“Recommendations
ConclusionsReferences
Introduction
Purchasing and supply management involve critical steps of procurement storing and monitoring the general flow of goods in a store. It does not matter whether goods are for retail or otherwise. A purchasing and supply manager is a person in charge of this job division. This manager is also in charge of the well-being of personnel. The purchasing and supply role is also referred to as procurement. This role involves the acquisition of goods and services. It is fundamental for the products to be acquired or procured at the best cost and meet the specifications of the end consumer in terms of quality cost quantity location and time. For many organizations includingthe upcoming and established businesses purchasing and supply management is an essential aspect. The description of a purchasing managers role includes determining appropriate suppliers and negotiating with suppliers in the process of buying raw materials or equipment.
Issued addressed in the procurement project
The purchasing and supply manager also coordinates with the cost analyst and finance professionals to acquire products that are cost efficient and quite durable. It is the responsibility of the purchasing and supply manager to research on new and emerging products. The manager should compare the products with the existing ones while considering the aspect of price service value and returns to be derived from the product. It has to be noted that the purchasing and supply department is critical in the organization. It is vital for the organizational stakeholders to compare notes before making appropriate decisions. The team is also responsible for the preparation of buying agreements between the company and their suppliers. Suppliers are individuals or businesses that provide goods or services to various vendors in exchange for an agreed upon payment (Johnson Flynn &Leenders 2011).
The purchasing manager of Rich Manufacturing Company was leading a team that had the responsibility of advising the company on some vital issues. The issue involved choosing the appropriate supplier. Purchasing and procurement of machines is vital because it is essential for the success of the firm in the near future. Finding the right and appropriate supplier is extremely valuable when answering the question on the acquisition of the right machine. The sourcing decision entails finding an appropriate supplier who can meet the requirements. In most cases the criterion used is weighing a number of factors. These factors include price durability maintenance cost depreciation and revenue expected to be derived from the use of the machine. The team has the duty to look for suppliers from various adverts or catalogues company or brand reputation trade exhibits internet or recommendations from other informative sources (Johnson Flynn &Leenders 2011).
However when the equipment is rare in the market reverse marketing is applied. This entails looking for suppliers with the most potential and providing them with the needed product. The feedback is then evaluated while considering the various factors. However when dealing with a product that is available in the market Rich Manufacturing utilizes the competitive bidding process in the selection of the supplier. This involves little or no negotiation compared to the other strategy. A tender document is prepared to requestfor the price quotation of the product. The prices and conditions of the product are also stipulatedin a clear manner. Here the contract is awarded to the lowest bidder who is qualified to fulfill the contract. In the earlier case of reverse marketing open negotiations are conducted. In this regard the second alternative is not included because the negotiations are likely to lead to an agreement. After successful vendor analysis the appropriate supplier is located. Thereafter the purchasing function shifts attention to ensure that all parties fulfill their obligations.
Rich Manufacturing further evaluates the shortlisted suppliers using a common ground. Once the appropriate suppliers have been selected data collection and analysis usually takes place. This is a fundamental step because it dictates the price at which the machine is acquired. These steps involve the finance sector and cost analyst carrying out evaluations based on the collected data. This entails appraising the suppliers individually to settle on the one that guarantees better outcome. Net present value is the preferred appraisal system among many organizations. Rich Manufacturing is considering the acquisition of a product from a number of sources. Taiko is one of the brands that the company is using. However due to the high maintenance costs incurred there is a desire to shop a machine with cheaper maintenance costs and appropriate service. Nonetheless in terms of cash flow when the time value of money is ignored Bolts has the highest returns in the form of revenue. In this case Bolts yield $900000 per year for the next years of the equipments estimated useful life. On the other hand Taiko yields $800000 Westecs $750000 and Orchids $700000. Thisis applied if the committee selects the machine based on total cash flows. This criterion does not consider the issue of maintenance and operational cost. This entails calculating returns or cash flows derived from using the machine (Johnson Flynn &Leenders 2011).
Findings and data analysis
Net present value usually accommodates the change in money value attributed to lapse of time by discounting the cash flows using a present value interest factor. As time passes the intrinsic value of money does not remain constant. To consider this change in money value the total cashflowsare reduced by deducting annual expenses. The net cash flows are then discounted to reflect the future value of money. The figure attained is then subtracted from the initial outlay to attain the net present value. In a case where the committee comes with a decision based on quality net present value and service the decision may tend to change. The variables or factors are to be in the following percentages: 20% 50% and 30% respectively. Concerning quality the committee uses colleagues recommendations and previous experience. Taiko has had a relatively stable period with the company as far as quality is concerned. During a previous seminar Westec and Bolts were highly recommended by colleagues in the same profession. For the case of Bolts they have most of their units sold in the South and East Asia market. As for Orchid majority of their information is not provided hence its quality cannot be accurately rated.
When service and technical support is considered Taiko is rated to have the quickest response in cases of breakdown. It also has rare instances of breakdown. However in case a breakdown occurs the technical response is availed within two hours. The Westec machine has frequent cases of breakdowns. Although the technical support is reliable it takes about 4 hours. Bolts offer the second most reliable optionconcerning service. In this case it has never had a breakdown incident. However in case it occurs it takes 8 hours for the technical support to arrive. The Bolts Company is located quite far. However they have an online technical support system to attend to their clients. The Orchid Company is not widely recognized as far as the machine is considered. However the firm has a strong reputation in the production of other equipment and applications. If the net present value is considered the Bolts Company yields the highest net present value (Burt Dobler& Starling 2003).
Recommendations
This implies that the company has the average machine at the best returns possible. Bolts machine should be awarded the tender to procure the machine. In this regard the machine from Bolt is second to Taiko on matters of service and quality. On the issue of returns through the net present value appraisal system Bolts has preferred returns. Bolts should be selected because it offers the best deal. Come October 2012 the company should consider adopting Bolts as the vendor for the cleaning machine (Johnson Flynn &Leenders 2011).
Conclusion
Purchasing and supply is a discipline that provides managers with skills to obtain the best materials for the best price. As a discipline purchasing and supply is vital for the well-being of any corporation. Rich Manufacturing is no exception and the company should evaluate the vendors critically to ensure they get the best deal. From the report compiled by the procurement team of Rich Manufacturing it is feasible for the company to obtain the cleaning machine from Bolts Company. The criterion applied entails evaluation of the machines cash flow its service and quality.”

  

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