Acquisition Process in Purchasing and Supply Management

Abstract

The transformation of the purchasing and supply chain function into a value enhancing function has necessitated the establishment of systems to guide an entity’s supply activities. This paper reviews the main concepts of the acquisition process, to identify aspects that shape system development, supplier identification, contractual terms, negotiating process and award of contracts. For instance, concerning system development, the goal is to ensure integration throughout the supply chain thus foster efficiency throughout the system and ability of the entity to meet customer expectations. The paper also reviews the stepwise process involved in the selection of the supplier, noting the aspects that form the basis for effective buyer-supplier collaboration. Moreover, the paper identifies the role of cross-functional teams in the acquisition process, for instance noting their importance in ensuring effective integration of the buyer and supplier systems.

Introduction

In the current competitive climate, both businesses and government organizations need to manage their purchasing and supply processes effectively to ensure survival. Traditionally, a firm’s supply function focused only on cost reduction in the aim of enhancing the entity’s margins. With the need for a customer focus to ensure survival in an increasingly competitive environment, businesses in the modern day need to view the supply chain in terms of revenue enhancement rather than managing only costs. Arising from such a need, has been the transformation of the supply function into a value adding process through such ways as establishing collaborations with suppliers, thus facilitating the delivery of better quality to the customer (Van Weele, 2009, p. xxi). From such a transformation, purchasing and supply management is core to ensuring that the entity meets its customers’ needs on time. This paper evaluates the process of acquisition by reviewing the system and technology used in the process, the source selection process from the supplier identification, through negotiations to award of supply contracts and the application of cross-functional teams in product development.

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