Module Title Page 1

THE UNIVERSITY OF WARWICK

WMG
MSc PROGRAMMES
POST MODULE ASSIGNMENT

WARWICK
STUDENT ID 2 1 1 7 7 9 4
NUMBER

FAMILY GIVEN
NAME
Tan NAMES
Bingwei TITLE Miss

MODULE NAME: Procurement and Inventory Management

MODULE TUTOR: Ahmed Tarek El-Said

MODULE CODE: ES9W8

MODULE DATES: From: 4/3/2022 To: 4/4/2022

PMA DUE DATE: 4/4/2022 by 12:00pm (UK time)

Assessment brief

You must answer any two (2) of the four (4) questions from the Assessment Brief below.

Each question will be marked out of 40 and therefore this PMA is worth 80 marks in total.

Please answer each question in a separate section. Ensure the question is included before each answer in
your PMA and include a separate word count for each question.
I have read and understood the rules on cheating, plagiarism and appropriate referencing
as outlined in my handbook and I declare that the work contained in this assignment is my
own, unless otherwise acknowledged.

No substantial part of the work submitted here has also been submitted by me in other
assessments for my degree course, and I acknowledge that if this has been done an
appropriate reduction in the mark I might otherwise have received will be made

Signed: ..................BINGWEI..TAN.............................................

(for on-line submission it is only necessary to type your name in this space)
Question 2 - Supplier Selection and Supplier Qualification
a. Develop a supplier selection process for GC to follow for the selection of either a food
or non-food supplier. This must account for the new structure identified in the case
study above. (10 Marks, LO2)
b. Identify, discuss, and compare suitable supplier selection criteria for the selection of
the food or non-food supplier. Highlight the differences between monetary and non-
monetary criteria and include this in your analysis. (15 Marks, LO 2, 3)
c. The supplier qualification process is one of the initial stages of Supplier Management
when engaging new suppliers. Considering the existing suppliers of GC and in context
with the case study (change of company structure and management) how would you
manage a program of supplier qualification retrospectively with regard to existing
suppliers? (15 Marks, LO 1, 4)
Procurement and Inventory Management

Contents

1. Supplier Selection Process For GC ............................. 3

2. Supplier Selection Criteria................................... 5
2.1 Product Quality .................................................. 5
2.2 Geographical Location ............................................ 5
2.3 Cost ............................................................ 6
2.4 Financial Position ............................................... 6
Summary ............................................................. 7
3. Program of Supplier Qualification ............................. 8
3.1 Application of Delphi to choose the criteria ...................... 8
3.1.1 Delivery .............................................................. 8
3.1.2 Flexibility............................................................ 8
3.1.3 Supplier Relationship .................................................. 9
3.1.4 Reliability............................................................ 9

3.2 Application of AHP to calculate weights of the criteria .......... 9

3.2.1 Building an AHP-based hierarchical model ............................... 9
3.2.2 Establishing the PWCM of Criteria ..................................... 10
3.2.3 Final Calculation Results ............................................. 11

3.3 Ranking the supplier performance ............................... 12

Reference ...................................................... 13

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Procurement and Inventory Management

Table of Figures and Tables

Figure 1: Supplier Selection Process ........................................................................... 3

Figure 2: AHP based Hierarchical Model to Evaluate Critical Factors ......................10

Table 1: PWCM of Criteria .........................................................................................11

Table 2: PWCA of Supplier Relationship Dimension .................................................11
Table 3: Calculation and Ranking of CFs of Service Supplier Selection ...................12

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1. Supplier Selection Process For GC

From Makhitha's (2015) literature review on the supplier selection process, a suitable
model for GC can be developed based on the actual situation of GC. Process cannot follow
the same standard and some relative adjustments should be made. In this paper, four
suppliers from different regions are selected according to the different situations in their
regions. The supplier selection process can be achieved through the following steps:
problem recognition, pre-classification, supplier selection preparation, final selection and
application feedback.

Figure 1: Supplier Selection Process

Problem Recognition. GC currently has problems with the quality of its food, the high
price of some raw materials and the lack of quantity of some food and ingredients, so GC
needs to be aware of these three areas when choosing suppliers. At the same time, GC is
now run by four successors and the environmental factors vary from region to region, so
the selection of suppliers in different regions should be determined by taking into account
the local geography and the volume of customers.

Pre-Classification. Because some fresh produce is perishable and short shelf life,
supplier selection criteria and focus are different for food and non-food goods.

Because different successors run the restaurants in different areas, different areas cannot
be sourced by the organisation in West Midlands. However, rather different local suppliers
may be selected in different areas. Because the West Midlands is farther away from the
north and the food abundantly produced in the north is very different from that in the south.
The vast differences between the north and the south mean that it is best not to select
suppliers on the same basis as other regions.

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For foodstuffs, because of the relatively short shelf life of fresh food products, the high
degree of uncertainty in demand and costs and the dependence on climatic conditions
(Siddh, 2017). Therefore, food products can be divided into fresh food and other. For non-
food items, they can be categorised into those related to customer volumes, such as
disposable takeaway boxes and other.

Supplier Selection Preparation. GC selects and evaluates potential suppliers by

establishing different criteria for different categories of suppliers and by establishing
different priority lists for different suppliers.

Final Selection. A detailed background check of the suppliers evaluated from the previous
stage is carried out to select the most suitable one and allocate an order quantity. At this
stage, it is necessary to consider how the supplier's supply will be distributed to the different
restaurants, whether it will be transported to a centralised purchasing centre or distributed
by third-party logistics.

Application Feedback, GC can use qualitative or quantitative methods to evaluate

suppliers' performance, to improve their selection preferences by using the actual situation
in the previous phase, and make changes to their decisions.

When cycling through suppliers, there are often cases where the selected supplier is not
satisfied, and it is then necessary to cycle through the Final Selection and Application
Feedback in the following cycle.

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2. Supplier Selection Criteria

Due to the diversity of goods and environments in which they are sourced, different supplier
assessments should be selected for different goods. This section is to identify the supplier
selection criteria for different goods of GC and assess their importance.

Kar (2014) estimated the importance placed on supplier selection criteria by analysing 12
industries and estimated the relative importance of these key criteria. Mokadem (2017),
when classifying supplier selection criteria for different manufacturing strategies,
summarises a set of criteria that meet the needs of customers and can be evaluated.

GC could only select suppliers based on known and fixed conditions in the initial phase.
The supplier selection was based on product quality, geographic location, cost, and the
supplier company's financial position, taking into account the actual situation and the
corresponding literature.

2.1 Product Quality

One of the problems faced by GC is the quality of some of the fresh foods in many
restaurants due to suppliers. Food safety, one of the top priority supplier selection criteria,
can be viewed as part of the quality of the goods. If food is deemed unsafe, it is disqualified
from the market and is, therefore, a criterion that must be met. If a supplier has a high
probability of providing unsafe goods, it will be automatically eliminated. Besides, food
safety failures can significantly lose of sales revenue and brand damage (Lau, 2018). As
a restaurant chain with 53 outlets, if there is a quality issue with the food in one chain, it
will affect customers' repeat business and brand reputation in all regions.

For non-food goods, the quality should at least match the GC's restaurant class, which
would provide a better experience for customers.

2.2 Geographical Location

The four regions in which the GC is divided have different natural conditions and produce
different local food. For example, the northern and south-western regions are dominated
by livestock farming; the central is an agricultural area with cereals and livestock farming,
and the south-east is dominated by cereal production. Therefore, their choice of local
suppliers varies in terms of the fresh, local food they can offer.

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Procurement and Inventory Management

Besides, the geographical location of the suppliers also represents economic positions.
Compared to other regions, the north is further away from the economic centre, has a
relatively small population and is not as well connected. Therefore, the Midlands and South
will have more favourable markets and transport conditions when transporting fresh foods.

Besides, the location of the supplier influences the lead time and response time, and if this
time is too long, the quality of fresh food will be affected, so the location of the supplier is
important.

(Note: https://www.gov.uk/government/collections/agriculture-in-the-united-kingdom)

2.3 Cost

Among the problems faced by GC were the fact that the prices of some raw materials were
significantly higher than the UK average, which caused significant financial losses to GC.
It is therefore important to consider the issue of cost.

The cost criterion is the most important in supplier selection (Bag, 2016). The cost of a GC
includes the delivery cost, ordering cost, inspection cost, handling cost and capital
investment, and when choosing a supplier, all of these must be considered.

For these non-food suppliers, the price of the goods is the most important criterion in
choosing a supplier, as they can have a high level of safety stock and a low cost and wear
and tear rate. However, it is also not true that the lower the price offered by the supplier,
the better. They are based on quality that does not compromise the basic dining experience
of the customer.

2.4 Financial Position

Punniyamoorty (2012) argues that a supplier's financial position must be healthy and stable.
Their financial stability, credit strength, financial disclosure and growth rates should all be
stable. A supplier company with a healthy financial position is less likely to be a risky
partner, making it easier for GC to establish a long-term relationship with the supplier.

Besides, the financial position of a supplier company is also a good indicator of the
company's operating conditions. A better financial position can, to a certain extent, indicate
that the company's business and service capabilities are better and that it is a more reliable
partner to choose.

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Summary

For food suppliers, the primary criterion to assess them is quality because the restaurant’s
quality must be guaranteed and has a bearing on the GC's brand image and subsequent
sales (Lau, 2018). Therefore, you should choose a local supplier with a lower price while
ensuring adequate supply and quality.

For non-food suppliers, the most important factor is cost, as non-food goods are more of
daily activity for restaurants, so quality should be acceptable and not affect customer
satisfaction with the food.

For financial position, it can be used as a secondary criterion to advise the GC when
choosing a supplier so that it can be considered holistically.

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Procurement and Inventory Management

3. Program of Supplier Qualification

After a cycle of working with a supplier, GC needs to evaluate the overall quality of the
service based on the supplier's performance. Qualification of the supplier is done. This
process can be done through Delphi, AHP (Lau, 2018).

Firstly, through the Delphi method, 10 to 20 experts in the GC's supply chain need to select
criteria for evaluating supplier performance, and a consensus on the decision was reached
over several iterations. After that, the AHP method was used to assign weights to the
importance of the selected criteria separately. Finally, the weights of the criteria are scored,
and their different suppliers are rated according to the weights obtained by the AHP method
(Diba, 2019).

3.1 Application of Delphi to choose the criteria

Qualifying suppliers is a multi-criteria decision problem, so this section uses AHP to

structure the supplier rating process. Besides, because the sustainability of the supply
chain and its ability to cope with risks need to be considered, the following criteria were
chosen for the qualification process, depending on the nature of the GC company
(Vijayvagy, 2012).

3.1.1 Delivery
Because GCs can have some raw material shortages or out-of-stock situations, it is
important to test the supplier's ability to meet demand on time when qualifying the
supplier's performance at the end of the process. Because Lead time exists, if there is a
delay in the committed date, this can lead to significant production standards and wasted
resources. Evaluating suppliers' lead times, committed delivery dates etc., can help
leaders stock the GC in conjunction with its stock levels and customer traffic to avoid losses
due to out-of-stock.

For delivery, the aspects being rated are quantity delivered, the efficiency of delivery, lead
time, reliability of delivery, number of goods arriving on schedule and waiting time.

3.1.2 Flexibility
Because GCs are faced with unstable demand due to external factors such as holidays
and weather conditions and unstable supplies of fresh produce, this can result in excessive
or insufficient backlogs of goods. To avoid this, suppliers need to have the ability to react
to fluctuations in demand, and suppliers can use demand data from previous years to make
forecasts. Therefore, flexibility is a very important factor in assessing supplier performance.

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3.1.3 Supplier Relationship

Relationship connectors, duration of the relationship, communication and conflict
resolution can assess the quality of a GC's relationship with its suppliers. Maintaining close
collaboration and smooth communication with suppliers increases their credibility and
makes it easier to establish long-term partnerships.

3.1.4 Reliability
In this respect, the quality of the goods supplied by the supplier, the time of arrival and the
other fulfilment of the order needs to be evaluated. Particularly in the case of food quality,
compliance with standards is of great relevance to the effectiveness of the GC.

3.2 Application of AHP to calculate weights of the criteria

As an analytical approach to complex decision-making problems, AHP allows the above

qualifying criteria to be weighted in order of their relevance and importance according to
the relevant nature of the GC.

3.2.1 Building an AHP-based hierarchical model

In the previous section, the key factors and their sub-factors that have been used to
analyse and rank the evaluations have been identified, as shown in the framework
illustrated in Figure 2.

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Procurement and Inventory Management

Figure 2: AHP based Hierarchical Model to Evaluate Critical Factors

3.2.2 Establishing the PWCM of Criteria

In the AHP framework, the structure of the key factors is hierarchical and consists of three
levels. At the first level is the objective, and at the second level are the four assessment
criteria proposed: delivery, flexibility, supplier relationship, and reliability. At the third level
is the analysis carried out for each assessment criteria. Table 1 shows the GC one-to-one
comparison matrix created to show the weighting of each dimension by the experts to
assess the factors for provider selection.

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Table 1: PWCM of Criteria

A similar weighting is then applied to the sub-criteria under each criterion. For example, for
the supplier relationship, the PWCA is created like Table 2.

Table 2: PWCA of Supplier Relationship Dimension

Similarly, establishing a PWCA for each criterion.

3.2.3 Final Calculation Results

After obtaining the weights of the sub-criteria of the criterion in the previous section, their
respective dimension's weights can be obtained.

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Table 3: Calculation and Ranking of CFs of Service Supplier Selection

The ranking then allows us to obtain the relative importance of the different criteria and
thus score them in a more informed and structured way.

3.3 Ranking the supplier performance

After the weighting of each sub-criteria is obtained, the experts rate each supplier from A
to F. A is the highest and F is the lowest. The final weighted calculation gives the final
result and is then considered in aggregate.

The results of the evaluation are used to determine the subsequent cooperation with the
supplier. The higher the rating, the higher the chances of subsequent cooperation.
Compensation can be requested suppliers who do not meet the requirements, or the
contract requirements can be changed, and supervision increased.

(Word count: 2143)

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Reference

Bag, S. (2016), "Service Supplier Selection using Analytic Hierarchy Process", Journal of
Supply Chain Management Systems, Vol. 5 No. 3, pp. 9-16.

Diba, S. and Xie, N. (2019), "Sustainable supplier selection for Satrec Vitalait Milk
Company in Senegal using the novel grey relational analysis method", Grey Systems, Vol.
9 No. 3, pp. 262-294.

Kar, A.K. and Pani, A.K. (2014), "Exploring the importance of different supplier selection
criteria: MRN", Management Research Review, Vol. 37 No. 1, pp. 89-105.

Lau, H., Nakandala, D. and Paul, K.S, (2018), "A business process decision model for
fresh-food supplier evaluation", Business Process Management Journal, Vol. 24 No. 3, pp.
716-744.

Makhitha, K.M. (2015), "Marketing Of Craft To Retailers: Understanding Their Buying

Process, Supplier Selection Criteria And Information Sources Used", The International
Business & Economics Research Journal (Online), Vol. 14 No. 6, pp. 791.

Mokadem, M.E. (2017), "The classification of supplier selection criteria with respect to lean
or agile manufacturing strategies: IMS", Journal of Manufacturing Technology
Management, Vol. 28 No. 2, pp. 232-249.

Punniyamoorty, M., Mathiyalagan, P. and Lakshmi, G. (2012), "A combined application of

structural equation modeling (SEM) and analytic hierarchy process (AHP) in supplier
selection", Benchmarking, Vol. 19 No. 1, pp. 70-92.

Siddh, M.M., Soni, G., Jain, R., Sharma, M.K. and Yadav, V. (2017), "Agri-fresh food supply
chain quality (AFSCQ): a literature review", Industrial Management & Data Systems, Vol.
117 No. 9, pp. 2015-2044.

Vijayvagy, L. (2012), "Decision Framework for Supplier Selection through Multi Criteria
Evaluation Models in Supply Chain", International Journal of Management and Innovation,
Vol. 4 No. 2, pp. 16-28.

Vouzas, F. and Katsogianni, T. (2018), "TQM implementation in 3PL organisations vs

organisations with in-house logistics department: A literature review", TQM Journal, Vol.
30 No. 6, pp. 749-763.

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Question 3 - Techniques and Improvements
Appraise and evaluate the merits and risks associated with the following techniques with
respect to the challenges facing the GC company and give examples of products or
services where these methods would be used. This must account for the new structure
identified in case study above. (LO 1, 3).

 ABC Analysis (10 marks)

 Supply scheduling (10 marks)
 Vendor Managed Inventory (10 marks)
 E-Procurement, including e-catalogues, e-auctions and reverse e-auctions, e-payment
etc. (10 marks)
Procurement and Inventory Management

Contents

INTRODUCTION ............................................................... 3

1. ABC ANALYSIS ................................................................................................... 4

1.1 MERITS AND RISKS ............................................................................................... 4

1.2 EXAMPLES............................................................................................................ 4
2.SUPPLY SCHEDULING ............................................................................................... 6
2.1 MERITS AND RISKS ............................................................................................... 6
2.2 EXAMPLES............................................................................................................ 6
3. VENDOR MANAGED INVENTORY ............................................................................... 8
3.1 MERITS AND RISKS ............................................................................................... 8
3.2 EXAMPLES............................................................................................................ 9
4. E-PROCUREMENT ................................................................................................. 10
4.1. MERITS AND RISKS ............................................................................................ 10
4.2. EXAMPLES......................................................................................................... 11
REFERENCE ............................................................................................................. 12

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Table of Figures and Table

Table 1: ABC Classification of some of GC's goods .................................................... 5

Figure 1: The flow of GC for scheduling....................................................................... 7
Figure 2: Lifecycle of E-procurement .........................................................................11

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Introduction

In order to solve the current issues faced by GC, the following four techniques, ABC
Analysis, Supply scheduling, Vendor Managed Inventory and E-Procurement, can be
applied to solve the corresponding problems.

This section will explain the benefits of using these four techniques in the context of GC
and the problems that may be encountered in their use. Moreover, it gives examples of
how GC can apply these technologies to the corresponding supply chain segments.

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1. ABC Analysis

ABC is an inventory classification method that is based on the Pareto principle and
classifies items into three categories, A, B and C, according to their importance. The use
of ABC analysis in a GC can help the GC develop a sound inventory policy.

1.1 Merits and Risks

As a restaurant chain, GC has a wide range of products in demand. Different products

have different sales and profitability and cannot be handled uniformly according to the
same stocking frequency and stocking volume. Using ABC analysis can help GCs develop
scientific inventory systems to minimise costs, keep inventory turnover at relatively high
levels and minimise storage costs (Rutendo, 2016).

However, many steps that need to be taken to apply ABC analysis to GCs. First of all, a
good inventory coding system and proper standardisation of the inventory are some of the
necessities (Rutendo, 2016). However, GC’s current IT system is very old and does not
have a system that can monitor all points of sale, stock usage, sales, forecasts and cost
data. To perform analysis would require a significant investment of resources. Moreover,
GC is now run by four different managers, which adds to the communication and
information-sharing problems.

In addition, for a restaurant like GC, there would be some variables where the monetary
value of inventory items is more important. For example, the shelf life of some perishable
or frozen ingredients, although the price of the ingredients may be lower, they are the main
industry of GC and are closely related to the brand and reputation of GC, so there is a
constant need to keep an eye on stock levels and ensure a certain safety stock.

1.2 Examples

In practice, GCs can combine ABC analysis methods with XYZ and EOQ methods to
determine the economic order quantity for each product, allocate the different goods, and
then combine the item values and frequency variations of the different goods to create a
relative inventory policy.

For GCs, the criteria for classifying the value of ABC analysis can be output profit, service
level and customer value (Greene, 2021). Therefore, most non-food products can be
classified as B or C products, as they are not profitable for the GC but are used to maintain
the GC's daily operations and as a tool to support the main product, food. For food products,
however, should be classified. In particular, for food products with short shelf life or high-
quality products, it is necessary to keep an eye on the quality of the products to ensure
that they meet safety standards and stock them according to the inventory.

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Based on the actual situation of the GC and the nature of the incoming goods, Table 1
selects some of the goods that the GC will purchase for ABC classification to determine
the frequency of the GC's incoming goods.

Table 1: ABC Classification of some of GC's goods

A B C
Goods supplied by High-quality wine, Seasonal food, Daily consumables
suppliers fresh food, milk drinks, disposable such as flour,
yoghurt and other consumables: seasoning, in-store
dairy products disposable takeaway non-disposable
boxes tableware and
disinfection supplies

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2.Supply scheduling

Supply scheduling is the process of allocating a series of jobs with a given amount of
resource material to optimise certain target criteria (Ivanov, 2012).

2.1 Merits and Risks

The biggest advantage of supply scheduling is that it allows the supplier to be involved in
capacity management. Supply scheduling can minimise inventory, overheads and delivery
costs if a good long-term relationship is maintained with the supplier (Selvarajah, 2014). In
addition, supply scheduling can also enhance continuity throughout the supply chain,
optimise the entire supply chain, and maximise both the total number of orders to be
fulfilled and the use of supply chain resources (Ivanov, 2012).

However, because the supplier can be involved in capacity management, the GC will have
to make more considerations in selecting of suppliers. At the same time, Ivanov (2012)
mentions that in the case of perishable or seasonal products or processing industries
where GCs are located, logistics suppliers face dynamic external and internal conditions.
Besides, GCs in different regions choose different suppliers with different plant and
distribution capabilities. Therefore, this dynamism and uncertainty will undoubtedly impact
the GC's final arrival at optimal supply scheduling. Furthermore, for GCs, an important
prerequisite for the completion of optimal design, planning, and scheduling is the
availability of centralised information on the entire network and related parameters.
However, GC is already in the hands of four people, so there may be risks for the GCto
share data on inventory, orders and capacity.

2.2 Examples

Through Ivanov's (2012) study, the dynamic and uncertain nature of the demand for goods
in the GC segment needs to be considered firstly when supply scheduling GC. In addition,
for food products, it is necessary to understand their environmental adaptability, i.e. shelf
life, special storage conditions and fluctuating cycles of demand.

The scheduling of the GC can then be started with the help of mathematical models, such
as the OPC model, combined with an adapted simulation model, which at this stage
considers the preconditions' external conditions. After the analysis, and internal

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adjustments and optimisation, the program is executed and the simulation is carried out
once the results are satisfactory.

Figure 1: The flow of GC for scheduling

It should be noted that the external conditions that need to be taken into account differ
depending on the geographical location of the shop and the distribution of customers once
the GC is in the hands of four successors.

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3. Vendor Managed Inventory

Vendor Managed Inventory is a coordinated system where the supplier determines the
quantity and timing of the retailer's replenishment. It differs from traditional supply chains
in that the supplier holds the retailer's costs and the costs of production set-up (Hong,
2016).

3.1 Merits and Risks

The use of VMI can improve the problems associated with stock for the problems
experienced at GC.

Many of GC's restaurants are experiencing shortages of promotional meals and

ingredients and over or understocking due to UK holidays, which also occurs because
some of GC's restaurants do not have sufficient stock levels. Introducing VMI into GC
restaurants and sharing information with GC will help GC forecast and share the
pressure of stock control. This can also help GCs improve customer satisfaction, reduce
lead times, reduce demand uncertainty and lower system costs (Hong, 2016).

In addition, the benefits of a VMI system depend on the operating conditions of the
arrangement (Mateen, 2015). However, for GC, its IT systems are old, and they are
linked together by a single in-house information technology manager. In addition, GC has
first been taken over by four different successors in different areas of the restaurant, so in
a sense, they can be seen as four parts. This means that different information technology
managers should also build IT systems. The investment in the new IT system will add a
lot of Research and Development Expenditure, which will make the GC's upfront
investment relatively large. If you choose to use VMI and update your existing IT
systems, this will impact cash flow and create a greater risk.

At the same time, GC companies have certain communication and information sharing
problems, which are serious issues in a VMI relationship. Proper information sharing in a
VMI relationship is important for information not being delayed, inaccurate or incomplete,
and sharing inventory levels and sales forecasts are the most commonly mentioned
elements of information exchange between buyers and suppliers (Zachariassen, 2014).
Good communication ensures that the strategic goals of the GC and the supplier are
aligned; if they are not, then the relationship with the supplier will be unsustainable. In the
case of the GC-supplier relationship, it is more desirable for the GC to maintain a long-
term collaboration because of the information sharing issues. With the unstable demand
for many of GC's products, poor communication can make it more difficult for suppliers to
forecast.

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3.2 Examples

Once the right supplier has been selected, the GC can collaborate with the supplier to start
a VMI relationship.

For non-food items requiring repeat orders and low volatility, using VMI can help GCs
reduce the likelihood of out-of-stocks and lower inventory costs (Mateen, 2015). For fresh
food, with a short shelf life and unstable demand, rigorous screening and background
checks are required before partnering to ensure the supplier's ability to forecast and the
potential for a long-term relationship.

Also, because of the use of VMI, the supplier can deliver the goods directly to the point of
use. This way, for GC companies, with their different local branches working with different
suppliers, the suppliers themselves or using outsourced logistics companies can deliver
the goods directly to the corresponding restaurants, eliminating the need to go from the
distribution centre to the different restaurants.

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4. E-Procurement

E-Procurement performs part or all of the procurement process by integrating, and

designing information and communication technologies (Mutangili, S, 2019).

4.1. Merits and Risks

For a restaurant chain like GC, which serves takeaway food, serving tens of thousands of
regular meals and entertaining 20,000 customers on average every day, its ingredients are
consumed quickly, so it ineeds to process orders quickly. Converting the traditional
procurement model to E-procurement allows the entire supply chain to run more efficiently.

E-procurement typically automates the buying cycle, improves operational efficiency and
reduces costs through e-procurement tools such as e-catalogues, e-auctions and reverse
e-auctions, and e-payments. It also makes improving the procurement process easier and
developing a long-term strategic approach (McCue, 2012). In addition, the use of E-
Procurement technology allows for the digitisation of information on deliveries, distribution,
etc. It allows for better coordination with suppliers through sharing information while
increasing the flexibility and accuracy of the information, decision-making and customer
relationships (Mutangili, S, 2019), and more effectively addressing issues such as low or
high stock levels and unstable consumer demand.

For e-procurement tools, e-payments make procurement transactions more secure and
less costly. E-catalogues allow access to both GCs and suppliers, enabling greater contact
between GCs and suppliers and making negotiations between the two more efficient. ERAs
increase the transparency of the negotiation process and allow suppliers to develop new
thinking, but can undermine the trust relationship with the GC (Andrade, 2012). Therefore,
when using e-procurement tools, it is important to be know how and when each tool is
used.

The short shelf life of GC products and the volatile nature of demand require a variety of
technology platforms to implement E-Procurement and the need for timely information
(McCue, 2012). This will undoubtedly increase the investment in E-Procurement. Besides,
any e-procurement tool requires the availability of a technology system that is compatible
with and supports the E-Procurement platform, which makes it more difficult to build an E-
procurement platform. Furthermore, E-Procurement tools can reduce processing time to a
certain extent. However, these structures can lead to security issues and costly errors if
the information is leaked due to the lack of security in these tools (Mutangili, 2019).

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4.2. Examples

McCue (2012) provides a complete and detailed lifecycle of e-procurement from purchase
to payment.

Figure 2: Lifecycle of E-procurement

Based on the lifecycle of E-Procurement proposed by McCue, certain recommendations

are made based on the reality of GC's situation.

For companies with no experience in E-Procurement, GC should first hire a specialist with
extensive experience to train some of its staff and increase their willingness to use E-
Procurement technology. Before signing a contract with a supplier, the GC should develop
a communication plan with the supplier to clarify the GC's purchasing intentions and the
different requirements for different goods.

In addition, because E-Procurement can cover a relatively wide geographical area,

although four successors take over the GCs in different regions, they can discuss in
advance to try to form a partnership and build a system platform together to manage the
orders of all GC regions, thus reducing the capital costs invested.

(Word count: 2054)

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Procurement and Inventory Management

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