Thursday, May 9, 2019

Procurement and Purchasing Strategies(Critique) Essay

Procurement and Purchasing Strategies(Critique) - Essay ExampleIn this paper, this idea will be discussed in detail considering three scholarly articles in order to know what benefits does startsourcing come through to companies and what concerns companies usually have in deciding whether they should outsource the procurement form or not. Discussion The articles elect for this discussion included The Make-or-Buy Decision in the Presence of a Rival Strategic Outsourcing to a public Supplier by Arya, Mittendorf and Sappington, The procurement functions role in strategic outsourcing from a process perspective by Carter and Yan, and Strategic procurement outsourcing a paradox in current theory by Fernandez and Kekale. The main concept behind all of these articles is that outsourcing is basic need of today for companies to operate efficiently. For example, Carter and Yan (2007, p. 210) state that in that location are many benefits of adopting this approach whatsoever of which inclu de bring down costs, improved competitiveness, and subjoind focus on other byplay processes. Some more benefits of outsourcing the procurement function to international sources include improvement in efficiency levels and reduced transaction costs (Fernandez & Kekale 2007, p. 168). Procurement outsourcing as well provides strategic benefits to companies (Arya, Mittendorf & Sappington 2008, p. 1749). Moreover, Fernandez and Kekale (2007, p. 168) also found that reduced cost is a very significant benefit of procurement outsourcing if we consider the increased percentage of external goods and services purchases. Fernandez and Kekale (2007, p. 168) also found that a company outsourcing its procurement functions can achieve at to the lowest degree five times more saving as compared to the savings that achieve from outsourcing other processes, such as, HR activities and financial operations. This figure suggests that procurement outsourcing is really a very beneficial aspect of doin g business in the modern world where the competition is continuously increasing with every passing day. However, companies usually have some concerns regarding outsourcing their procurement functions to external sources. For example, managers of such companies feel that they will become dependent on other firms if they entirely outsource the procurement function. They also feel that this approach will lead to downsizing ion their firms which will out a negative impact on the careers of many employees working for purchasing and procurement department. Manager also have other concerns like what they should actually outsource, whom should they outsource their procurement function, and whether outsourcing to a common supplier in presence of competitors will be a viable option or not (Carter & Yan 2007 Arya, Mittendorf & Sappington 2008). Some managers rally that if they outsource their procurement function to a supplier which is also serving some of its competitors, it will increase t he cost because of monopolistic power of the supplier. However, in actual, there is no such case and the monopolistic insert supplier serves all clients equally (Arya, Mittendorf & Sappington 2008, p. 1747). According to Cohen and Roussel (2005), the purpose of outsourcing is to add value to suppliers while reducing business costs. Procurement means to acquire those goods and services which a company needs to have for completing its manufacturing processes. If these goods and servi

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