IB- Supply Chain Management
1. Practical phenomenon
Purchasing function is getting more and more important and this position is more or less cross-function job. For big organization, however, the trend of purchasing function is centralized or central-led, which means headquarter performs as central purchaser. In this business cycle, agencies perform as important entities. For example, Macintosh (www.macintosh.nl) group is facing the problem of changing the organization. During a few years development, its subsidiaries purchase products from different channels as directly from Great China, from European agency (economical scale and designing advantage), from EU countries, and from Eastern European Union. The process is time consuming and very expensive, and more seriously, all the subsidiaries perform different purchasing standard and process.
To deal with the problems, organizations have to face a lot of problems: • How and when to purchase
• Subsidiary job definition
• Bargaining power
• Cost reduction
• And so on
Moreover, the risks change during the purchasing organization transform from decentralized one to centralized one. The risks lead the purchasing organizations to extremely uncertainty.
2. Literature review
Through a review of former literatures, it is hard to find previous researchers achievements in the field of risks in purchasing organization change. During the research of other related areas, the author found that some articles mentioned risks, change management, purchasing organizational structure and case studies in the shoe business. Villers Raymond mentioned some risks and control method in the structures of decentralized structure and centralized system. Juha et al 2008 and Leopoulos et al gave us some information of managing risks in organizational purchasing and buying processes. To control the transforming process, Mclvor et al 2000 provided how to measure and perform purchasing organizational change. Furthermore, it is necessary to pursue some other techniques. For example, Lisa M. Ellram mentioned how to manage warehousing in deferent situations. The decentralized warehousing strategy owns high risk of overstock; the centralized warehousing strategy, on the other side, shares the high risk of defect product cause of brand misstandard. Previous researchers did not give sufficient suggestions of how to avoid the problem.
3. Problem statement
During the authors’ initial research, he found out the basic research question as following: What risks change when companies are transforming their purchasing organization structure in the shoe business?
To solve the research question, the author came up with following sub-questions: • What are the major risks of decentralized and centralized purchasing organization in shoe business? • What will be the procedure of changing in purchasing process? • What are the subsidiaries’ tasks?
During my research, I would like to investigate which risks are involved into the purchasing organizational change, what the procedures of changing, and how to control and limit the uncertainties. The risks could be mentioned, for example, as cost reduction, more effective, and higher TCO. In my case, however, I should focus my study on shoe business. These risks control processes could help other shoe companies or other shoe department in companies.
Except for the practical contributions, I would also perform theoretical contributions to future research in purchasing organizational change risks in other fashion businesses. The purchasing organizational structure is another theoretical contribution for future research. Furthermore, this research would also contribute to the theory by bridging the gap which previous literatures scarcely investigated. Specifically, this research would focus on the question of what the risks are and how to manage the risks in different purchasing organization structure. Additionally,...
References: Franco Caron et al (JOURNALOF BUSINESS LOGISTICS. Vol.17. No.l. 1996)
Chandrasekhar Das and Rajesh Tyagi (JOURNALOF BUSINESS LOGISTICS, Vol.20,No
Lisa M. Ellram (International Journal of Physical Distribution & Logistics Management, Vol. 25 No. 8, 1995, pp. 4-23.)
Roger Mansfield (Bureaucracy and Centralization: An Examination of Organizational Structure)
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