Reply to the two DB post 250 words a piece see attached (Must introduce a NEW CONCEPT)

Discussion Board Forum-Procurement

Sydnie Harris

Key Concept Explanation

In order for organizations to acquire something, they must purchase it, which is the act of procurement. The act of a procurement strategy “would refer to the planned approach of cost-effectively purchasing a company’s required supplies, taking into consideration several elements and factors such as the timeline for procurement, the funding and budget, the projected risks and opportunities, among others” (Procurement strategy development, 2017, p.NA). Companies who have a professional and formal procurement process in place will save money, time, and reduce overall risks. Before a procurement strategy can be designed, it is necessary for businesses to assess all of the details they have to work with. It is important that every detail is custom-made to the organization while contributing to its overall goals and objectives.

I am specifically interested in this topic due to understanding how this department reaches its goals through attaining relationships, avoiding dishonesty, and its involvement with IT processes. The corporation I am currently employed for strives to develop strategic relationships and practice ethical business that adds innovation and value across their regions and brands daily. Working for an industry that is committed to practicing responsible procurement also intrigues my interest in researching more into this topic.

Comparison

After reviewing the class text and the research that was conducted, it is important for companies to practice their supply chain strategies through obtaining products immediately and for the right price. Per (Meredith & Shafer, 2016), “procurement is the responsibility for acquiring the goods and services the organization needs, by any means” (p.177). This may include companies reusing materials and recycling methods to help reduce the cost with future production. Two different procurement strategies can be practiced in organizations, which are single and double sourcing methods. In single sourcing “the buyer exploits only one supplier for purchasing. This supplier owns a defined level of reliability, i.e. a given capacity of providing the product when requested. In the case of double sourcing, besides the first supplier, the buyer can exploit a second vendor, which is always able to deliver the product required” (Montanari, R., Bottani, E., Shekarian, E., & Kazemi, N., 2017, p.79). Companies must select the most suitable purchasing strategy for their organization in order to successfully grow.

One method of procurement that aims to reduce costs by taking an illegal approach is the practice of procurement corruption. Procurement corruption occurs within organizations when “officials and contractors are often tempted by the gains from trading in illegal, or at least illegitimate, mutual favors” (Burguet, R., 2017, p.315). When bribes occur, rules that select the price or quality of a good are manipulated. A group of individuals who practice this kind of business are cartels. Cartels are a group of independent businesses who act together to set fixed prices for the goods and services they produce. “Cartels are the most severe violation of antitrust laws” (Heimler, A. , 2012, p.849), their objective is to weaken rivalry among competitors. With a strong incentive to cheat and lie in regards to set prices and quantities, it is important for businesses to avoid this behavior.

Article Summary

The article that has been selected for further review in regards to IT procurement is titled Successful Information Technology Procurement (2002). IT procurement involves strategic and administrative responsibilities to be in place in order for businesses to acquire products and services. The amount of money that companies spend on IT processes continues to increase its total expenditures and real value daily. This article discusses how successful IT procurement processes are still hard to achieve for most organizations. Organizations must develop effective tools that will allow them to properly manage their IT services. Procurement decisions surrounding a new IT system can fundamentally impact the value and success of the new structure. “Whilst IT procurement improvement is a relatively new discipline, there are new tools available to assist organizations that want to obtain better value from their IT procurements and supporting activities” (Dorling, A., 2002, p.21). Companies who follow these tools still have a hard time of achieving procurement success since they do not directly identify the critical aspects or practices, which ensures achievement.

Another item that falls under the IT procurement category is E-procurement. E-procurement is the practice of Internet purchases and sales for businesses and consumers. When it comes to companies implementing E-procurement, often times they fail which results in costly attempts. This is due to “the quality of IT infrastructure does not have a mediator relationship to the success of E-procurement” (Eskandarian, M., Marthandan, G., Malarvizhi, A., & Tehrani, Z., 2016, p.73). In order for E-procurement to suceed, quality of knowldege management must be a full mediator that does not impact the dynamic of the organization directly.

Biblical Integration

The practice of buying and selling products/services is an integral practice on our every day lives. Through scripture, God makes it very clear that we are supposed to practice these dealings and exchanges through moral and honest behavior. The first lesson can be found in Mark 4 where two businessmen are in attempts to sell a farmer seed. The first salesman was strictly after the sale and did not care about the customers’ needs and concerns, while the second salesman listened to his customers needs and focused on being a trusted advisor. Mark 4:7-8 (New International Version), “Other seed fell among thorns, which grew up and choked the plants, so that they did not bear grain. Still other seed fell on good soil. It came up, grew and produced a crop, some multiplying thirty, some sixty, some a hundred times.” In other words, the first salesman did not differentiate his product and unknowingly stated his product was like everyone else’s. The second salesman provided an honest and useful product.

In Proverbs 16:18 (NIV), we are told, “pride goes before destruction, a haughty spirit before a fall.” Salesman who practice honesty and have pride in their product/service will allow customers to feel firm and happy with their decisions to purchase from them. Lastly, Mark 8:36 (NIV), we are asked, “And what do you benefit if you gain the whole world but lose your own soul?” Christian salesman must remember where their duties and work originates from. Instead of desiring profits we should desire to bear our cross in this world so that our souls will be saved in the next.

Application

The key topic of this post, procurement, is applied to the real world by practicing the process or acquiring or purchasing something. More particularly, it includes purchasing goods or services with the correct quality and quantity, from the best supplier, during the right time, and it typically involves some sort of contractual commitment. Depending on the companies’ scale of their project, there will be a wide range of potential procurement solutions and approaches. Most companies have master agreements in place that allows for procurement to happen automatically which results in a quicker process and a predetermined price. As companies continue to seek growth in their revenue stream, it is important for them to ensure they are doing everything ethically possible to minimize costs wherever needed.

Annotated Bibliography

Burguet, R. (2017). Procurement design with corruption. American Economic Journal: Microeconomics, 9(2), 315-341. doi:10.1257/mic.9.2.315

This article discusses the importance of recognizing the corruption of procurement in businesses. When procurement is being organized, and created in businesses, it is easy for contractors to manipulate owners into practicing of illegal trade or mutual favors. Corruption of procurement also involves bribes that are typically exchanged for the manipulation of a set price or rules. When corruption is taking place, quality of the business and product cannot be observed. This article also observes the design of optimal procurement mechanisms which is studied when a contract is breached or a project is abandoned. Bribery cannot occur when the contractor/sponsor designs the optimal mechanism.

Dorling, A. (2002). Successful information technology procurement. Software Quality Professional, 4(3), 21. Retrieved from http://ezproxy.liberty.edu/login?url=http s://search-proquest-com.ezproxy.liberty.edu/docview/214070910?accountid=1208

This article discusses the role procurement plays with information technology how it is difficult to accomplish in most companies. New IT procurement tools have been launched that assist organizations that want a better outcome from their IT procurements and activities. Organizations are experiencing extreme pressures to streamline their operations and reduce costs. IT helps increase companies real time value as well as its total expenditures. Decisions that surround IT’s procurement processes will impact the success and value of the organization. This article observed European organizations and their approaches to procurement methods. Results of these studies were presented in a best practice guidebook, which allows organizations to identify areas of improvements.

Eskandarian, M., Marthandan, G., Malarvizhi, C. A., & Tehrani, S. Z. (2016). Quality in E-procurement success. International Journal of Management & Information Systems (IJMIS), 20(3), 73. doi:10.19030/ijmis.v20i3.9742

This journal discusses the factors and origination of E-procurement from E-business. When E-procurement fails within businesses, this can be a very costly expense. This article attempts to explain how to increase the success rates of E-procurement by ensuring it is more sustainable. A study was performed and a sample of 208 managers were studied in order to collect data on their relationship between E-procurement quality factors. Results of this study showed that the quality of an organizations culture has a partial intermediary relationship with E-procurements success. Although, quality management has a full intermediary relationship with E-procurements success, which does not impact the dynamic capability of an organization directly.

Heimler, A. (2012). Cartels in public procurement. Journal of Competition Law and Economics, 8(4), 849-862. doi:10.1093/joclec/nhs028

This article observes the relationship cartels have in public procurement. Public procurement involves the bidding authority setting fixed pricings on products, which grows the incentive for creating cartels. Cartels allow a price elasticity of demand to occur which is zero below the base price. A cartel is a secret agreement among potential rivals stating that they will not compete with one another. Being the most severe violation of antitrust laws, cartels objective is to weaken rivalry among competitors. Public procurement cartels on the other hand are more stable and have a larger presence than cartels in private markets. With public procurement cartels operating in a bid form rotation, officials have all the information they need to discover them, rather than in normal markets where customers are not aware of a cartels presence.

Procurement strategy development. (2017). Retrieved from http://www.procurement- academy.com/procurement-competences/procurement-strategy-development/

Meredith, J. R., & Shafer, S. M. (2016). Operations Management for MBAs (6th ed.). Jefferson

Montanari, R., Bottani, E., Shekarian, E., & Kazemi, N. (2017). A model for the analysis of procurement strategies in the economic order interval environment. Mathematics and Computers in Simulation, 134, 79-98. doi:10.1016/j.matcom.2016.10.007

This paper observes two different procurement strategies, which are single and double sourcing. With single sourcing, the buyer only exploits one supplier for purchasing. Double sourcing allows the buyer to exploit a second vendor, which is reliable and is capable of always delivering the required product while selling at a higher price. Purchasing decisions are extremely important when trying to ensure the final product and the cost of procurement. Another procurement method discussed in this article is the practice of multiple sourcing, which is when the buyer works with several suppliers and encourages competition among them. Though multiple sourcing, a supplier is selected every time a purchasing decision is made.