Achieving operations efficiency, supplier relationships, and improved profitability through strategic sourcing

• Main Author: Villazon, Sheryne
• Format: text
• Language: English
• Published: Animo Repository 2023
• Subjects: Business logistics; Operations research; Business Administration, Management, and Operations; Operations and Supply Chain Management
• Online Access: https://animorepository.dlsu.edu.ph/etdm_manorg/184; https://animorepository.dlsu.edu.ph/context/etdm_manorg/article/1221/viewcontent/Achieving_operations_efficiency__supplier_relationships__and_improved_profitability_through_strategic_sourcing.pdf
• Institution: De La Salle University

This Action Research "Achieving Operations Efficiency, Supplier Relationship, and Improved Profitability Through Strategic Sourcing" helped in standardizing the sourcing and procurement activities of JCEA CGT to simplify business processes, establish supplier relationships and improve profitability. JCEA CGT's Strategic Sourcing Method was adapted from A.T Kearney, Joseph Payne, and William Dorn's Multi-step Processes related to Strategic Sourcing. Part of its development was supplier selection and that was supported by a Weighted Decision Matrix. Activities involved in its development were carried out through a modified RACI Matrix. During implementation and evaluation, feedback about the JCEA CGT’s Strategic Sourcing Method shall be gathered through Informal Group Discussions. Quantitatively, the impact of the method shall be determined through the Cost Of Goods Sold to Sales Ratio and Gross Profit Margin Ratio. The first cycle proved Strategic sourcing’s capability in improving JCEA CGT’s operations, establishing supplier relationships, and achieving efficiency. Supplier Profitability wise, adapted practices involving buying in volume, supplier selection, and negotiation led to lower cost of goods, prompting a higher gross profit margin. Challenges in terms of demand forecasting, storage, and inventory management emerged during the first cycle and resulted in a modification of the established purchasing strategy. The team had to increase its purchasing frequency to minimize the volume in stock, avoid shelf life losses and be able to procure additional goods needed. The principles of Resource Dependence Theory and Network Theory paved the way for recognizing relationships built during supplier integration and how to manage these relationships to achieve interdependence. JCEA CGT exercised its buying power to align its operational needs with affected suppliers. The modified strategy still helped in achieving operational efficiency, supplier relationships, and improved profitability. This action research aims to contribute to the existing knowledge bases related to the adaptation of Strategic sourcing in small-scale perishable goods trading. In a wider setting, similar organizations belonging to small businesses involved in perishable goods trading can refer to this action research in establishing their own Strategic sourcing methods to achieve specific operational goals. With academic knowledge, inquiry, and collaboration, organizations can initiate this. Keywords: Strategic Sourcing, Action Research, Improved Profitability, Operations Efficiency, Sourcing, Supplier Selection, Sourcing Strategy, Perishable Goods Strategic Sourcing, Perishable Goods Trading, MSMEs, Supplier Relationship