B2B

0207

Problem

Explain how the decision-making process that a university might employ in selecting a new computer would differ from that of a commercial enterprise. Who would be the key participants in the process in each setting?

Step-by-step solution

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Step 1/3

Procurement is one of the processes in supply chain management where the company or firm buys materials that are required for their production or service process. The procurement process is different based on organizational settings like institutions, commercial enterprises, and the government.

Step 2/3

The decision process of selecting computers for universities and for commercial enterprises. The reason is that universities are institutional buyers and have unique characteristics and criteria while making the purchase. In the case of universities, they often make a budget as soon as they find procurement needs. They tend to spend only within the budget limit. They will prefer group buying by understanding how many colleges under the universities need computers. This is to qualify discounts on purchases. This allows the institutional buyer to enjoy purchases at low prices with high-quality materials. The suppliers who sell the products to purchasing groups at institutions do deliver the products to individuals (colleges directly) in the group also. They tend to reduce the administrative cost by standardizing the purchase and to gain greater competition from suppliers. However, in the case of commercial enterprises, the total cost of the products that the new supplier provides is given more importance. The cost should be correlated and compared together with the factors like transportation, material managing, quality, reliability, and value creation. The supplier who provides uninterrupted materials for the firm and the materials that are sold should be of premium quality. The purchase may or may not be a group purchase. They should be an easy return and refund policy if the material is not satisfactory and they will also measure if the suppliers are capable of providing additional materials on demand. The overall cost should be low and the value addition while making purchases. This is how their purchase decision differs.

Step 3/3

The key players in both cases are as below.

• University: The need for the purchase of computers will be identified by the purchasing analyst in each college. Then, this will be passed to the purchase manager. He then selects the best supplier and the buyer buys the computer.

• Commercial enterprise: Here, the purchase analysis identifies the purchase requirement. This information is transferred to the purchasing director. The purchasing director after analyzing transfers to the purchase manager. The purchase manager assigns the procurement details of the purchase officer. He then passes the information to a buyer who selects the best supplier and makes the purchase.

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