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Optimising the procurement process of an organisation in the manufacturing industry to improve its efficiency, cost-effectiveness, and overall management practices
Author(s)
Esau, Edmund Charles
Date Issued
2024
Type
Thesis
Publisher
Cape Peninsula University of Technology
Abstract
This comprehensive research explores the optimisation of procurement processes in the
manufacturing industry, driven by the persistent challenges associated with traditional
methods. Though beneficial in the past, the labour-intensive and manual nature of these
methods is increasingly recognised as time-consuming, prone to disruptions, and lacking
in strategic value. Consequently, the study advocates for a paradigm shift towards
unified, digital platforms, emphasising the transition from manual to automated
procurement processes to enhance efficiency, speed, and reduce errors.
The research underscores the critical role of procurement in organisational success, with
a specific focus on the manufacturing industry. Despite technological advancements, the
underutilisation of procurement's potential prompts an examination of automation,
particularly within the context of the Fourth Industrial Revolution (4IR). The overarching
goal is to optimise procurement in the manufacturing sector, aiming for improved
efficiency, cost-effectiveness, and overall management.
The literature review accentuates the importance of optimised procurement processes
in navigating the competitive global environment. Efficient procurement is fundamental
for manufacturing organisations, contributing to minimised lead times, reduced
operational bottlenecks, and enhanced overall operational efficiency. Cost-effectiveness
emerges as a central theme, with well-optimised procurement processes enabling
organisations to negotiate favourable terms, identify cost-saving opportunities, and
strategically source materials and services. This optimisation extends beyond immediate
financial considerations to align procurement activities with organisational goals, foster
supplier relationships, and integrate sustainable and ethical practices.
This research aims to investigate and analyse effective methods, technologies, and
strategies for optimising the procurement process within the manufacturing industry, with
a specific focus on improving efficiency, cost-effectiveness, and overall management
practices. Traditional procurement processes, outlined by Jenkins (2021), involve a ninestep
process, providing a foundation for delving into challenges, particularly those arising
from unclear specifications.
The literature also acknowledges the transformative force of the Fourth Industrial
Revolution, introducing technological enhancements, automation, and data-driven
decision-making in procurement processes. Blockchain technology enhances
transparency and security, while Artificial Intelligence (AI) and machine learning reshape
procurement practices. The anticipation of continued advancements in AI and machine learning further
emphasises the need for automation to enhance decision-making processes and
strengthen relationships between manufacturers and suppliers. Sustainability and ethical
sourcing are expected to be prioritised, aligning with the 4IR's emphasis on transparency
and traceability.
The research process, guided by Singh (2021), outlines eight crucial steps for
investigating procurement process optimisation. A quantitative research method was
used in the study. This involved data collection through questionnaires from a nonprobability
sample of 11 individuals directly involved in procurement. Findings reveal
perceived declines in efficiency and cost-effectiveness of traditional procurement
methods, emphasising the need for human involvement in automated processes.
The data collected through questionnaires within a manufacturing organisation explores
various aspects of procurement processes. Respondents’ express views on traditional
procurement methods, potential synergy between traditional and modern approaches,
perceptions and usage of automated procurement systems, and the necessity of human
intervention. Recommendations based on the findings include exploring reasons for
uncertainty, investing in training programmes, and establishing feedback mechanisms
for continuous improvement.
The research concludes by proposing a future procurement process involving technical
systems and tools, aiming to integrate technological advancements with human
expertise. This solution addresses identified challenges in traditional procurement and
emphasises the significance of balancing human intervention and technological
advancements for effective procurement in contemporary business environments. The
study offers valuable insights for strategic decision-making and process enhancement in
the manufacturing industry's procurement practices.
manufacturing industry, driven by the persistent challenges associated with traditional
methods. Though beneficial in the past, the labour-intensive and manual nature of these
methods is increasingly recognised as time-consuming, prone to disruptions, and lacking
in strategic value. Consequently, the study advocates for a paradigm shift towards
unified, digital platforms, emphasising the transition from manual to automated
procurement processes to enhance efficiency, speed, and reduce errors.
The research underscores the critical role of procurement in organisational success, with
a specific focus on the manufacturing industry. Despite technological advancements, the
underutilisation of procurement's potential prompts an examination of automation,
particularly within the context of the Fourth Industrial Revolution (4IR). The overarching
goal is to optimise procurement in the manufacturing sector, aiming for improved
efficiency, cost-effectiveness, and overall management.
The literature review accentuates the importance of optimised procurement processes
in navigating the competitive global environment. Efficient procurement is fundamental
for manufacturing organisations, contributing to minimised lead times, reduced
operational bottlenecks, and enhanced overall operational efficiency. Cost-effectiveness
emerges as a central theme, with well-optimised procurement processes enabling
organisations to negotiate favourable terms, identify cost-saving opportunities, and
strategically source materials and services. This optimisation extends beyond immediate
financial considerations to align procurement activities with organisational goals, foster
supplier relationships, and integrate sustainable and ethical practices.
This research aims to investigate and analyse effective methods, technologies, and
strategies for optimising the procurement process within the manufacturing industry, with
a specific focus on improving efficiency, cost-effectiveness, and overall management
practices. Traditional procurement processes, outlined by Jenkins (2021), involve a ninestep
process, providing a foundation for delving into challenges, particularly those arising
from unclear specifications.
The literature also acknowledges the transformative force of the Fourth Industrial
Revolution, introducing technological enhancements, automation, and data-driven
decision-making in procurement processes. Blockchain technology enhances
transparency and security, while Artificial Intelligence (AI) and machine learning reshape
procurement practices. The anticipation of continued advancements in AI and machine learning further
emphasises the need for automation to enhance decision-making processes and
strengthen relationships between manufacturers and suppliers. Sustainability and ethical
sourcing are expected to be prioritised, aligning with the 4IR's emphasis on transparency
and traceability.
The research process, guided by Singh (2021), outlines eight crucial steps for
investigating procurement process optimisation. A quantitative research method was
used in the study. This involved data collection through questionnaires from a nonprobability
sample of 11 individuals directly involved in procurement. Findings reveal
perceived declines in efficiency and cost-effectiveness of traditional procurement
methods, emphasising the need for human involvement in automated processes.
The data collected through questionnaires within a manufacturing organisation explores
various aspects of procurement processes. Respondents’ express views on traditional
procurement methods, potential synergy between traditional and modern approaches,
perceptions and usage of automated procurement systems, and the necessity of human
intervention. Recommendations based on the findings include exploring reasons for
uncertainty, investing in training programmes, and establishing feedback mechanisms
for continuous improvement.
The research concludes by proposing a future procurement process involving technical
systems and tools, aiming to integrate technological advancements with human
expertise. This solution addresses identified challenges in traditional procurement and
emphasises the significance of balancing human intervention and technological
advancements for effective procurement in contemporary business environments. The
study offers valuable insights for strategic decision-making and process enhancement in
the manufacturing industry's procurement practices.
Additional information
Thesis (MEng (Engineering Management))--Cape Peninsula University of Technology, 2024
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