Procurement Dell
Procurement Department and its role in Dell Inc.
Firstly, I would mention what is the general meaning of procurement. Procurement is an act of obtaining or buying goods or services. Leaning on this definition, we can realize that the proces also includes preparation and processing of a demand as well as the end receipt and approval of payment. Procurement is often part of a company’s strategy because the ability to purchase certain materials that will determine if operations will continue (Administrative Guide Memo, 2012).
Currently, any business cannot be able to survive if its price of procurement is more than the profit it makes on selling the actual product. Due to this fact and from my own prospectives, the procurement department should always work in conjunction with finance department of an organization, because these both departments operate on financial basis. I would split them all together and would call Finance, Procurement departmen. Procurement department should be placed in the middle management part as they do operations and as a part of finance department, because procurement is running strategic purchasing, service and reports them to a senior vice-president for Finance ( Administrative Guise Memo, 2012). For example PC and laptop producer Dell chose a very interesting strategy in its operations and supply chain management. They don’t put the procurement department in front due to their strategy called postponement ( Craig S., Kumar S., 2007) . Postponement strategy is where a product will not be assembled until its ordered by customer. This kind of strategy gives advantage to Dell to increase its economies of scale and also gives an opportunity to its customers to design their own computers ( Craig S., Kumar S., 2007). As soon as the product designed, the order placed and payment made ( credit clearance), then the procurement department of Dell orders and purchases all needed materials from Dell’s material suppliers( Craig S., Kumar S., 2007).
Firstly, I would mention what is the general meaning of procurement. Procurement is an act of obtaining or buying goods or services. Leaning on this definition, we can realize that the proces also includes preparation and processing of a demand as well as the end receipt and approval of payment. Procurement is often part of a company’s strategy because the ability to purchase certain materials that will determine if operations will continue (Administrative Guide Memo, 2012).
Currently, any business cannot be able to survive if its price of procurement is more than the profit it makes on selling the actual product. Due to this fact and from my own prospectives, the procurement department should always work in conjunction with finance department of an organization, because these both departments operate on financial basis. I would split them all together and would call Finance, Procurement departmen. Procurement department should be placed in the middle management part as they do operations and as a part of finance department, because procurement is running strategic purchasing, service and reports them to a senior vice-president for Finance ( Administrative Guise Memo, 2012). For example PC and laptop producer Dell chose a very interesting strategy in its operations and supply chain management. They don’t put the procurement department in front due to their strategy called postponement ( Craig S., Kumar S., 2007) . Postponement strategy is where a product will not be assembled until its ordered by customer. This kind of strategy gives advantage to Dell to increase its economies of scale and also gives an opportunity to its customers to design their own computers ( Craig S., Kumar S., 2007). As soon as the product designed, the order placed and payment made ( credit clearance), then the procurement department of Dell orders and purchases all needed materials from Dell’s material suppliers( Craig S., Kumar S., 2007).
References: Administrative Guide Memo, (2012), Procurement Relationships, Stanford University, [accessed on 10.02.13], available at [ http://adminguide.stanford.edu/52.pdf ] Craig S., Kumar S., (2007), Dell, Inc.’s closed loop supply chain for computer assembly plants, EBSCO, [accessed on 10.02.13], available at [http://web.ebscohost.com/ehost/pdfviewer/pdfviewer?sid=c8d1ba2c-89f9-4dde-93c4-dc2f9ed39d00%40sessionmgr111&vid=5&hid=103 ] Jacobs D.G., (2003), Anatomy of Supply Chain of Dell, EBSCO, [accessed on 10.02.13], available at [ http://web.ebscohost.com/ehost/pdfviewer/pdfviewer?sid=7378ef2c-10d1-4ffe-a023-aec5e9739854%40sessionmgr110&vid=16&hid=103 ]