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Purchasing And Material Management Of Business - Myassignmenthelp.Com
Question: Discuss about thePurchasing and material management ofa business. Answer: Introduction The report focuses on the concept of early supplier involvement in the business world. Early Supplier Involvement is used to define the collaboration between supply chain partners and manufacturers at the initial stage of product development (Brindley, 2017). The reason for choosing this topic is to understand the benefits that a business may encounter if the suppliers are involvement from the initial stage before the development of a product. The study can help in understanding the theories involved in the supply chain and the results that are normally derived by a manufacturer. The report can help in comparing the difference between involvements of suppliers at an early stage with that of the involvement at a later stage. The report focuses on reviews by scholars and identifies models involved in understanding the topic. The methods used for gathering data has highlighted that help in deriving the result. The discussion related to findings and the implications are mentioned in the report. Concept of Early Supplier Involvement In the modern day, every business organisation wants to gain a competitive advantage in the market. This needs to be done by formulating strategies that are required for conducting the business in a proper manner. According to Menguc, Auh Yannopoulos, (2014), Early Supplier Involvement (ESI) is one such strategy that is adopted by managers in order to promote a product before its release. This promotion is done by involving the stakeholders that have considerable interest in the company. The stakeholders involve the customers, suppliers and the manufacturers. The early involvement of the stakeholders provides various advantages to the business. One such advantage is the better quality of products. Preview about the process used for product development is provided at an early stage to the stakeholders. This provides an opportunity to entertain ideas about the ways by which a product can be improved. The quality of a product can be improved depending upon the needs and wants of the customers. Keeping this in mind, the cost of the product can also be reduced. In the opinion of Yurtkulu, Hilletofth Johansson, (2014), the involvement of manufacturers reduce the cost of manufacturing the product. Subsequently, the final price of the product is also reduced. The product life cycle is also reduced which can help in the rapid development of the product. However, there are certain challenges as well. The basic challenge that every manager faces is the implementation of the system. Most of the employees believe that involvement of manufacturers and customers can result in the failure of the product (Sarang et al., (2016). This is mainly because of the loss of the surprise element that at times can attract the customers. Importance of Early Supplier Involvement In order to develop a product in a manner the customers can use, certain specifications are required to be maintained. These specifications can at times be complicated for the engineers designing the product. Hence, the involvement of suppliers can reduce the burden of calculating the specifications and gathering resources one at a time. According to Roh, Hong Min, (2014), the involvement of suppliers in ESI is an important factor for the company. Apart from this, the change in process is another factor that is important for the implementation of ESI. In earlier times, the suppliers were not involved in product development. Hence, the process used for manufacturing a product was lengthy. The involvement of suppliers after the designing of the product proved to have a negative factor as in most times there remained discrepancies in the product. However, with the involvement in the initial stage, such discrepancies can be avoided (Zhao, Cavusgil Cavusgil, 2014). Based on the quality of the products that are being manufactured the inventory can also be controlled. This provides an opportunity to manage the inventory and make a place for involving new products (Luzzini et al., 2015). Thus, the importance of ESI can be attributed to reducing the number of flaws that an engineer may commit while designing a product. Early Supplier Involvement in new product development According to Yeniyurt, Henke Yalcinkaya (2014), long-term relationship with the customers is required in order to maintain the supply chain of a company. Cooperation between the suppliers and the customers can help in the sales of the products and provide the company with an added advantage. Hence, while developing a new product, it is necessary that the opinions of the customers be taken into consideration. This can be done by providing the customers with feedback forms that can help in understanding the tastes and preferences of the customers. The ways by which the customers remain involved in the business is indicative of the level of expectations that exist in the business. Pystynen (2016) stated that the dependence structure followed by the customers have a considerable influence in the supply chain. Apart from this, the involvement of suppliers can also lead to the increase in profit. This can be done by proving proper knowledge about the ways by which the products can be manufactured. The manufacturing cost is reduced which makes it possible for setting up a reasonable price for the customers. Thus, it can be said that in order to develop and launch a new product, the involvement of the suppliers is important (Monczka et al., 2015). The new product development method involves five steps that help in the involvement of the suppliers. Figure 1: Process of developing new product (Source: Yue Jing, 2015) Early Supplier Involvement and Resource Dependency Theory In the modern world, Resource Dependency Theory (RDT) has become influential in understanding organisational and strategic management theories. Rossignoli Ricciardi, (2015) is of the opinion that the need for support from external sources is required by every organisation. In the course of this assistance, the organisations become dependent upon the external resources. RDT helps in removing such dependencies by analysing the potential issues that may arise in the organisation. RDT helps in creating an innovative atmosphere that helps enterprises to continue the current task. According to Jones et al., (2016), the use of this theory can help in gaining a competitive advantage for an organisation. Therefore, the link between ESI and RDT can be well established from the fact that the introduction of an innovative model can help any organisation to satisfy customers. This theory can particularly be used in the case of developing new products. In this regard, it can be said that the profitability of the enterprises depend on the techniques used for innovation and the dependence it has on the external factors (Craib, 2015). Hence, an organisation needs to maintain a future course of action in order to ensure that the profitability is maintained. The building of social relationships can also help in the development of resources. This is because, with the involvement of people from various sectors, the designing of products can be made in an effective manner. Hence, this theory can help in the effective involvement of suppliers and contribute to improving the quality of the product. Early Supplier Involvement and Social Exchange Theory According to Christopher, (2016), Social Exchange Theory (SET) is important to understand the decision-making issues that a purchaser normally faces. In order to make an assessment regarding the product that needs to be purchased, decision-making is important considering various elements. The elements include planning of the demand, analysing the strategy, analyse the strategy adopted by the supplier and the awards or rewards that may be obtained. It has been observed that SET is applicable while trying to analyse the strategies adopted by the suppliers. This can be done by establishing a long-term relationship with the suppliers, gaining the trust and remaining committed to a certain level of purchase. In the light of this statement, it can be said that the application of SET is an important in order to improve the buyer and supplier relationship (Stadtler, 2015). This helps in increasing the performance of the organisation. The involvement of suppliers at the initial stage is usefu l for maintaining the relationship with the suppliers. This is because SET helps in analysing the potential benefits and pitfalls before making a decision. This is an important part of an organisation as the decisions involved may lead to the proper execution of the product and services. Apart from this, Wisner, Tan Leong, (2014) stated that social exchange also involves the analysis of the outcome by calculating the rewards from the cost involved. This is indicative of the fact that people willing to make social exchanges weigh the difference between the cost factor and the reward factor. Hypothesis and gaps After analysing the theories and the models that involved in the involvement of suppliers in the early stages of production, a possible hypothesis can be gathered. The theories provided are indicative of the fact that in the modern business world, the implication of ESI can help an organisation to develop in an effective manner (He et al., 2014). The benefits that are involved in the application of the technique signify that the use of the technique can help identifying flaws in the organisational context. However, Jean, Sinkovics Hiebaum, (2014) stated that the relation between the suppliers and designers need to be involved more in the organisational context. Another important thing that the theories failed to deliver was the fact that the use of ESI in the modern day is in contrast with that involved in earlier times. The relation to change in a manufacturing process is a huge bonus for organisations that involve in profit-making objectives and customer satisfaction (Pulles, Veld man Schiele, 2014). Thus, the application of such information can help in understanding the ways by which ESI is applicable in the modern world. Apart from this, the theories can be used in order to come to a relevant conclusion and findings that help in the implication of ESI in the business. Research method In order to conduct the research in a successful manner, the researcher has adopted certain methods to collect data. The secondary method of collecting data has been chosen in order to understand the concept of ESI and its importance in business. The secondary data can help in understanding the concept in a broad manner and suggest ways to make improvements. Based on these findings can also be derived that are essential for the research. The researcher used information from books, journals and websites in order to gain the necessary details concerning the topic. Analysis on the theoretical aspect is done in order to develop the idea of the concept in a broader manner. The resources used for collecting data are the reviews and opinions of renowned scholars. The reason for choosing this source is to understand the opinions of the scholars and help in the development of a proper knowledge about the topic. Findings From the analysis of the literature review, it can be said that the use of ESI in the modern business has influenced a lot of change in the business world. Reports claim that most significant changes have been seen in organisations that specialise in manufacturing cars and other technologies. Such a detail is evidenced by the fact that the involvement of suppliers has helped in reducing callbacks of the cars considerably in the past year. It has been seen that about 15% of the automobile industries have applied the process and have managed to reduce the callbacks. However, some automobile industries have failed to use the system in an effective manner. The literature review also provides an understanding of the models that are required to maintain proper manufacturing of a product. These models are used along with the ESI in order to understand the ways by which an organisation can be impacted. The conservation of resources has made about 2% production houses to engage in sustainabil ity of the environment. The completion of the literature review also helped to identify the potential areas that need improvement. The supplier and designer relation need to be analysed in order to understand the level of collaboration among the employees. Evidence shows there has been a rise by 4% of the sale of goods from small enterprises due to the use of ESI method. It has also been seen that the managing of resources needs to be done in order to avoid any potential dependent on the external environment. The following part provides the discussions of the findings. Discussion of findings From the findings, it can be said that the use of ESI in business can help in the development of competitive advantage in the market. The involvement of the suppliers can bring about expertise for the management and designing of the products. This can help in reducing any discrepancies in the work place. The application of RDT and SET is useful in engaging the suppliers. This is because with the application of proper resources in the business, it can be easy for organisations to maintain track of the level of expertise required. It can also help in maintaining sustainability in the business as evidence from the findings. The literature review also suggests that the use of SET can help in determining the advantages of a particular business. In this regard, the decisions taken by the managers can be influenced by the application of SET during the involvement of suppliers. The advantages of such an involvement can help in reducing many mistakes that can occur. The advice from experience d people can bring about knowledge for the designers. RDT can reduce the dependency of the external resources. Thus, the implications of these findings can help an organisation in every way. However, in certain areas, the application of this cannot be implemented properly. Implication of findings The findings suggest that the use of ESI has not been implemented in emerging markets of the world. The implication of ESI in business markets in Brazil, India, Russia, China and South Africa need to be made in order to improve the level of productivity. In the recent areas, these countries have emerged as serious marketing countries in terms of manufacturing of goods and products. However, with backward technology and an unstable economic environment, the countries have been unable to improve the techniques used for product marketing. Apart from this, the lack of ESI in the service industry also needs to be improved. In retail industries, the use of the manufacturing tools needs to make with the application of ESI and its supporting factors. Service industries, like retail stores that manufacture goods, need to implement this in order to maintain the quality of the products and satisfy customers. Conclusion Thus, it can be concluded that involvement of suppliers before the finalisation of products can help an organisation avoid major flaws. The way by which an experienced supplier can guide the designing team can be useful for the employees. In this regard, the application of different theories can also help in developing the concept. However, while conducting the research there have been certain limitations in terms of a gathering of data. This is mainly because of the fact that the research is based on secondary data and recent implications in business in the last 25 years were difficult to find. In the modern world, the implication of this strategy in the service sectors has been limited. The future scope of the research is the study of ESI in the service industry. 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