Week 4: Relationship Between Operations/Project Management and Purchasing and Supply Management

QUESTION

Week 4: Relationship Between Operations/Project Management and Purchasing and Supply Management

Based on your experience or readings, discuss the interaction between Purchasing and Supply Management and the operational groups in a manufacturing or service organization – in particular product design, quality management, forecasting/planning, project management, and inventory control. To what extent does Purchasing and Supply Management participate in the use of Manufacturers Resource Planning (MRP II) or Enterprise Resource Planning (ERP) in the private sector? What is the role of Purchasing and Supply Management in the development of supply chain strategy for a manufacturing organization?

NOTE: Your response should include comments and/or observations relative to each of the items associated with this week’s discussion topic. You can divide your response into paragraphs – one each for each item. Moreover, your initial response should address each of these items. Subsequent responses can constitute a commentary on your classmates’ comments/observations on any one or all items. Although no specific length or size of each item is required, your response to each item should focus on the salient points or key aspects corresponding to the nature of each item. Activity: Review outside and supplemental readings

ANSWER

Project Management’s Relationship with Purchasing and Supply Management

How Project Management Affects Purchasing and Supply Management

Project management can be explained as the art of applying certain techniques and business knowledge in planning, controlling and carrying out the work of a business team, to achieve set targets and goals over a set period. It affects purchasing and supply management departments in various ways. The primary functions of a purchasing and supply management department include outsourcing of activities such as product assembly and manufacture, decisions on whether to deal with a local or global supply chain, rationalization of suppliers, programmes that will reduce costs of supply, lead time reduction programmes, and technology deployment at a firm (Monczka, Handfield, Giunipero, Patterson, 2015). These functions are influenced by the operations of project management in that they all require very complex management of the resources availed to achieve a set objective within the fixed period.

One of project management department’s roles is scheduling and planning. This function mostly involves the institution and maintenance of accurate and precise delivery schedules, while considering the resources available and the project dependencies. These operations affect purchasing and supply management directly, as the resources required and how to acquire them is a purchases and supply management department role. Risk management is a function of both the project management team, who assess risks that may arise during the execution of a project or business so as to minimise the chances of their occurrence and prevent schedule overrun, and the purchasing and supply management team, who seek to formulate a sound risk management plan that will minimise cost and generally guarantee the smooth continuity of supply (Fredendall, Hill, 2016).

Ensuring that only quality systems are implemented in a project is a vital function of project management teams. Purchasing and supply management teams collectively carry out this task with their project management colleagues, to ensure that all goods and services are procured through a quality system, to minimise costs, to ensure that the products are in a condition that will be fit for their intended use and ensure that they meet the business need (Ellram, Cooper, 2014).

MRP II is a method for proper planning of a firm’s resources, and comprises a simulated way of answering a firm’s ‘what-if’ problems (Lambert, Calvasina, Bee, 2014), while ERP is a method of managing major business processes using a real-time software. During the incorporation of these management systems, the purchasing and supply management team must be involved, as some of their operations, such as stores and requisitions of materials by various departments, will require the use of ERP and sometimes even the MRP II systems. The two management systems are mainly tasked with the proper usage and allocation of a manufacturer’s resources and goods, which is primarily a purchasing and supply management department’s role.

The functions of a purchasing and supply management team in an organization, majorly involving proper supply and procurement chain strategy development and its implementation through the consideration of factors such as procurement costs, whether to transact locally or internationally, proper tendering of suppliers, and product transport costs, are, therefore, intertwined with those of the project management team. Teamwork and fostering a good relationship between the two departments will, therefore, make business decision-making easier and quicker.

References

Monczka, R. M., Handfield, R. B., Giunipero, L. C., & Patterson, J. L. (2015). Purchasing and supply chain management. Cengage Learning.

Fredendall, L. D., & Hill, E. (2016). Basics of supply chain management. CRC Press.

Ellram, L. M., & Cooper, M. C. (2014). Supply chain management: It’s all about the journey, not the destination. Journal of Supply Chain Management, 50(1), 8-20.

Lambert, S. L., Calvasina, R., & Bee, S. (2014). Assembly FG: An educational case on MRP II and ERP.