The transformation of purchasing in New Zealand

Abstract

This project discusses supply chain management, paying particular attention to the purchasing function with the chain. It explores the professionalisation in purchasing specifically concentrating n its presence in the New Zealand business environment Initially, SCM is described in general terms to provide a context within which the development of purchasing can be analysed as a concept. SCM refers to many interrelating parts that span inter and intra-organisational functional borders it involves informational, material and integrative flows between supply and demand. The role of purchasing has developed in recent years from purely a buying based, clerical activity, to a strategic function involved in organisational decision making. This transformation was initiated by the recognition that efficiency in purchasing can provide a competitive advantage in the corporate environment. Distinctive features of a strategic purchasing function include the ability to make decisions on a strategic level, the existence of its own department and positive relationship with a smaller set of suppliers. One of the ways that strategic purchasing manifests itself is through the use of strategic outsourcing. Originally, organisations manufactured most materials inhouse, whether they were part of its developed core competency or not. As greater confidence in outsourcing non-core production developed the strategic use of global sourcing to gain competitive advantage became more popular. Global sourcing is used in this project to illustrate some of the strategic benefits of outsourcing. The concept of professionalisation is also investigated. What professionalisation entails, and the steps an occupation must go through in order to achieve 'professional' status are discussed. These factors include: a common mode of education, a code of ethics, and the establishment of a regulatory body, which often takes on the responsibility of performing licensing functions dictating who can and cannot belong to the profession. It is concluded that an occupation pursues professionalisation to increase their autonomy within the workplace and to increase recognition and status in the wider societal context. Section 2 discusses the methodology utilised by this project. It describes how the survey on purchasing and professionalisation was constructed and how after distribution to one hundred members of the New Zealand Institute of Purchasing and Materials Management (NZIPMM), it yielded an exceptional 53% response rate. Section 3 compares the empirical data collated from the survey results with the opinions of the literature. The findings show that although the NZIPMM membership believe they practice purchasing strategically, blocks are set in place at the organisation level are preventing it from reaching its full potential. Barriers to decision making and information access, and the discriminatory preconceptions of other top management functions can limit the strategic development of purchasing. The survey results reveal a resounding number of NZIPMM's members view purchasing as a 'profession'. However, the conspicuous lack common code of ethics and effective legislative body, prove that purchasing is in fact far from reaching professional status. The recommendations in Section 5 connect the threads of purchasing and personalisation to suggest avenues of future activity for the NZIPMM. The recommendations to the NZIPMM are as follows: 1. Actively endorse strategic purchasing through increasingly the public image of the NZIPMM. 2. Increase the frequency and depth of educational courses in this field, and seek to form an exclusive relationship with a tertiary provider. 3. Seek confirmation and legislative endorsement of their position as an authoritative body in the purchasing field.