how Supplier selection, Purchasing cost and the use of ICT for purchasing operation and management affect the effectiveness of the purchasing manager’s role within Harris Tea Company.
Harris Tea Company is among the top leading producer of black, herbal, green and other types of tea within the world market. The company has four production facilities located in California, Georgia, New Jersey, and the United Kingdom respectively. The target market for the company includes the European and the American region. Harris Tea Company got recognized as the top supplier of blended tea in America in the year 2015 (Harris Tea Company, 2018). One of the organizational strategies the company has put in place is having a robust research facility for tea blending. The facility has ensured that the company produces the highest quality of processed tea products that can compete well in the market. Harris Tea Company faces stiff competition for tea markets from two major companies namely; Yogi Tea and Argo Tea.

The two are fast growing blending companies that target the European market. Harris Tea Company has a goal of becoming the number one tea retailing company not only in Europe but also in the rest of the world. The strategy they are currently employing involves importing tea from regions known to produce the best quality tea in the world (Harris Tea Company, 2018). The regions include Brazil and Kenya.
Supplier selection criteria
As a Purchasing Manager for the Harris Tea Company, there are several factors I have to consider before selecting the supplier of the raw materials used within the organization. Harris Tea Company being a blending and tea processing industry with the goal of producing the highest quality of tea has to produce the best tea leaves for processing. Tea production requires a particular set of weather condition (Zhang, Li, Wu & Meng, 2016). The weather determines the quality of tea that gets produced. In an optimal weather condition, the polyphenol content of tea is at its peak. It is vital for us at this stage to note that the quality of tea is measured in terms of the polyphenol content it harbors. Any deviation from the optimum conditions tremendously reduces the polyphenol content of the tea. In light of the information given a purchasing manager has to know the region where the tea came from so as to determine whether the tea met the optimum weather condition for its production (“Selecting A Vendor – Your Vendor Selection Criteria”, 2018). Harris Tea Company sources its tea from Kenya and Brazil. The two countries have the most favorable conditions for tea production. The tea from the region has also proven to contain the highest content of polyphenol compared to other teas from the rest of the world.
The other issue I consider for selection criteria of tea raw material supplier is the production time. Tea tends to drastically lose its quality with time. Harris Tea Company mostly depends on blending although it has its own manufacturing wing. Most of the tea it purchases is already processed and so they blend the tea to improve its quality (Miller & Grady, n.d.). To employ the services of a supplier, I first ensure that they have the capability of processing their tea. Suppliers from Kenya and Brazil have better technology for tea processing be it black or green tea (Aurora, 2017). The two countries are among the world leading tea producers and have invested heavily in the industry. Purchasing processed tea for blending from them, therefore, ensures that the tea acquired was processed in good time using the best technology hence the quality is maintained at a high level (“Selecting A Vendor – Your Vendor Selection Criteria”, 2018). Another factor to consider during supplier selection is the accessibility of their products. As mentioned earlier, if tea processing gets delayed then the quality of the tea gets lowered (B.A.D, Wijekoon & Wanigasundera, 2014). It is therefore very essential for the purchasing manager to select a supplier who can get their tea to Harris tea processing site in good time. For local producers, they should show that they are capable of delivering their tea leaves to the Company’s processing site within 12 or 24 hours. For suppliers of already processed tea, they should be able to ship their tea in good time so as to reduce the time taken for blending (Pemer & Skjølsvik, 2016). Most of the suppliers from abroad have direct flights to the country to save on shipment time. Finally, suppliers have to prove that they are capable of supplying the company tea on a long-term basis (B.A.D, Wijekoon & Wanigasundera, 2014). They have to show that they can meet the demand of tea the company has steadily so as to ensure continued supply of the raw material. The move is aimed at ensuring that the Harris Company maintains their production throughout.
ICT for Purchasing Operation
Harris Tea Company requires the use of Information communication and technology (ICT) in almost all aspects of its running (Gelderman, Semeijn & de Bruijn, 2015). Information flow is very vital as it makes it possible for the company to track and monitor all the necessary activities that run the organization. In terms of supplies of raw material, ICT makes it possible for the purchasing manager to know the exact amount of supply required (Deng, Hu, Deng & Mahadevan, 2014). The information helps them to make decisions on whether to increase the volumes of raw materials from the supplier or whether to scale down at any given time. On top of determining the volume required. The manager can also be able to track all the purchased raw materials. This will ensure that they are in a position to adhere to the schedule of production without any fears of delays from suppliers. ICT helps them to stick to the schedules they have simply by creating a monitoring platform for all the activities in the company.
ICT helps to determine competitive supply markets. Harris Tea Company doubles as a blending and processing company. It has several tea products that perform differently on the market. ICT helps to track the sales of individual products (Gelderman, Semeijn & de Bruijn, 2015). From the information acquired for each product. The company can get to know which products are least competitive in the market. It will also show which products are best sellers. From the information, the company can make the decision on which products to scale up as a result of increased sales and which ones to reduce due to non-competitiveness in the market. The outcome will be increased efficiency business-wise for the company. For the purchasing manager, It means that ICT will give me important pointers on which raw materials to purchase and which ones not to purchase.
Harris Tea Company relies heavily on imported raw materials for its operation. ICT helps to give more information on the quality of tea from different regions at different times. Tea has world trade fairs that accommodate all the players in the tea sectors. Information on tea quality and their prices mostly get highlighted on the trade fairs. The use of ICT will help the purchasing manager to know where the best tea gets produced at a given time, it will also help them to measure the prices of the tea. The information will be very crucial in determining which country to source suppliers from at any given time (Route Planning, 2018). ICT, therefore, will help to manage quality management of raw materials. If the tea quality in Brazil goes down, for instance, the manager will get to know through sourcing for the information online (Purchasing Manager, 2018). He or she will also get to know which country has its tea quality improved. With the information, a manager can comfortably switch to the best supplier at the moment without worrying about quality fluctuation.
Purchasing Cost Analysis
Purchasing cost analysis is a critical element that determines the amount of profit a company makes. The purchasing cost of a company has to factor in the market price of the finished products and the production cost. When purchasing for raw materials for Harris Tea Company, The purchasing manager has to make sure that the price is kept as low as possible (Route Planning, 2018). The manager has to consider the market price of the finished product so as to make the decision on the cost to spend on raw materials (Aurora, 2017). In as much as quality is a factor in determining which supplier to source from, their price should also be low enough to work with. In cost analysis for the Harris Tea Company. The procurement manager should factor in the cost of delivery and storage. For example, importing processed tea from Kenya is more expensive compared to importing from Brazil yet they both have almost the same quality. It is therefore critical to factor in the extra cost incurred in the importation. Cost analysis also has to check on the inventory analysis. Knowing the storage capacity of the company is important. One should not incur losses on storing extra raw materials that are not in need at the moment. The manager should also ensure that the raw material supplied is at optimum. The move will ensure that no workers are idle as they increase expenses. It will also make sure that there is product supply is kept at a constant.
A procurement manager can also improve on cost saving through analyzing the delivery time analysis. Considering the company deals with perishable goods or processed tea that loses quality over time. It is vital to determine the best delivery time. The move will save on avoiding extra expenditure on buying special storage facilities for storing the tea (Tate, 2018). Instead, the tea can be delivered at intervals that workers can deal with without the need for extra storage space.
Another purchasing cost analysis to factor in is determining the suppliers to work with. Having one supplier is not the best idea, having several suppliers will create competition among themselves hence giving you a pool from where you can get the best quality for the best price. The monopoly of a supply tilts the balance to the supplier’s favor hence they might decide to up their process knowing that as the sole supplier in place they are bound to get away with their high price. Creating a maverick spending will help Harris Tea Company in having a data to compare different supplier’s cost and quality (Tate, 2018). The resulting outcome will be the generation of a reliable information on which supplier to work with more with the aim of achieving reduced purchasing cost for the best quality.
Harris Tea Company has other purchasing management aspects that have to be adhered to in order for the company to thrive in the tea business. The table below highlights some of the supply risks and their impact on value of a business enterprise.
Peter Kraljic Table
438150190500028956006667500 Bottleneck Strategic
Unique specification – Continuous availability essentials
Supplier Technology Important – Custom design or unique
Production-based scarcity – Supplier technology important
Substitution Difficult – Few adequate suppliers
-834390261620 RISK
LowHigh
00 RISK
LowHigh
Usage Fluctuates – Changing source of supply difficult
High risk / Low value – High risk /High value
4857751587400
Non-critical Leverage
Standard or commodity type – Unique cost management important
Substitute Product available – Substitution possible
Competitive supply market – Competitive supply market
Low risk / Low value – High value / Low risk
419100888900
LowHigh
Value
Harris Tea Company operates on the leverage supply risk model. They increase their value through engaging more suppliers with the aim of trading with the ones with the best quality. The method ensures they suffer low risk as they source for the best product with the best price.
Conclusion
In conclusion, we can agree that the process of purchasing for supplies is key as it touches on both the quality of the product outcome and the profit margins of a company. Getting the best supplier entails sourcing for the lowest price of raw materials without interfering with the quality of the material. Information on the supplier’s raw material must be considered first before making any purchases. One should do careful research on the raw material. It is also critical to ensure that the technology employed in processing and manufacturing of the material is of top quality. Technology ensures maximum exploitation of the quality in making the final product. Finally cutting down the cost of production is an essential element of profit maximization. Careful monitoring and tracking of goods will help a company to come up with a schedule that ensures minimal wastage of resources while maximizing the output. A competitive purchase manager factors in all the necessary aspects of purchase management to ensure the business runs seamlessly.
References
Advantage – Harris Tea Company. (2018). Harris Tea Company. Retrieved 17 January 2018, from http://www.harristea.com/about/advantage/.Selecting A Vendor – Your Vendor Selection Criteria. (2018). https://www.purchasing-procurement-center.com. Retrieved 17 January 2018, from https://www.purchasing-procurement-center.com/selecting-a-vendor.htmlB.A.D, a., Wijekoon, R., & Wanigasundera, W. (2014). Use of ICT by the Managers of Tea Plantations in Sri Lanka Information-seeking Behavior and the Use of ICT by the Plantation Managers of the Corporate sector Tea Plantations in Sri Lanka. Researchgate.
Purchasing Manager. (2018). Sokanu.com. Retrieved 17 January 2018, from https://www.sokanu.com/careers/purchasing-manager/Deng, X., Hu, Y., Deng, Y., & Mahadevan, S. (2014). Supplier selection using AHP methodology extended by D numbers. Expert Systems With Applications, 41(1), 156-167. http://dx.doi.org/10.1016/j.eswa.2013.07.018Gelderman, C., Semeijn, J., & de Bruijn, A. (2015). Dynamics of service definitions—An explorative case study of the purchasing process of professional ICT-services. Journal Of Purchasing And Supply Management, 21(3), 220-227. http://dx.doi.org/10.1016/j.pursup.2015.04.004Zhang, R., Li, J., Wu, S., & Meng, D. (2016). Learning to Select Supplier Portfolios for Service Supply Chain. PLOS ONE, 11(5), e0155672. http://dx.doi.org/10.1371/journal.pone.0155672Route Planning: How Good Logistics Makes E-commerce Companies Great – Inbound Logistics. (2018). Inboundlogistics.com. Retrieved 17 January 2018, from http://www.inboundlogistics.com/cms/article/how-good-logistics-makes-ecommerce-companies-great/Aurora. (2017). Supply Chain Complexity: What’s Behind Supply Chain Disruption and Why You’re Not Achieving Consistent ROI Improvement. Inbound Logistics.
Pemer, F., & Skjølsvik, T. (2016). Purchasing Policy or Purchasing Police? The Influence of Institutional Logics and Power on Responses to Purchasing Formalization. Journal Of Supply Chain Management, 52(4), 5-21. http://dx.doi.org/10.1111/jscm.12112Miller, M., & Graddy, T. How Purchasing Can Reduce Supply Chain Costs. Institute For Supply Management. Retrieved from https://www.instituteforsupplymanagement.org/pubs/Proceedings/confproceedingsdetail.cfm?ItemNumber=11182&SSO=1Tate, W. (2018). Purchasing and Supply Management and Return on Investment (ROI) | The Essential Concepts of Purchasing and Supply Management | InformIT. Informit.com. Retrieved 17 January 2018, from http://www.informit.com/articles/article.aspx?p=2165644&seqNum=5