Value chain management (VCM) is more than a theory. It is a strategic business approach that is helping a growing number of businesses increase their long-term competitiveness. It would be extremely difficult to achieve such competitiveness by operating as an individual business within fragmented value chain. The primary purpose of this research is to address procurement and value chain impact on organizational performance. The project provides an informed, objective perspective on VCM by demonstrating how value chains and procurement operate at the business level rather than the sector or sub-sector level.
Major changes are currently taking place within procurement functions of manufacturing firms. Procurement is shifting its focus from daily purchasing activities to long term, value-adding procurement and supply chain activities. At the same time, it is responding to the challenges and opportunities of electronic procurement (e- procurement), which refers to the utilization of the internet to buy and sell products and services. The responsibilities of procurement have changed over the last few decades, procurement focused heavily on the transactional elements of the purchasing process. Procurement was accepted as a support function that provides for the sourcing needs of other departments within the organisation
Table of Contents
- Abstract
- Background of the Study
- Literature Review
- Procurement Cycle in Ghana
- Measuring Procurement Effectiveness
Objectives and Key Themes
This research aims to investigate the impact of procurement and value chain management on organizational performance, specifically within the context of the Electricity Company of Ghana Limited (ECG). It provides a business-level perspective on value chain management (VCM) and procurement, demonstrating their practical application rather than focusing on sector-wide analysis.
- The role of procurement in achieving organizational goals.
- The impact of value chain management on organizational competitiveness.
- The evolution of procurement functions from transactional to strategic activities.
- Effective procurement management techniques and their measurement.
- The application of VCM principles within the ECG.
Chapter Summaries
Abstract: This research explores the impact of procurement and value chain management (VCM) on organizational performance, using the Electricity Company of Ghana Limited as a case study. It emphasizes the shift in procurement from transactional activities to strategic, value-adding roles within the broader supply chain, highlighting the importance of VCM for long-term competitiveness. The study aims to provide a practical, business-level understanding of how value chains and procurement function.
Background of the Study: This section sets the stage by discussing the challenges faced by organizations in expanding their global market share while defending domestic markets. It highlights the strategic importance of inventory positioning and the evolution of purchasing functions from mass production philosophies to strategic supply chain management aligned with overall corporate strategy. The increasing reliance on outsourcing and supplier capabilities underscores the vital role of effective procurement in achieving competitive advantage.
Literature Review: This chapter reviews existing literature on procurement, differentiating between strategic and operational tasks. It examines various definitions and aspects of procurement management, including the importance of effective procurement for efficient organizational functioning and the complexities involved in public procurement. The review encompasses perspectives on managing procurement effectively, including aspects of contract management, dispute resolution, and the institutionalization of procurement reform within government frameworks. It also touches upon the challenges in international procurement operations and the importance of attention to detail throughout the procurement cycle to avoid failures.
Procurement Cycle in Ghana: This section details the procurement cycle in Ghana as defined by the Public Procurement Act, 2007, illustrating the stages from planning and sourcing to contracting, management, storage, distribution, and evaluation. Each stage is described in detail, emphasizing the activities involved at each step and the need for a structured approach to monitoring and evaluation. The illustration uses a visual representation (Figure 1) to clarify the cyclical nature of the procurement process.
Measuring Procurement Effectiveness: This chapter explores how procurement effectiveness can be measured, focusing on three key factors: the impact on an organization's economic performance, the effectiveness of supplier relationship management, and the alignment of procurement with the organization's corporate strategy. The text discusses the monetary value of procurement, cost-saving opportunities, and the effects on turnover, profit, efficiency, and overall organizational equity. It emphasizes the importance of supplier relationships in achieving competitive advantage and highlights the influence of procurement on various aspects of organizational performance, including aspects of delivery times and resource optimization. It also delves into cost-efficiency and capital release, illustrating how effective procurement strategies lead to better financial outcomes.
Keywords
Procurement, Value Chain Management, Supply Chain Management, Organizational Performance, Competitive Advantage, Public Procurement, Supplier Relationship Management, Cost Reduction, Ghana, Electricity Company of Ghana Limited (ECG).
Frequently Asked Questions: Impact of Procurement and Value Chain Management on Organizational Performance
What is the main focus of this research?
This research investigates the impact of procurement and value chain management (VCM) on organizational performance, specifically within the Electricity Company of Ghana Limited (ECG). It offers a practical, business-level perspective on VCM and procurement, emphasizing their application rather than broad sector analysis.
What are the key objectives of the study?
The study aims to explore the role of procurement in achieving organizational goals, the impact of VCM on organizational competitiveness, the evolution of procurement from transactional to strategic activities, effective procurement management techniques and their measurement, and the application of VCM principles within the ECG.
What topics are covered in the different chapters?
The document includes an abstract, background information setting the context of the study, a literature review summarizing existing research, a detailed explanation of the procurement cycle in Ghana according to the Public Procurement Act, 2007, and a discussion on measuring procurement effectiveness. Each chapter provides in-depth analysis of its respective topic.
What is the significance of the Ghanaian procurement cycle?
The study details the Ghanaian procurement cycle as defined by the Public Procurement Act, 2007, outlining stages from planning and sourcing to evaluation. This provides a specific, contextual understanding of procurement within Ghana.
How is procurement effectiveness measured in this research?
Procurement effectiveness is measured by examining its impact on economic performance, the effectiveness of supplier relationship management, and its alignment with organizational strategy. Key indicators include cost savings, impact on turnover and profit, efficiency gains, and overall organizational equity.
What is the role of Value Chain Management (VCM) in this study?
VCM is a central theme, emphasizing its importance in achieving long-term competitiveness and its integration with strategic procurement. The study demonstrates how VCM principles can be practically applied within an organization like the ECG.
What are the key takeaways regarding the evolution of procurement?
The research highlights the shift in procurement from transactional activities to a strategic, value-adding role within the broader supply chain. This transition is crucial for achieving and maintaining a competitive advantage.
What is the importance of supplier relationship management?
Effective supplier relationship management is identified as a critical factor in achieving competitive advantage and optimizing organizational performance. Strong supplier relationships are essential for efficient procurement.
What are the key words associated with this research?
Key words include Procurement, Value Chain Management, Supply Chain Management, Organizational Performance, Competitive Advantage, Public Procurement, Supplier Relationship Management, Cost Reduction, Ghana, and Electricity Company of Ghana Limited (ECG).
What type of methodology does this research use?
The research uses a case study approach, focusing on the Electricity Company of Ghana Limited (ECG) to provide a practical and in-depth analysis of the impact of procurement and VCM on organizational performance.
- Quote paper
- Dr. David Ackah (Author), Makafui R. Agboyi (Author), 2014, Procurement & the value chain. A tool for acheiving effective organizational goal, Munich, GRIN Verlag, https://www.grin.com/document/283898
