The Importance of Procurement for Global Organizations Operating in Complex Market Environments Essay

Here, we shall be looking at The Importance of Procurement for Global Organizations Operating in Complex Market Environments. In addition to this, we shall be providing all the necessary information related to the topic. Reason being that it quite an important topic for students of management.

Moving on, we shall be dividing the sample essay into different sections. This will help readers understand the essay clearer and better. Moving on, we shall be starting our discussion by looking at the definition of global procurement. As it is important to understand before moving to more advanced concepts.

What is global procurement?

The term “Global Procurement” is used to denote the process that enables organizations from across the world to buy goods or services from different locations. In addition to this, it also includes acquiring work from external sources often through competitive biding and tending. Moreover, this concept has become widely popular lately. The reason being that cost of shipping and transportation decreased dramatically.

Furthermore, a large organization’s globalization allows them to avail benefits of cheaper labor and lesser material costs while maintaining the standard quality of product and services. Thus, we can say that these are three main advantages of global procurement. Namely: Lower cost, stimulating global economies, as well as an increasing consumer base.

Nevertheless, we shall be discussing the Importance of the same in the next section of the sample essay. Thus, without further adieu:

Importance of procurement of global organization

Procurement is quite an important aspect of business and even more so if an organization is multinational or global. Procurement in a global environment holds great strategic importance.  Like we read before, this concept offers a great many advantages. One of which is cheaper labor and material cost. For the same reason, it holds importance for global organizations. Because it allows big corporates to decrease the cost of raw material and production while maintaining the same quality standards.

Moreover, It also significantly after global supply chain management for obvious reasons. Regardless, brands also use this concept to increase their customer base which in turn increases profit channels. Moving on, we shall be looking at the process of procurement at the global level in the next section of the sample essay.

Process of procurement at international level

In this section of the sample essay, we shall be looking at the procurement process or rather an international process. Above we discussed the “What” of the concept, here we shall be answered, “How”. Because again the whole concept revolves around this concept.

Nevertheless, this process consists of several steps. We shall be looking at these steps. Thus, these are, as following:

1. Carrying out an internal analysis
2. Assessing supplier’s market
3. Collecting information related to suppliers
4. Developing sourcing or out-sourcing strategy
5. Applying the strategy developed in the previous step
6. Conducting negotiation and selecting the winning bid.
7.  A transition plan is implemented

Challenges of global procurement

Even though procurement’s benefits out ways its shortcoming, there are several challenges involved as well. Here, we shall be looking at these challenges to global procurement. Thus, without further adieu:

• Risk mitigation
• Dark purchasing
• Long process cycles
• Inaccurate data
• Problems related to suppliers

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