Optimising the procurement process of an organisation in the manufacturing industry to improve its efficiency, cost-effectiveness, and overall management practices

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.