AN EVALUATION OF THE SUPPLY CHAIN RISKS IN PROCURE-TO-PAY PRACTICES IN PRIVATE SECTOR

Kenneth Ikpeme 120 PAGES (26465 WORDS) Dissertation
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Abstract

The later part of the twentieth century recognized that procurement function can strategically position firms and are unceasingly utilizing its developing role. There are outstanding indications in most markets that cost is the order winning criterion and there are also many other markets that form their winning criteria through on-time and ethical supply for goods and services. Surprisingly, procurement function not only ensure the need to supply timely or ethically but also to continuously manage supplier relationship while contributing uniquely to total operational cost reduction through strategic procure-to-pay practices. However, supply chain risks have continued to cause disruptions to supply flow and, in some cases, damaged organizations’ reputation. To mitigate the negative impacts of risks, organizations insert efforts to prevent occurrence of underlying uncertainties. It is reassuring however, that the identification and implementation of best supply chain risk management strategies may apply to leverage efficient effective procure-to-pay operations, leading to world-class performance in private sector organizations. Hence, this research conducted an exploratory and descriptive study of literature to give adequate understandings of the study area and uses a qualitative approach for a cross-sectional analysis of primary data. The findings of this paper present an overview of the current application of supply chain risk management approach in the case study organization. The evaluation of these risks against the classification criteria was an unexpected discovery but gives a clearer approach to risk management in procure-to-pay practices for private sector firms. Additionally, a comprehensive supplier engagement conditions, good negotiation, strategic integration and collaboration as well as technological utilization will contribute to address supply chain risks in procure-to-pay practices. Further research possibilities lie in risk evaluation for the entire operations in private sector firms and/or multi-organizational supply chain risk evaluation. 

Table of content

1 Introduction chapter. 0

1.1 Background of the study. 1

1.2 Aim of Research. 3

1.3 Research objectives. 3

1.4 Main Research Question. 3

1.5 Synopsis of Area of Literature. 3

1.6 Synopsis of Methods of Research design. 4

1.7 Research Plan. 5

1.8 Summary of Chapters. 6

2 Literature review.. 7

2.1 Supply Chain. 7

2.1.1 Supply Chain Actors and Channel Relationships. 9

2.2 Supply Chain Management 10

2.3 Procurement and the Supply Chain. 14

2.3.1 Procurement scope and strategy. 17

2.3.2 Procurement spend analysis for private sector organization. 22

2.3.3 Procurement and Procure-to-pay Process in stages. 26

2.3.4 The pre-contract stage. 28

2.3.5 The contract or Outsourcing stage. 33

2.4 Integration for procurement success and post contract stage. 34

2.5 Information Technology for Integrative Procurement 41

2.6 Purchasing and logistical operation. 47

2.7 Supplier relationship and contract management reviews. 48

2.8 Risk and Procurement 55

2.8.1 Risk Management in Procure-to-pay practice. 55

2.9 Evaluation of literature chapter 59

3 Synopsis of the methods of research designs. 62

3.1 Research design. 62

3.2 Research approach. 62

3.3 Method choices. 64

3.4 Data collection process. 66

3.4.1 Sampling style. 67

3.4.2 Sampling frame. 68

3.5 Time horizon. 68

3.6 Data analysis process. 69

3.7 Study authentication. 70

3.7.1 Reliability. 71

3.7.2 Validity. 72

3.7.3 Limitations to reliability and validity. 72

4 Analysis for research data. 74

4.1 Case study overview.. 74

4.2 Diageo procurement structure. 74

4.2.1 Diageo procurement strategy. 78

4.2.2 Diageo’s core vendor selection conditions. 81

4.3 Diagio supply chain risks management approach. 83

4.4 Supply chain risk evaluation in diageo procure-to-pay practices. 84

4.4.1 Findings on risk assessment 86

5 Evaluation, Conclusion and Recommendations. 96

5.1 Evaluation of thesis. 96

5.2 Conclusions and recommendations on the study. 97

5.2.1 Theoretical contribution. 97

5.2.2 Managerial contribution. 98

5.3 Further research opportunities. 98

List of references. 100

Appendix 1 Pre-interview induction format for risk evaluation………………………………………….123

List of tables

Table 1. 1 Research Calendar 5

Table 2. 1 IT procurement spend assessment for TCO…………………………………..…………………………………25

Table 2. 2: Risks control measures. 58

Table 3. 1: Source of reasons for method choice………………………..……………………………………………………66

Table 4. 1 Diageo zones and responsibility(s) ………………………..………………………………………………………..74

Table 4. 2 Diageo Purchasing category. 80

Table 4. 3 Business Integrity and Ethical Standards. 81

Table 4. 4 Human Rights and Labour Standards. 82

Table 4. 5 Health and Safety standards. 82

Table 4. 6 Environmental Impacts. 82

Table 4. 7 Sustainable Agricultural Supply Chain. 83

Table 4. 8 Financial risks results. 87

Table 4. 9 Strategic risks results. 88

Table 4. 10 Operational risks results. 90

Table 4. 11 Hazard risks results. 91

Table 4. 12 Procure-to-pay risk deductive index

List of figures

Figure 2. 1 An illustration of company’s supply chain.  Source. 8

Figure 2. 2 Supply chain network structure and channel relationship. 10

Figure 2. 3 Information & product flows in supply chain management 12

Figure 2. 4 Stages of a Detergent Supply Chain. 13

Figure 2. 5 Procurement aided: Dell’s direct delivery/installation for client. 14

Figure 2. 6 The scope of procurement function. 18

Figure 2. 7 Estimated procurement spend for private sector organizations. 23

Figure 2. 8 Procure spend breakdown. 24

Figure 2. 9 Procurement and procure-to-pay process. 27

Figure 2. 10 Procure-to-pay generic high level map. 28

Figure 2. 11 Pre-procurement activities. 29

Figure 2. 12 Key sourcing related process. 32

Figure 2. 13 The contract and outsourcing requirement web. 33

Figure 2. 14 Drivers of trusting relationship. 35

Figure 2. 15 Three Sources of Inter-organizational Competitive Advantage. 36

Figure 2. 16 The phases of negotiation-multiple meetings. 37

Figure 2. 17 Ranges of possibility in procurement negotiation. 38

Figure 2. 18 Order processing without EDI. 42

Figure 2. 19 Order processing with EDI. 42

Figure 2. 20 Technology leveraging world class procurement performance. 43

Figure 2. 21 Buyer’s catalogue operation. 44

Figure 2. 22 Conceptual model of strategic procurement technology planning & integration. 46

Figure 2. 23 Portray of Procurement success and defects. 47

Figure 2. 24 Models of supplier relationships. 49

Figure 2. 25 Suppliers relationship by levels and peculiarity. 50

Figure 2. 26 A comparison of before and after the supply re-engineering. 52

Figure 2. 27 Unlocking sourcing value. 53

Figure 2. 28 Reference model 56

Figure 2. 29 Risk Management Cycle. 57

Figure 2. 30 Model for assessing Procure-to-pay practice. 61

Figure 3. 1 Research choices…………………………………………………………………64

Figure 3. 2 Figure 3.2: Sampling frame in relation to population and sample. 68

 Figure 4. 1 Diageo procurement organizational structure………...…………………………76

Figure 4. 2 Diageo’s Aims & Objectives for efficient delivery process. 77

Figure 4. 3 Self-billing procedure designed and adopted by Diageo. 80

Figure 4. 4 Diageo’s Partnership Standard areas. 81

Figure 4. 5 Best cases of procure-to-pay risk management approach. 94

Figure 4. 6 Model for extensive procurement uncertainty management key reference. 95

 

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APA

Kenneth, I (2019). AN EVALUATION OF THE SUPPLY CHAIN RISKS IN PROCURE-TO-PAY PRACTICES IN PRIVATE SECTOR. Afribary.com: Retrieved June 16, 2019, from https://afribary.com/works/msc-dissertation-final-copy

MLA 8th

Ikpeme, Kenneth. "AN EVALUATION OF THE SUPPLY CHAIN RISKS IN PROCURE-TO-PAY PRACTICES IN PRIVATE SECTOR" Afribary.com. Afribary.com, 01 Mar. 2019, https://afribary.com/works/msc-dissertation-final-copy . Accessed 16 Jun. 2019.

MLA7

Ikpeme, Kenneth. "AN EVALUATION OF THE SUPPLY CHAIN RISKS IN PROCURE-TO-PAY PRACTICES IN PRIVATE SECTOR". Afribary.com, Afribary.com, 01 Mar. 2019. Web. 16 Jun. 2019. < https://afribary.com/works/msc-dissertation-final-copy >.

Chicago

Ikpeme, Kenneth. "AN EVALUATION OF THE SUPPLY CHAIN RISKS IN PROCURE-TO-PAY PRACTICES IN PRIVATE SECTOR" Afribary.com (2019). Accessed June 16, 2019. https://afribary.com/works/msc-dissertation-final-copy