Procurement Applied to a PM Organization - Assignment Example

PROCUREMENT APPLIED TO A PM ORGANIZATION of Introduction Organizations have different types of operational policies. In the current study the researcher will investigate on various procurement and supply of organizations. In the current study, researcher opted Starbucks as the organization to outline the procurement policies. The researcher has investigated procurement management policies of coffee materials and outlined suggestions on developing operations (Butter, 2012). 1.1. Procurement policy of Starbucks Starbucks have been using six boiling centers to develop delicious coco beans. Coco Beans are the most important raw materials used by Starbucks. The organization implemented effective system that controls delivery of dairy, sugar, cocoa and cup materials. They have implemented environmental measures in procurement policies (Fleming, 2003). 1.2. Primary objectives of Starbucks procurement Starbucks is one of the leader level coffee beverage producers in the world. The key aim of procurement system policy of Starbucks is to increase feasibility to collect raw materials from various countries. Starbucks Coffee procurement policy collects cocoa beans from some selected countries. Roasting coffee beans will improve the taste. Manufacturing of coffee cups will increase recyclable policies. Starbucks plants will use milk from set up countries and coffee beans from some selective countries (Fullalove, 2007). 1.3. Stages or processes of providing Starbucks coffee beverages products and services to clients Operational policies of Starbucks develop certain policies to convert coffee beans and prepare beverage for serving in cup. Operational policy of Starbucks is a complicated process. Coffee beans are collected from all around world. Starbucks is having more than 17000 beverage retail outlets around the world. Starbucks is having more than 55 million customers around the world. The organization is having their presence in nearly 59 countries. Procurement policy of Starbucks in the global region is developed with the help of co-manufacturers. Starbucks is adopting strategies for different regions. European, Asian, and Latin American markets are targeted by Starbucks in terms of increasing the profitability (Giacchetta & Marchetti, 2013). 1.4. Differences between project procurement and operational procurement Starbucks is mainly a global beverage production and serving organization. Project procurement Operational procurement Raw materials of Starbucks projects will be various machineries, construction and other policies regarding the development of warehouse Starbucks can be developing extra warehouse, additional set up of coffee beverage production and managing customer ambience. Operational procurement of Starbucks will be having the raw materials like cocoa beans, dairy products, sugar products and different cup based products. Procurement regarding operational policy of Starbucks will be concentrating to develop quality of the products and service delivered in the set up of beverage chains (Louth & Boden, 2014). 1.5. Starbucks related documents to develop procurement planning process in the industry Starbucks developed procurement planning policy with the help of some documents. Financial report related documents will identify change in the material cost, whereas, variable costs of Starbucks will be affecting the earning potentials. During the fiscal year of 2011-2013 the organization was able to increase the EPS from $1.33 to $1.47 (Starbucks Coffee Company, 2015). 1.6. Two options used by Starbucks procurement department in developing the project-specific outcomes Starbucks is adopting various policies regarding the use of different types of materials and cups. Both the options are having certain advantages and disadvantages for beverage production of the organization. Starbucks also faced certain problems due to economic crisis. In addition, amount of sales will gradually reduce due to the inflation and profitability of firm will face increased cost. Starbucks adopted highly feasible strategies that helped them to report higher earnings. Profit earning of the origination reported $242 million during the period of 2013-2014 (Starbucks Coffee Company, 2015). They differentiated commodity based procurement policy along with project based procurement policies (Morris & Pinto, 2007). 1.7. “All make or buy decisions fall into one of three categories” The three major categories are competency, image or goodwill and personality traits which affects make and buy decisions. Decision making policies of Starbucks will be adopting satisfaction in terms of projects. Moreover, presentation of the procurement policies will develop knowledge base of the employees and clients (Moschuris, 2007). 1.8. Listing out some amendments for the knowledge base of current employee Current procurement policy adopted by the Starbucks management is concentrating on reducing costs. Project prices of the policies will increase functional feasibility. In addition, desire of development will increase feasibility of involvement. Relationships between the client and employees or management must be feasible enough to meet the accurate demands and expectation. Possibility of minimizing risk is possible (Day & Barksdale, 1992). 2.1. Different inputs of tender planning process: “Statement of work” will be providing best input tender planning process. Procurement management policies of the organization will outline following aspects; Nature of items: Beverage service provisions of Starbucks will influence the pricing procurement policies (Morris & Pinto, 2007). Buyer’s needs: operational procurement of Starbucks outlines appropriate requirement of the customers and contrasting certain aspects of behavioral aspects of customers. Contractual paper: Procurement of different products and raw materials must be outlining the price of the contracted delivery of the products. 2.2. Ethics and responsibilities of tendering authorities in Starbucks tender negotiations and procurement Procurement tender will be facing various circumstances. Procurement policies must be aligned with the organizational objectives as per priorities. Therefore, procurement policies of the Starbucks must be developing prior compilation of ethical representation and development of sound quality in the beverage products (Patterson, 2013). 2.3. List of different organizational factors that may affect procurement decision and provisions of a tender Contractual documents must ensure listing of all the information regarding operational and structural procurements. Risk associated with the procurement policies will be creating substantial damages to the operational policies. Payment related terms must be feasibly paid out. 2.4. Different forms of tender advertisements information 1. Providing potential contractual obligations to the users 2. Associated operational process of tender must be disseminated 3. Information of associated risks must be outlined 4. Standard conditions should be stated (Smith, 2009) 5. Responsibility and roles must be stated 6. Innovations must be encouraged 2.5. List of advantages and disadvantages of performance specifications Advantages of performance specification 1. Result orientation 2. Inventive nature 3. Originality 4. Evaluation of benchmarks Disadvantages of performance specifications 1. Low coverage of performance criteria 2. Solutions of tendering performance will not be as feasible as expected 2.6. Ways to approaching a market for the supply of beverage service Procurement related tenders must be developed along with the outline of interest of the parties involved. Moreover, Starbucks needs to show the interest regarding the proper management of procurement of coffee beans, dairy products and paper products. 2.7. Advantages and disadvantages of selective tendering potentials for the tendering process Selective tendering process will aid the procurement of the different organization. Starbucks will be adopting selective tendering in terms of managing the internal and external procurement. On the other hand, it will reduce the scope of exploring different potentials of resources (Walker & Phillips, 2009). 2.8. Selection of most appropriate tendering pricing method for the service Estimation of post tendering policies outcome Accuracy of production Estimation of result Feasible time of estimation Historical data usage Defining project 2.9. There are three main methods by which the price may be expressed: Fixed price – Potential tendering of procurement different type of beverage and food products will increase the feasibility. Cost recovery – Profits of the procurement process of Starbucks will influence potential overhead and other fixed costs. Measurable – The organization need to set measurable policies of tendering of procurement (Fleming, 2003). 3.1. List of the best desirable qualities that a tender submission Validity – Procurement tender of Starbucks can be judged on the basis of the tendering process. Valid tenders will aid the Starbucks in terms of managing different traits of parties of tenders. Reliability – Tenders must be identifying the reliability for evaluating outcome. Information of procurement policy will be adopting feasible methodical process that will negotiate reliability of any tender. Accuracy – Error free tenders will be helping the Starbucks in managing more procure mental process. Proper decision making will increase accuracy of tenders of procurement policies (Fullalove, 2007). Precision – Statistical figures of the procurement tenders of Starbucks must be presented in a brief manner. 3.2. List of the outputs from a tender selection process: Inputs Outputs Proposals of tenders Offers of procurement and suggestions Evaluation set Evaluation of the procurement and tendering process Organizational operational policies Feasibility of contract along with maintenance of potential responsibilities Evaluation Non-biased answers 3.3. Usage of multi-criteria for the contractor’s tender in the case study what criteria “Value for money” is one of the criteria of the procurement policies of the Starbucks. These policies are providing superior technical competence in terms of providing beverage production capacity. Financial stability can be judged along with quality certification (Giacchetta & Marchetti, 2013). 3.4. Source selection invariably requires negotiations before a contract is entered into. Proposals of the tendering process will outline different types of constraints. Negotiation policy will increase the benefit for the purchasers. Fix prices of the procurement needs to be offered in the tendering. Unavoidable circumstances can be handled well. Complex circumstances will hamper the feasibility of tender and procurement policy of Starbucks (Louth & Boden, 2014). 3.5. Identification of some ethical dilemmas associated with pre-award negotiation. Aims and objectives of the organization must be provided along with the contract and tender process, and that needs to be maintained properly. Negotiation of party demands must be entertained. 3.6. Award Recommendation report Procurement strategy should outline the circumstances faced during the operations. Bids must be analyzed in details. Contractor’s potential ideas must be outlined. 4.1. Definition of outsourcing Outsourcing in the procurement policy denotes the policy of collecting materials of products from third parties. 4.2. Outsourcing concept and effects in procurements of Starbucks Starbucks procurement contract will outline the operational flow. Cash flow and productivity of the organization will gradually increase with the help of quality of raw materials. In addition, profitability and market share growth will increase (Morris & Pinto, 2007). 4.3. Understanding of the concept and impact of procurement policies of Starbucks: From the study of the term outsourcing it can be observed that the organizations are adopting the policy in terms of getting certain competitive advantages. Outsourcing can be adopted by, in terms of procurement policies of the organizations. In the United States, outsourcing policies are aiding firms with increased customer attention meeting, competitive edge creation and reduced costs (Patterson, 2013). Conclusion The study has outlined different aspects of the procurement policies of Starbucks. The organization need to collect various raw materials like coffee beans and other dairy products. They are also leading the coffee beverage market; therefore proper procurement policies are required. References Butter, F. (2012). The transaction management perspective on procurement in the era of globalisation. International Journal Of Procurement Management, 5(2), 123. Day, E. & Barksdale, H. C. (1992). How Firms Select Professional Services. Industrial Marketing Management, vol. 21,. 85-91. Fleming, Q. (2003). Project procurement management. Tustin, Calif.: FMC Press. Fullalove, S. (2007). Elsewhere in ICE Proceedings. Management, Procurement And Law, 160(1), 38-44. Giacchetta, G. & Marchetti, B., (2013). Supplier Satisfaction Survey as a management tool for reengineering the procurement process. International Journal Of Procurement Management, 6(2), 170. Louth, J. & Boden, R. (2014). Winging it? Defence Procurement as Risk Management. Financial Accountability & Management, 30(3), 303-321. Morris, P. & Pinto, J. (2007). The Wiley guide to project technology, supply chain, & procurement management. Hoboken, N.J.: J. Wiley. Moschuris, S. J. (2007). Triggering Mechanisms in Make-or-Buy Decisions: An Empirical Analysis. The Journal of Supply Chain Management 43 (1): 40-49. Patterson, R. (2013). Book review: Early Contractor Involvement in Building Procurement – Contract, Partnering and Project Management. Proceedings Of The ICE - Management, Procurement And Law, 166(4), 215-215. Smith, A. (2009). The impact of e-procurement systems on customer relationship management: a multiple case study. International Journal Of Procurement Management, 2(3), 314. Starbucks Coffee Company. (2015). Cup and Materials. Retrieved 19 March 2015, from http://www.starbucks.com/responsibility/environment/cups-and-materials Walker, H. & Phillips, W. (2009). Sustainable procurement: emerging issues. International Journal Of Procurement Management, 2(1), 41. Read More