The management of risk is proving to be one of the most difficult tasks for the project management profession. How can risk be managed effectively and who should be responsible for this task?
You are required to critically analyse the concept of risk; discuss how it can be measured and ranked and outline how a project risk management strategy may be constructed for a project of your own conception. In completing this assignment, you should address how appropriate practices can assist in minimising risk for your project.
|Marking Scheme Criteria||Marks|
|Use of theory||30|
|Quality of argument||10|
|Reference to course ideas||10|
|Citation and References||10|
Strategic procurement depends on strong “Supplier Relationship Management” (SRM) where procurement professionals are concerned about developing robust supplier relationships and negotiating favourable terms and conditions. In the future, it is expected that supply chain structures will become more complex and choosing the right supplier will be more critical. Increasingly stringent supplier requirements will become routine, and demanding purchasers will expect suppliers to demonstrate their essential competencies. Supply chain risk, scarcity of raw materials, environmental, sustainable and economic issues will lead to increased pressure on these buyer-supplier relationships.
You are to consider a UK business that sources food materials extensively from Greece and discuss how it can manage the dangers of economic and other risks arising from this relationship You are asked to critically discuss how the procurement function can manage a network – often global – of vendors and suppliers that can quickly become inoperative due to rapid shifts in the business environment. You are expected to provide appropriate case study examples to illustrate your answer.
This coursework should follow a structured approach and should be prepared and presented as a professional business report. You should undertake a relevant literature review that helps inform your investigation. Please also ensure that the Harvard Referencing System is adhered to and fully complied with.
PROJECT MANAGEMENT-ASSIGNMENT 1
Table of Contents
Management of risk and responsibility
Critical analysis on concept of risks
Ways of measuring and ranking risks
Measurement of risk
Ranking of risk
Outlining project risk management strategy
Recommendation for minimizing risk
A project is generally exposed to risks under severe circumstances that could either prevent the completion of project in given time or halt the progress of research. It cannot be denied that the necessary decision to manoeuvre business plans are particularly managed and supervised by senior professionals. Since risk particularly have their influence on project stakeholders and project success, positive risks should be segregated from negative bounded risks. This assignment provides an overview on risk management strategy and concept of risk management for achieving the objectives of research.
Management of risk and responsibility
The responsibility to manage business risks and negative surroundings of business environment is handled by senior management members of an organization. Since management members have the primary access to details and business outline, the primary decision to alternate and mitigate risks rests on their shoulder. It has been commented by Almeida, Hankins, and Williams (2017, p.4182) that in order to manage risk effectively, identification of business requirements needs to be garnered. This approach can help an organization to prepare a risk register. The suggested statement of author regarding risk management requires a proper description of risks and the present data for putting a logging date in risk register.
It has been argued Tupa, Simota and Steiner (2017, p.1226) that risk response action plan does not only help in identifying the risk but also helps in locating the source of risk in a particular project. The identification of risk is particularly performed by conducting a thorough breakthrough of all the probable steps that is particularly being generated from inefficiency of project stakeholders. It also needs to include variant solutions that are generally being garnered from project members and also senior professionals. Since risk particularly have their influence on project stakeholders and project success, positive risks should be segregated from negative bounded risks.
It has been highlighted by Bellini and Di Bernardino (2017, p.492) that positive risks are those risks that have the possibility to provide opportunity for the organization. A particular anticipation plan can be prepared prior to the initiation of any project. This could be utilized as an extensive opportunity to highlight the goals of project and also include key areas that can have maximum exposure to project management strategy. These approaches are very much aligned with decision theory that helps in proper management and mitigation of risk. It can be argued that decision theory is considered to be the mathematical approach that analyzes the probable choices of project members and also considers evaluation of more than one approach (Evans et al. 2016, p.152). It can help them to evaluate particular situation that can later be classified as per their involvement in the project.
The senior project members can apply this theory to acquire more than one decision out of which only one needs to be selected for effective management of risk and future businesses. It has been noticed that major corporations, employs decision theory to not only bring out specific issues in project but also arrive at possible consequences of risk. This could be stated as one of the possible mechanism to find alternate decisions without subjecting the project to any further risk. In order to mitigate risk from project stakeholders, it can be advised that contingency theory of risk management is applied within the structural framework of project. The planners of project can evaluate the corporate governance of an organization so that the strategic objectives can be achieved. The management of risk can be simplified by monitoring the contingent variables of a project that are external business environment, size of the company, strategy and technology to mitigate the risk.
It can be stated that departmental heads plays an important role in managing the risk and opportunities. The argumentative viewpoint of Bodnar et al. (2016, p.28) signifies the responsibility of departmental head or team leader that supervises the project initiation as well as implementation of elements that assists in project success. These particular members do not only create necessary guidelines for project success but also helps in devising future mitigation plan for risks. Since they are the primary influence on project stakeholders that are suppliers and team members, a responsible action plan can be prepared under their supervision.
The effective management of risks is particularly done through three approaches that can help in managing the risk as per the requirement of organization. The three steps which can allow risks to be managed is to identify, evaluate and control risk. These three stages of risk control can be considered influential for mitigating various types of risks that are pure risk, speculative risk, fundamental risk and peculiar risk. It has been highlighted by Taylor (2016, p.242) that pure risk is those risks that have higher chances of destructing or damaging the risk. Pure risk are generally considered to be occurs in specific situation that can disrupt the internal process of project.
However, speculative risk does not only result in probable possibility that occurs when there is diversification in business activity. It generally occurs from invariable exchange transaction in stocks and supplier negotiation. On the contrary, fundamental risk generally affects the project success that has already put negative element in initiation of a project. It has been argued by Cole, Giné and Vickery (2017, p.1962) that peculiar risk generally occurs during wrong decision of individual project members. It does not only halt the necessary action of project process but also requires further evaluation of risk for proper management of project. Here, comes the play of three stages of risk management. The fact that identification of risk is necessary to manage the approaches that needs to be taken for effective solution of risk. The firm involved in a particular project conducts identification of risk as a primary stage of risk management.
Influenced from the views of Qazi (2016, p.1188) it can be stated that identification of risk allows an organization or project head to find probable causes of risk that can have possible damage to the progress of project. The secondary stage in the concept of risk management is evaluative approach toward risk. The possible evaluation can be progressed by considering three states of risk that are possible loss, size of loss and probable assets that are at risk. This particular approach can be termed helpful for future mitigation plan as it can help senior managers to take appropriate decision based on past evaluation.
The last stage that assists in management of risk is through risk control process. The possible control of risk can be initiated by changing either the location or a particular activity that could promote the risk in a certain project. Another basic way suggested by Oliva (2016, 64) is to include risk retention plan that has major influence over financial risk to the project. This particular approach requires project heads to assume the probable risk and also conserve needed amount of financial approach that can help in mitigating the risk.
The measurement of risks involves team members to evaluate current as well as future risk that can have negative consequences over a project. The primary step to measure risk is to conduct critical identification of situational event that could have adverse possibilities for the project. It has been noticed by Choi, Chan and Yue (2017, p.1987) that identification of probable situation can help project members to consider the financial aspect of project and operational deficiency in project. The probable disruption from vendors and suppliers can undermine the possibility of project. The evaluative measurement of probable risk can be done through transferring the risk to stakeholders that are external to the project.
The counter argument by Paquin, Gauthier and Morin (2016, p.1466) suggests that issues in supply chain can be transferable to operational aspect of the project. The measurement of risk can be calculated through sheer observance of critical impact of risk and also assess the scope of project. This assessment does not only help in garnering the possible probability for managing and emphasis the risk based on their impact on particular situation. The mitigation of risk can be ascertained by considering the probability of causing negative effect over project schedule. The measurement of exposure of risk to calculate the possible impact can help the project to analyse whether the risks are high or low.
The measurement of risk also involves human involvement in the project as they are considered to be the primary stakeholder in the project. Any particular risk from project members can be considered a lowest probability of risk for project which needs to be managed at earliest way possible. However, Hillson and Murray-Webster (2017) signified that formation of contingency plan or strategy helps in proper evaluation of risk. The statement of scholar is significant because contingency plans are generally alternate possibility that put the risks under critical observation. It also influences the decision of project heads as counter contingency plan needs to be produced.
The possible examination of risk so that helps in calculating the probability of occurrence in the project is considered to be the ranking of risk. The ranking of risk can be taken up as possible recommendation that certain risk needs to be eliminated at the beginning of project so that they have higher occurrence probability. The ranking of risk needs to be properly analyzed and characterised so that possible scenario can be avoided and controlled. The best possible mechanism to rank risk is to conduct a risk matrix that can rank the risk as per their influence and probable impact on the project. Baybutt (2016, p.42) has verified the use of risk matrix mechanism that notes down the likely dangers of risk. This approach has classified the consequences of risks as catastrophic, negligible, critical and marginal.
Therefore, it suggests that Rank of a risk is calculated for both the probable consequence and probable impact. For consequence range, risks are ranked among 1-4 where as probability range considers certain to be the highest rank and rare as lower rank of risk. The catastrophic risk are said to be the most dangerous form of risk that does not only have highest chances of jeopardizing the project but also results in irreversible damage to the project. It also affects the efficiency of employees as they become unfocused in their approach for success in the project.
On the contrary Khatter and Malik (2018, p.72) stated that criticality of risks are ranked when there is higher chances of project rectification. These types of risks are not only reversible in nature but also responsible for temporary halt of project process. In comparison with critical and catastrophic risks, marginal risk highlights the use of activity that restore the process from it was left. The risks that are ranked in marginal section hardly affects the probability of risks and also results in temporary loss in project. One of the lower ranked risks are those that fall under the category of negligible. These types of risks do not break any rules and regulation but exposes the project for minor damage that can be considered as negligible. However, the probability of repetition in occurrence of risks are classified as certain -5, Likely- 4, Possible- 3, Unlikely- 2 and Rare- 1. (Refer to Appendix)
The concerned project that is in question is related with cost management of Artelia’s raw materials received from offshore region. The primary scope of the project is to reduce inbound cost from offshore partners so that it can be utilized to expand the business in other local regions of the country. The probable timeframe within which the project needs to be completed is divided into phases of project. It has been expected that the project might complete within a span of 1 month. This project is inclined towards providing a specified structure of materials along with their local cost so that project heads can evaluate on ways that can optimize the function of project. The statement of Taylor (2016, p.244) has suggested that project cost provides a brief guideline to manage the real time expense of the project.
The primary objective of Artelia’s project is to manage the resource cost that are supplied by offshore clients as well as update the project process. This project can be classified as complicated one as it involves proper evaluation of suppliers and vendors involved in the sourcing of raw materials from offshore clients. The capital aspect of project can be considered to be sourcing from private and mixed elements since it involves both private entities as well as mixed business entities of private and public. This particular project can be exposed to quality deficiency risk, supplier issue, insufficient span of completion time, errors in cost analysis and ineffective information source for evaluating the cost management project of imported raw materials.
The ranking of risks can help in determining the probability as well as the consequence of certain project (Bellini and Di Bernardino, 2017, p.502). Since catastrophic section includes project risks that can leave a permanent damage to the project, ineffective information source can permanently damage the success of project. Therefore, this particular risk can be ranked 4 in the negative consequence of the project.
However, Artelia maintains a proper database of their suppliers and offshore clients that put the risk under possible probability range. Thus, information risk can be ranked as 3 in the probability range of risk matrix. On the contrary, Oliva (2016, p.70) argued that quality deficiency risk is somewhat specified to critical aspect of risk. It can expose the project under lease amount of risk that cannot be subjected to negligence. Hence, the cost management project of Artelia can rank the quality deficiency risk under 2 in terms of consequence of the project.
However, the vulnerability of project is mainly inspired by the probability of risk in repetition format. Therefore, probability range of quality deficiency risks is very likely possibility for the risk to manifest which put it in rank 4. It does not only put the project under constant monitor and supervision so that probable quality can be maintained. The cost management project of Artelia has also considered delay in completion of project. This risk can have a critical consequence over the completion and success of project. This is the reason behind ranking this risk under rank 3 in the possible consequence over the project. It has also been suggested that delay in project evaluation is generally influenced by inactive members in the group. This suggests that risks in completion time can be ranked under 2 in the probability range as there are unlikely chances of probable occurrence of this risk.
Severity of risks
Quality deficiency risk
Insufficient time frame
Ineffective information source
Errors in cost analysis
Table 1: Risk matrix
(Source: Based on views of Oliva, 2016, p.70)
However, Baybutt (2016, p.44) stated that analysis of cost factor in the project needs to be properly conducted to minimize redundancy in the project. The statement of author can be utilized to suggest that error risk in cost analysis is very much inclined toward critical consequence in the project. Hence, this particular risk can be ranked as 3 under the consequence range and has higher chances of occurrence in the project. Since this type of risk is mostly depended upon the quality of project, it can be ranked 1 which falls in rare section of the probability of project. It is because the project members might be aware of their responsibility which makes it one of the rarest phenomenon in the project.
However, the supplier issue with Artelia’s authorities regarding the negotiation of resource cost can be put under negligible section in the consequence over project which falls in rank 1 category. This suggests that Artelia do not need to make influential approach toward supplier relationship. On the contrary, the probability of occurrence of supplier issue in the project is certain because of negotiation factor between Artelia and suppliers.
The primary recommendation that can be put to practical use by Artelia in reducing the risks of cost management project is to propose higher returns to suppliers. This can be implemented by negotiation for wholesale option that could lower the purchase cost for Artelia and also promises good return to probable suppliers of the company. Higher returns from Artelia’s business process can certainly influence suppliers to induct price range that are affordable for the company. It can be considered as specific recommendation because it can allow Artelia to reduce the resource cost as well as maintain a healthy relationship with probable suppliers of the project.
The suggested recommendation can also be considered as realistic as wholesale option could be used as influential element for managing the supplier relation. Another recommendation that can help in reducing risks in cost management project is to induct ICT mechanism with partners and suppliers of company. This could be considered as influential approach for automatic access to information that can be utilized for managing the business process with suppliers and nullifies the risks in sharing of information.
The identification of risk is particularly performed by conducting a thorough breakthrough of all the probable steps that is particularly being generated from inefficiency of project stakeholders. It also needs to include variant solutions that are generally being garnered from project members and also senior professionals. From the above mentioned sections, it can be concluded that risk matrix provides an evaluative approach for ranking and measuring the effects of research. The probability range of risks are marked as likely, unlikely rare, possible and certain. The possible identification of risk does not only help in locating the success and negative effects on the project.
Almeida, H., Hankins, K.W. and Williams, R., 2017. Risk management with supply contracts. The Review of Financial Studies, 30(12), pp.4179-4215.
Baybutt, P., (2016). Designing risk matrices to avoid risk ranking reversal errors. Process Safety Progress, 35(1), pp.41-46.
Bellini, F. and Di Bernardino, E., (2017). Risk management with expectiles. The European Journal of Finance, 23(6), pp.487-506.
Bodnar, G.M., Giambona, E., Graham, J.R. and Harvey, C.R., (2016). A view inside corporate risk management, pp. 22-44.
Choi, T.M., Chan, H.K. and Yue, X., (2017). Recent development in big data analytics for business operations and risk management. IEEE transactions on cybernetics, 47(1), pp.81-92.
Cole, S., Giné, X. and Vickery, J., (2017). How does risk management influence production decisions? Evidence from a field experiment. The Review of Financial Studies, 30(6), pp.1935-1970.
Evans, C., Fisher, J., Gourio, F. and Krane, S., (2016). Risk management for monetary policy near the zero lower bound. Brookings Papers on Economic Activity, 2015(1), pp.141-219.
Hillson, D. and Murray-Webster, R., (2017). Understanding and managing risk attitude. Routledge.
Khatter, K. and Malik, S., (2018). Ranking and Risk Factor Scheme for Malicious applications detection and Classifications. International Journal of Information System Modeling and Design (IJISMD), 9(3), pp.67-84.
Oliva, F.L., (2016). A maturity model for enterprise risk management. International Journal of Production Economics, 173, pp.66-79.
Paquin, J.P., Gauthier, C. and Morin, P.P., (2016). The downside risk of project portfolios: The impact of capital investment projects and the value of project efficiency and project risk management programmes. International Journal of Project Management, 34(8), pp.1460-1470.
Qazi, A., Quigley, J., Dickson, A. and Kirytopoulos, K., (2016). Project Complexity and Risk Management (ProCRiM): Towards modelling project complexity driven risk paths in construction projects. International Journal of Project Management, 34(7), pp.1183-1198.
Taylor, M., (2016). Risky ventures: financial inclusion, risk management and the uncertain rise of index-based insurance. In Risking Capitalism (pp. 237-266). Emerald Group Publishing Limited.
Tupa, J., Simota, J. and Steiner, F., (2017). Aspects of risk management implementation for Industry 4.0. Procedia Manufacturing, 11, pp.1223-1230.
Risk Matrix for ranking of risks
(Source: https://www.projectsmart.co.uk/ranking-risks-rare-to-certain-negligible-to- catastrophic.php)
PROJECT MANAGEMENT: ASSIGNMENT 2
This report sheds light on supplier relationship management techniques and issues that generally faced by Agora Greek Delicacies. In the report, a discussion over economic and other operational risks is provided along with proper mitigation approach to manage the risks. Certain business centric approaches for Agora Greek Delicacies have been justified for proper management of various risks involved with suppliers. This report has also evaluated Toyota-Japanese supplier issue and Grainer and Worrall payment issue so that proper mitigation of supplier issue with Agora Delicacies can be garnered. Furthermore, the report maximizes the practice of procurement process so that necessary product can be identified for Agora and financial risks are lessened. It required an evaluative approach toward the issues of supplier relation management which has also highlighted mitigation plans to minimize the risks.
Table of Contents
Management of economic and business risks
Issues in supplier relationship management
Evaluation of Similar cases
Critical discussion on management of a network (vendors and suppliers) through procurement function
The management of relationship with a third party provider is particularly influenced by supplier relationship management. It follows particular strategic approach to interact with the suppliers and form a progressive relationship that improves supplier as well as company’s performance in the market. In order to maintain business opportunity, it is best to avoid confrontation that could pressurize the relationship between buyer and supplier. Agora Greek Delicacies is one of the UK organizations that sources ingredients and food materials from Greece. Agora implies supplier relationship management to have a strategic plan against suppliers and also helps them in influencing the negotiation.
This report has highlighted the economic and other operational risk that company faces under supplier relation. The probable issues that affect SRM have been mentioned along with proper analysis of likewise cases. Furthermore, the report also conducts a critical discussion over the advantages of procurement function. It also highlighted the influence of procurement function in managing global network of suppliers and vendors.
The recurrent dangers of economic risk in the relation between Greek suppliers and senior members of Agora Greek Delicacies need to follow a tier based structure. It has been highlighted by Flynn and Davis (2016, p.560) that tier architecture of suppliers and vendors allows an organization to assess the supplier risk. In order to manage the economic risk, Agora Greek Delicacies does not only need to locate all the suppliers in proposed supplier tier but also map the directional route of sourcing of food materials. This particular approach can assist Agora Greek Delicacies to identify the supply chain that are managed and controlled by similar suppliers. The probable identification of supply chain can also empower Agora Greek Delicacies to monitor the financial capability in supply chain and also result in higher coordination between connected suppliers of the company.
However, Bakar et al. (2016, p.12) has argued that risks in relationship with foreign sources of resource material can be maintained via adherence to legislation mandated by that country. The necessary adherence to legislative guidelines does not only present a valuable communication ground with higher authorities but also verifies the supplier data. The probable verification of gathered supplier data can centralize the information of suppliers and also influences them to garner consistent sourcing of materials. Agora being of the highest revenue achiever in Greek delicacies of UK, proper information regarding profitability and liquidity information supplier needs to be prepared. It can help Agora to produce accurate financial information of supplier procurement situation so that probable changes can be rectified by the company.
It has been stressed by Rendon and Rendon (2015, p.712) that segmentation of foreign and domestic suppliers allows an organization to mitigate risk that covers finances, operational and marketing risk. The influential statement of author signifies that Agora Greek Delicacies consider the use of supplier relationship management as the primary model for mitigating any issues or risk from Greek suppliers. It also signifies that supplier relationship can improve by maximizing the probable value of material quality and better pricing structure of suppliers. This approach can be considered as advantageous method for Agora as it could be utilized as an influential aspect for structuring the purchase price as per the quality of product. It also stresses the company toward efficient contract management with suppliers in Greece.
Oghazi et al. (2016, p.4808) has supported innovation in contractual agreement with suppliers so that the procurement teams of an organization can streamline the process and eliminate risks. It can be stated that Agora needs to make a balanced contract that could highlight the requirements of suppliers along with possible pricing of the product. The operational risk of Agora also requires constant monitor and evaluation through which unwanted issues can be eliminated. It is considered as a fact that visibility of supplier’s financial status allows the company to handle recurrent changes in supplier demand and also influence voluntary submission of financial data.
These documents could be proved to be useful for managing the risks of Greece suppliers and also promote well balanced relationship with Agora Greek Delicacies in UK.
Since Greece falls under the legislative boundaries of Europe, Agora needs to update their business process according to the changes in company laws of specific EU country. It generally provides an influential ground for effective management of business but also result in higher recognition from competitors and foreign suppliers. It has been argued by Chae et al. (2017, p.152) legislation of a particular country are considered to be the primary element in influencing the relationship between suppliers and foreign buyers and vice-versa. This particular approach can allow Agora Greek Delicacies to quickly adapt to changes as per the situational demand. (Refer to Appendix)
The primary issue that restricts supplier relation management is to manage common business approach that could be aligned with strategic approach of foreign suppliers. Inspired from viewpoint of Lonsdale et al. (2016, p.292) it can be highlighted that noting down the practices of suppliers in advanced technology helps in eliminating inefficient relationship. Agora Delicacies have to apply modern technological system that can help them to draw the comparison and alignment with the requirements of supplier.
One of the most likely occurrences of disturbed supplier relation is particularly influenced by lack of common understanding between supplier and Agora Greek Delicacies. Poor communication flow does not allow Agora Delicacies to be consistent in their approach and also influences the collaboration with other supplier as well. The necessary information of resource material can be helpful for Agora validate their demand with suppliers and also make needed modification in their business approach. On the contrary, Tidy et al. (2016, p.3296) has argued that supplier relationship management needs to induct strategies that can allow companies to highlight the incompetence of non-performing suppliers. In order to have proper command over supplier relation, it is needed that issues should be notified to probable suppliers. This particular practice could allow Agora Greek Delicacies to not only mitigate but also supplier discrepancies but also result in inefficient approach of business.
In another context of supplier relationship, issues in contractual agreement need to be managed for effective business performance. Agora Greek Delicacies have to update their supplier contract on monthly basis that does not only influence the relation between Agora and suppliers from Greece. The contractual agreement should eliminate any further discrepancies that do not only settles the price issue but also manage the requirements of suppliers. The contrary statement of Pongsuwan (2016, p.52) signifies that procurement process of any organization needs to be well organized that can eliminate the complications in supplier relationship. In fact Agora Greek Delicacies should have to profitability issue of suppliers so that they the company can propose less price margin cap for higher consumer attraction.
On the contrary, it is noticed that sale system of suppliers inducts complicated process that tends to deteriorate the buying power of particular organization. Agora Greek Delicacies can face higher supplier issue from Greece that do not maintain and update their sale system for managing the relationship between suppliers and the company. It is needed by Agora to induct an automated system for recording the sales and finances of company. This particular approach can certainly help them to increase efficiency of organizational performance as well as induct specific activities that could manage the sourcing of food materials from Greece. Most of the companies work within the framework of traditional procurement system that primarily focuses on reduction of resource cost. However, it does not assist in acquiring consumer information and also require proper management of supplier documents. Other issues such as rapid acquisition of orders and designation of employees with specific supplier cannot be managed through traditional procurement system.
However, Ferdows et al. (2016, p.68) has argued that timely payment system between supplier and company often disrupted due to improper communication ground. The fact that Agora Delicacies are active primarily in UK, detailed invoices of purchased orders can be missed out from suppliers in Greece. As a result, Agora faces issues in timely delivery of their products that restricts timely payment of products. The suppliers of Agora can induct electronic sales invoice that could improves the efficiency of business as well as garner higher possibility of better relationship with the company. The implementation of advanced technology is a progressive step for influencing the SRM between Agora and suppliers from Greece.
However, it could increase the cost of Agora’s business. It is needed for Agora to hire efficient logistic analyst so that professionals can garner information for proper evaluation of supplier statistics. They can also help Agora to provide necessary tier structure that could locate suppliers as well as surface the issue that are managed by suppliers to deliver the product on every day basis. Apart from necessary information of supplier, the product location also needs to be showcase to purchasing organization. This particular practice could allow Agora to eliminate the delivery risk and also count the order of third party sources. It has been pointed by Stanczyk et al. (2015, p.162) that quality of supplied products and materials needs to be examined for packaging and smooth functioning of business process.
Agora needs to input proper qualitative information of supplier so that effective delivery of the product can be garnered. The appropriate quality of purchased product has to signify and consider third party sources that can help in delivering the satisfactory product. It is needed for Agora to hire efficient logistic analyst so that professionals can garner information for proper evaluation of supplier statistics. They can also help Agora to provide necessary tier structure that could locate suppliers as well as surface the issue that are managed by suppliers to deliver the product on every day basis.
The issues in supplier relationship management do not allow an organization to proceed with the general procedure of business process. For instance, Toyota had narrowed down supplier issue faced from Japanese counterpart of the company. It has been suggested by Toyota more than 15 % of suppliers belong to Japanese region. The primary issue faced by Toyota during the businesses with Japanese strategic vision is to manage the short term business activity of the company. The Research and development department of Toyota involves active support for Japanese suppliers as they have the most innovative capabilities. Hohenthal et al. (2015, p.188) has stated that identification of supplier capabilities can help in influencing the relationship between purchaser and suppliers. Toyota has mostly focused over the quality of car material which led Japanese suppliers to know the intricacies of their business relation.
It is also noticed that Toyota had to integrate every opinion of company operation so that any business gap can be fulfilled with probable supplier of the company. Taking the reference of Toyota case study, it can be suggested that Agora needs to prepare the KPI of their suppliers from Greece. This could allow Agora Greek Delicacies to not only measure the performance of suppliers but also align their activity as per the supplier information. Similar measure of Toyota can be inducted into Agora’s business relation with Greek suppliers. It can help them to not only influence but measure the financial responsibility with suppliers.
Another UK based engineering firm known as Grainer and Worrall have made ineffective approach toward the payment criteria of their suppliers. It has also been noted that Grainer and Worrall had a record of missing payment deadline by more than 90% of the instances (thisismoney.co.uk, 2018). Therefore the mentioned company had to modify their supplier approach through reviving some of the points in contractual agreement. It is being suggested by Hohenthal et al. (2015, p.188) that modification in contractual agreement does not only result in higher recognition from suppliers but also eliminate other potential risks.
The influential statement of author does not only allow proper changes in the organization but also make them valuable in front of other competitors. This also highlight that companies facing complexities in supply chain reduces the complexities of organization. It can also allow Agora Delicacies to make needed changes in purchased order during post production of items. The necessary changes in the contract between suppliers and Agora Delicacies can help the company to garner specific information that could allow them to not only influence but manage the business criteria as per the demands of supplier. It could allow Agora Delicacies to maintain their specific business approach as well as document the invoice from suppliers.
Procurement generally guarantees that all the necessary sourcing of materials from outbound suppliers and strategic requirements are known to the organization. The practical approach of procurement of good quality services is particularly managed by allowing the company to align their objectives with the activities of supplier management. Pongsuwan (2016, p.46) has said that procurement process generally involves the evaluation of contracts, process for acquisition of goods and also make competitive bidding of companies. It does not only help in realizing the scarcity in purchasing decision of company but also make sure that every competition in business has been explored to garner perfect delivery and quality of the product.
The procurement process manages vendors and suppliers by ensuring proper mitigation of risk in business as well as perfect delivery of the product. The strategic partnership with Greece based suppliers needs to inculcate either centralization or decentralization facility. The probability to evaluate the functional input of suppliers and vendors results in adapting to the changes brought by the business environment of suppliers. Agora Delicacies could perfectly manage the operational efficiency and delivery of the product. The procurement function generally involves effective responsibility of the business as well as providing functional guidance to the organization.
The global expansion of Agora’s business can only be influenced when there is active involvement of third party sources and advanced technology for collecting information of supplier. The procurement function involves garnering market knowledge regarding the services and products provided by the company (Nazari-Shirkouhi et al. 2015, p.194). This particular step could help Agora Delicacies to achieve proper analysis of customer requirement. It can be utilized by the company to order items that can be easily used to influence the supplier relation management. The demand of customers is also put into agile methods that could help in influencing the participants of the process.
The negotiation with suppliers is considered to be the primary advantage of procurement as it allows an organization to not only control the sales aspect of company but also result in better customer value (Mitrega and Pfajfar, 2015, p.200). Therefore, the statement of author certainly put special relevance to supplier and business relation. It can be utilized by Agora Delicacies to manage the redundancy in acquisition of supplier information for proper mitigation of vendor and supply issue. The necessary synchronization between all the other function such as management of inventory, logistics and production are put into automotive process. This process can certainly help Agora Delicacies to mainly induct responsible suppliers that understand the business process of the organization. It also empowers companies to achieve major monetary advantage and recognition from customer.
The induction of proper procurement strategy could allow Agora Delicacies to influence suppliers through compliance issues and reputational losses resulted from in effective delivery and business process of Greece suppliers. The probability to evaluate the functional input of suppliers and vendors results in adapting to the changes brought by the business environment of suppliers. This particular possibility can certainly have positive influence over offshore suppliers of the company. The statement of Rhodes et al. (2016, p.74) suggests that procurement involves segmentation of suppliers that does not only result in proper selection of appropriate suppliers. The specification of business is initiated to not only manage the requirements of business but also result in better evaluation of supplier demand.
From the aforementioned sections, it can be concluded that Agora Delicacies suffers from supplier issue such as inconsistent communication ground with Greece based supplier. In order to mitigate any issue with suppliers, it is required by companies to follow legislation of foreign country so that proper management of economic risks can be initiated. The factual information over supplier location and their demand could allow Agora Greek Delicacies to implement needed procurement approach for management of company operation.
The conclusion can also state that procurement process helps in garnering needed services or products that can be utilized to achieve the operational and financial objective of the company. It could also help in getting appropriate suppliers that maintains the procedural business process of the company as well as determine the products that can be considered affordable by primary consumer of the company. Agora Delicacies needs to generate proper communication and information sharing platform that can help in influencing larger market region along with satisfied customer base of the company.
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Supplier Relation Management steps
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