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Assignment Brief

Strategic procurement depends on strong "Supplier Relationship Management" (SRM) where procurement professionals are concerned about developing robust supplier relationships and negotiating favourable terms and conditions. In the future, it is expected that supply chain structures will become more complex and choosing the right supplier will be more critical. Increasingly stringent supplier requirements will become routine, and demanding purchasers will expect suppliers to demonstrate their essential competencies. Supply chain risk, scarcity of raw materials, environmental, sustainable and economic issues will lead to increased pressure on these buyersupplier relationships.

You are to consider a UK business that sources food materials extensively from Greece and discuss how it can manage the dangers of economic and other risks arising from this relationship You are asked to critically discuss how the procurement function can manage a network - often global - of vendors and suppliers that can quickly become inoperative due to rapid shifts in the business environment. You are expected to provide appropriate case study examples to illustrate your answer.

This coursework should follow a structured approach and should be prepared and presented as a professional business report. You should undertake a relevant literature review that helps inform your investigation. Please also ensure that the Harvard Referencing System is adhered to and fully complied with.

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In recent years, the uncertainty and risks of the supply chain have received extensive attention from practitioners and academics. Several firms have adopted the supply chain basics, resulting in complex and extremely dependent networks with suppliers. Supply chains should coordinate supply and demand effectively, so they suffer from high probability and low impact risk. Similar to the supply chain, companies are no longer constrained by geographic boundaries. At the same time, market globalization and cost-reduction pressures led to relocation of companies in emerging moreover cheaper markets to find low cost labour as well as products. Simultaneously, the supply chain is also facing rapid changes and disruptions in the business environment, which means high impact on the company, low probability risk (Ambulkar, Blackhurst and Grawe, 2014). Managing the relationships with buyers and suppliers is seen as a key strategic process for long-term attention. In this case, procurement management moreover plays an important role, because it is no more a purchasing function, however an essential part of organizing business methods (Roscini, Schlefer and Dimitriou, 2011). This business study looks at an example of a British company that purchases food ingredients from Greece to a high extent. Potential supply-chain risks and uncertainties stemming from this association will be simply presented. Critical discussion of how procurement manages unstable supplier relationships will too follow, which will also supported by few suitable case studies.

Food industry and supply chain risks

Today, the food sector is one of the most vulnerable sectors of deliberate contamination by destructive agents. Some cases of contaminated food indicate that product quality risk is a loophole in the global supply chain. A series of corporate scandals that have affected reputation, led to product recalls and rising costs, have hit the food industry. The obvious problem is that even a minor accident in one part of the chain can have a catastrophic effect on the rest of the supply chain. Therefore, risk is passed through the chain. Even if the dangers of members in the supply chain are small, the cumulative effect can become very large (Chen and Fan, 2012). The UK is a country that imports large quantities of goods for a long time. While this may be true for several countries in the whole world, the focus of this report is on an example of a UK company purchasing food materials from Greece, but detailed information on the supply chain is unclear. Moreover, it is not apparent whether the products obtained from Greek producers are sold in the same form as imports, for example in supermarkets, or if they all are further processed once they import, for example in the restaurant (Büyüközkan and Berkol, 2011). Additionally, the scale of the business is not entirely clear, but the fact that food is purchased in Greece and shipped to the UK leads to the conclusion that product type, quality and additional costs make it attractive in UK market. In addition, the author of this work assumes that it is appropriate to talk about international procurement rather than global procurement/purchasing in this case. Given that the subsequent part of the analysis discusses how the procurement function manages the supplier network, changes may occur, so the concepts of international procurement and global procurement will be properly explained.

Risks in supply chain

Given the huge complexity of globalized supply chain, a member or group cannot eliminate all food safety risks that increase rapidly as a result of increased import activity. With the opening of the market, global product procurement and outsourcing businesses are also increasing. Globalization and rapid improvement of premium products have brought huge levels of market stress or pressure to the company. The number of global food and ingredient suppliers is growing rapidly. The fact that global researchers have published numerous papers in the supply chain proves the importance of this topic (Gordini, 2010). Over the past two decades, academics have generally believed that more complex businesses and global markets have led to more complex supply chain structures. As a direct result, managing risk in the supply chain has also attracted a lot of attention. Wagner the main reasons why supply chain risk management is a key topic are:

? Develop (information) technology to make it easier to monitor and coordinate supply chain processes
? Increase reliance and reliance on certain vendors to gain superiority over competitors
? Increase outsourcing activities (low cost countries) procurement and cooperation with international partners (Hong and Kwon, 2012).

These examples have a positive as well as negative impact on the company. Organizations will certainly benefit from an increase in strategic choices, but the increase in uncertainty and the severity of adverse events affecting business operations, and therefore greater exposure, is undeniable. Environmentally and socially sensitive customers may be required to be responsible for the execution or respect of their suppliers' environmental standards. In China, milk powder is contaminated with melamine, for example in the food supply chain. Another example comes from the German car giant BMW, which has had a huge problem when they received spare parts from suppliers to sell them to the German domestic market (Roscini, Schlefer and Dimitriou, 2011). Thousands of angry customers and their respective media reports have become negative news for weeks (Jayant, Gupta and Garg, 2011). JIN, (2017) look at manufacturing and provide general evidence related to other industries. They convinced that relying heavily on a small number of suppliers and suppliers would weaken the organization's procurement function, as it would present some risks and dangers. The main risks are: less cost control, less market information, and less control of social and environmental problems.

Supply chain and risks and issues in food industry

The literature review seems to confirm the view expressed by Kalaitzi, Matopoulos and Clegg, 2019) that although the European Union (EU) has many regulations, there is no universal standard for food quality, food safety and ethics in global supply chain security. The protagonists of the food industry must be aware of developments outside their organization in order to build an effective and sustainable supply chain that involves regulatory, geographic, market, technical, environmental, economic and social principles (Kalaitzi, Matopoulos and Clegg, 2019). Khan, Christopher and Creazza, 2012, provide an example of a classic supply chain for the food industry, the first of which is the production of food, followed by transportation, temporary storage, packaging, palletizing, transportation to shipping locations, temporary storage, transportation, destination goods (Khan, Christopher and Creazza, 2012). Receive, temporarily store, and transport to the consumer/sales point. They identified three sets of issues related to the food industry because of financial incentives, lack of uniformity and moral hazard. In terms of financial incentives, producers and retailers often want to maximize their profits, which may represent potential risks in the supply chain. In order to be able to produce at a competitive cost, quality control may not be of much concern. Information asymmetry is related to the diversity between retailers and the "market power" of producers, because if they are expected to manage risk in an efficient manner, other supply chain participants need product information that is available and available. Without information, it is difficult to define a comprehensive approach to risk management. The third reason for risk in the food supply chain is moral hazard. Although there are many regulations in the EU, the frequency and intensity of food industry control is considered predictable. As long as this is the case, we will continue to see scandals like the 2006 Bavarian/German rotten meat scandal. While these arguments make sense, the authors of this report are convinced that two other aspects need to be considered in this particular context. . First, the market size plays an important role in the international network (Magda, 2012). This is related to the notion that private and public organizations, as well as governments and related agencies, operate without agreed quality and safety standards. Second, the importance and urgency of some of these issues and risks vary by product type and market characteristics. For example, the quality of food materials is a key element of the end customer. Food must usually be fresh and tasty. Therefore, they should be packaged, shipped and presented to the end customer accordingly. For example, these are the key elements of any fruit and vegetable. In addition to these points, the consumer's decision about what to buy is influenced by the nutritional value and price of the food (Moradeyo, 2012). Customers who buy organic products are often sensitive to issues related to sustainability and the environment. Therefore, any environmental problem that negatively impacts product quality can have a negative impact on the behaviour of the end customer. However, the food industry should understand that improving the sustainability of processes and products will definitely helps to reduce risk and find the right solution for fast-changing consumer needs. The academic community rightly points out that organizations need to measure or benchmark and manage supply chain vulnerabilities so that the number of interruptions and their impact can be reduced.

Risk and issues of sourcing the food materials from Greece

Greece found itself in the most difficult period in post-war history. The macroeconomic situation has deteriorated, the fiscal and public service deficits are huge, and the productivity of various industries is low, tax evasion and negative economic growth. The European Union and the International Monetary Fund have provided several emergency loan programs to Greece. The people lost confidence in politicians, and official strikes and riots shook the country, especially since local banks restricted the amount that could be withdrawn from the account. Greece's potential rescue of the EU is a real threat. Food processing is one of the main economic sectors in Greece. According to the US Department of Agriculture's Foreign Agricultural Service (2015), more than 10% of the local workforce usually supplies raw materials to the food industry through agriculture. Fish, olives and olive oil are the products that dominate the country's food exports, followed by canned fruits and canned food. Next to Italy and Germany, the UK is a major importer of Greek products (US Department of Agriculture, Foreign Agricultural Service, [online]). As a member of the European Union, Greece applies the same tariffs, import and export taxes and measures as other EU members, and must comply with EU food safety and quality standards. Personal contact and language functions are of great value when building business relationships. For a UK company that sources food ingredients from Greece, the main risks appear to be: Euro zone rescue and introduction of the new currency; the economic situation, including remittances, has deteriorated (Staples and Dalrymple, 2015). Greek suppliers may pay in advance before delivery; and Social unrest may lead to unreliable supplier relationships

Although it is clear that the likelihood of problems arise when products are traded internationally, it is difficult to predict when the economic situation in Greece will improve. The following sections will critically discuss how the procurement function manages the supplier and supplier networks as the business environment changes. Appropriate case studies will be introduced to support the arguments presented. The food supply chain continues to grow rapidly, and consumers now expect fresh, exotic foods on the plates throughout the year. This has allowed the supply chain to expand geographically and more, making the supply chain longer and more complex than ever. Manufacturers, manufacturers, distributors, logistics providers and others are under pressure to bring products to market quickly, safely and optimally. This is a major challenge (Taylor and Fearne, 2006).

A typical food supply chain consists of six phases:

1. Purchasing raw materials
2. Production
3. Processing and packaging
4. Storage
5. Wholesale distribution
6. Retail industry redistributed to consumers
If any of these stages is compromised, various problems will arise and the entire supply chain will be at risk.

Procurement function & supplier management

In today's dynamic global marketplace, sourcing is increasingly becoming the basic integrated business process for participating in the organization's strategy development. Procurement has expanded from short-term cost and supplier management to long-term value creation. KPMG's research shows that the procurement function's response to supply chain efficiency is not as fast as required, but they have taken steps beyond negotiating low-cost contracts to a broader business role (KPMG). International procurement as defined by Baily in 2008 is the purchase of products from other countries (Baily, 2008). The same authors convincingly believe that this is often confused with global procurement, which can be more described as a method of embedding the globalization process of large companies, the term internal global procurement. In Europe, buying food abroad is very common (Yakovleva, 2007).

Procurement can manage the network of suppliers

Research on food industry issues shows that the above problems are typical in the food supply chain, mainly concentrated on the economic output of the entire industrial chain. For many companies, the economic performance of the supply chain is the most important factor. The organization's procurement function plays a vital role in risk management because it must ensure that all internal and external parties involved in the supply chain understand its responsibilities. A weak contract will allow either party to accept the claim. The main aspects raised by Bailyet (2008) urges procurement managers involved in contract discussions with suppliers and suppliers to consider projects such as this: Undelivered sanctions, Change service requirements, Claim avoidance, Cost of any dimension

To overcome these risks and uncertainties, they proposed a series of measures:

? Implement a checklist with the organization's top suppliers and suppliers and build a
? Benefit from the potential of suppliers to provide early information about economic change
? Consider the supplier's potential for innovation
? Retain control of the most influential products

When it comes to international supply chains, logistics must be considered, especially in the food industry, where agility is a key factor due to rapid changes in customer demand. Memon and Ambulkar, Blackhurst and Grawe (2014) propose to improve supplier networks. Check options for working with other companies for shipping and considering the dimensional weight and product type in contract negotiations. In my opinion, in addition to the above points, a key task of the procurement department is to maintain good relationships with suppliers and suppliers, and to persuade the permanent improvement discussions to benefit all parties in the medium to long term.

Case study: Sustainable supply-chain at DM Germany

German pharmacy giant DM ranks in the top business in this business field, and no matter what they try, they can't grasp the market leader position. However, the firm noted more and more scandals in the food industry, recognizing that their worldwide supply chain is likely to offer food materials that exceed the types of products they purchase for pharmacies. DM pays close attention to customer behaviour and finds that German customers are willing to pay extra for the food, as long as the product is of superior quality. As a result, they introduced all food to their typical pharmacy product line, coconut as well as other juices and organic baby food products from the producers that strictly follow the principles of "sustainable production moreover supplies chain". Today, they are market leader in German pharmacy market.

Case study: Milk powder scandal China

Food safety is the key feature of food. In 2008, China's polluted milk powder scandal was exposed, and industrial additives such as melamine made the product intoxicated. As a result, more than 300,000 babies became ill due to kidney damage and total six babies died. This is not company but it was also a big fault of Chinese dairy companies involved in it. In this specific case, the purchasing functions of such companies failed because several firms selling the last product milk powder purchased contaminated all the ingredients from same supplier. As far as China is concerned, the government also took over the "procurement" function when changing the regulatory structure. Only 1 year after this scandal occurred, the government also introduced the new "Food Safety Laws", which firmly prohibits any treatment of the unauthorized food related additives the amendments to the law were amended in the March 2015 to further strengthen the control of the food industry.


This study concludes that there is a questioning about the role of sustainability in the food supply chain organization - whether it can be delivered in a sustainable manner, transporting and consuming food without neglecting costs: which new technologies are helpful for sustainability and for sustainability What influences the supply chain? Clearly, safety and quality are key elements of food supply-chain management and organization. How to make sure this is furthermore a big challenge for procurement functions of firms within the industry. This report discusses the case of a British company that purchases food from Greece as well as the risks it faces. It also analyzes the issues that procurement desires to do to manage complex supplier networks. The authors are fully sure that sustainability addresses many of the risks and issues associated with the food supply chain. The key strategy is to maintain very close relationships with all buyers as well as suppliers, particularly in small family-owned suppliers in the Greece. Once established, the company can take benefit from the supplier's innovative potential and potential to give early information or knowledge about changes in a business environment. At all times, the most important thing for the organization is to know what and which product have a most important impact. The maximum value achieved through procurement function needs effective coordination of procurement and distribution. In the present financial disaster in Greece along with other European countries, organizations and governments strictly control the budget, which can also be seen as an opportunity for further development and redefinition of their horizons.

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