It is important and preferable to separate need identification and definition of commercial equivalents. This is because firms such Abu Dhabi Sewerage Services spend a lot of money on purchasing and this may be in vain if the two phases are combined. It was opined by Arjan and Weele (2010) that management of any organization is always concerned with value preposition for particular needs.
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As for such, it is important to detach need identification (recognition) and definition of commercial equivalents. Besides, according to Schmidt and Dobler (2002), need identification assist suppliers in knowing the exact needs of their consumers (p. 64).
On the other hand, separating the two stages is beneficial since it assists in selecting cost-effective commercial equivalent for the identified consumer need. As well, it was believed by Arjan and Weele (2010) that separating the two stages helps to economically quantify the price, quality and quantity of a particular need.
For that case, Johnson, Leenders and Flynn (2010) went ahead to give the example of a consumer who combined these two stages by telling a supply professional that he needed a nail to nail two pieces of wood. By doing so, the consumer may have come up with an expensive option.
For this scenario, it would have been preferable if the consumer would have stated the need and left the supplier to define various commercial equivalents. The equivalents would have included use of staples, screw or bolts, glue among others. This separation would have helped the supplier to settle on the most cost-effective and innovative option.
Furthermore, Arjan and Weele (2010) went ahead to insist that the separation of the two stages helped to define needs as either strategic or non-strategic. This helped in their prioritization.
Tellingly, need identification is an essential stage of supply management. During this stage, the sales professional takes prospective suppliers through question and answer session in an effort to determine requirements and their commercial equivalents. During the session, the sales person identifies the ‘gap’ which is clarified to help come up with the best solution to address it.
Early supply or supplier is important in the acquisition process because it helps in the attainment of value improvement. Borrowing from Michiel and Fraser (2000), the author established that an organization is supposed to benefit early from its investments. This consequently means that it is relatively important that supplier’s involvement and early supply of the acquisitions should be encouraged.
This helps in avoiding the hassles related to the threats of reversing decisions that have already been technically approved (Johnson, Leenders and Flynn, 2010). In addition, it was opined by Michiel and Fraser (2000) that early supply in the acquisition process is important since it helps in assuring that the specified items are procurable.
Moreover, it was also postulated by Arjan and Weele (2010) that early supply is vital since it helps to carry out value analysis of the supplied goods or services. As a result, early prediction of whether the investment can be economically viable can be determined in the initial stages of the project.
Importantly, it was noted by Arjan and Weele (2010) that early supply and supplier involvement is instrumental in setting up the required management functions.
For instance, staffing is able to be done early in preparation for the project implementation (Johnson, Leenders and Flynn (2010). The above reasoning was upheld by Arjan and Weele who acknowledged that early supply assists in forming teams that are responsible for the management of the project.
Specifying by performance has various advantages and disadvantages. Starting with the advantages, Michiel and Fraser (2000) concluded that it helped in attaining the demands and building confidence amongst customers and stakeholders.
These were vital in reducing risks hence assuring delivery, fairness and standards in the entire process. For example, according to Harding and Harding (2001), it was believed that specifying by performance helps to reduce variation which guarantees standardization of processes (p.106).
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Additionally, another importance of specifying by performance is that it assists a supply professional to describe what is required so as to be sure on what is wanted. As a result, the supply department is able to check the descriptions provided thus not being able to alter or change the descriptions. Therefore, this assures that the deliverables are those that help in achieving the desired value improvement.
On the disadvantages, it was noted by Michiel and Fraser (2000) that specifying by performance may lead to discouragement. This is common if the process is not pleasant to the stakeholders involved. As a result, it leads to loss of potential clients for the supply professionals.
Moreover, it was also noted by Michiel and Fraser that specifying by performance may be disadvantageous when it has biases. Biases occur when a structured process is used thus creating a common tendency where biased procedures will be heavily used in the whole specification process.
On the other hand, there are various ways a supply professional will use to know if a certain requirement is strategic or not. To begin, Arjan and Weele (2010) said that a supply professional will be able to know this given the amount that the customer is willing to spent on a given requirement.
As such, it is believed that an organization will only spent more on a requirement that is strategic in its business operations. A requirement that is not strategic will receive less consideration. As such, an organization will be unwilling to spend more on a non-strategic requirement.
Furthermore, a supplier will know that a certain requirement is strategic if it is intended to reduce risks associated with the client’s organization (Johnson, Leenders and Flynn, 2010). Usually, all organizations including Abu Dhabi Sewerage Services are exposed to various types of risks which pose various threats to their business operations. As a result, any requirement that is required to curb these risks is taken to be strategic.
Moreover, it was also opined by Johnson, Leenders and Flynn (2010) that a supply professional is able to know whether a given requirement is strategic if it is desired to help in accessing new technology, venturing into new markets, enhancing revenue, providing competitive benefits and improving corporate image.
To wind up, it was also postulated by Michiel and Fraser (2000) that a supply professional’s creativity and his focus on the future is likely to help him or her in identifying whether a given requirement is strategic.
In addition, it was believed by Gopalakrishnan (2005) that the supply manager is supposed to think strategically as a corporate leader and not as an operational leader. For that case, it was affirmed by Arjan and Weele (2010) that a supply professional should be critical enough to be able to categorize these requirements in the acquisition process.
Arjan, J., & Weele, V. (2010). Purchasing and supply chain management: Analysis, Strategic, Planning and Practice. UK: Cengage Learning.
Gopalakrishnan, P. (2005). Handbook of material management. New Delhi: Prentice-Hall.
Harding, M., & Harding, M.L. (2001). Purchasing. US: Barrin’s Educational Series, Inc.
Johnson, P. F., Leenders, M.R., & Flynn, A.E. (2010). Purchasing and supply management (14th ed.). US: McGraw-Hill.
Michiel, R. L., & Fraser, J. (2000). Major structural changes in supply organizations: Center for advanced purchasing studies. New York: McGraw Hill.
Schmidt, I., & Dobler, T.(2002). E-Commerce: A platform for integrated marketing; case study on U.S. retailing. London: Transaction Publishers.