Certainly, purchasing and inventory management involve complex and interconnected

concepts that need to be aligned coherently within an organization. These areas are pivotal for

the smooth functioning of businesses, ensuring that products are sourced, stored, and distributed

effectively. Proper alignment and congruency in purchasing and inventory management are

crucial for optimizing costs, maintaining appropriate stock levels, and meeting customer

demands efficiently. It involves various elements such as supplier relationships, demand

forecasting, order processing, inventory turnover, and supply chain logistics. Organizations must

carefully manage these factors to achieve operational excellence and enhance overall business

performance.

Supply Chain:

The supply chain comprises every element organizations, procedures, resources, and

information essential for producing and delivering a product or service to the end consumer. A

network of consumers, merchants, sellers, producers, and vendors are all involved. Ensuring the

efficacy, affordability, and effortless integration of each of these elements are the main goals of

supply chain management (Sweeney, 2009).

Value Chain:

In contrast, a value chain is a more comprehensive notion that encompasses all of a

company's support functions in addition to the manufacturing and delivery stages (as in a supply

chain). These processes, which include marketing, procurement, human resources, and research

and development, enhance the value of the good or service. Optimizing these support functions

to increase the total value provided to consumers is emphasized by the value chain approach.
 In essence, while a supply chain concentrates on the logistics of getting a product from A

to B, a value chain incorporates all activities within a company, emphasizing how each activity

adds value to the end product or service (Dubey & Singh, 2020).

Internal Customer:

Insiders who depend on the goods, services, or data that are supplied by another

department or team inside the same corporation are referred to as internal customers. In the

context of purchasing, internal customers are colleagues or departments within the company that

require goods or services procured by the purchasing department to carry out their own tasks and

responsibilities effectively (Marshall, Baker, & Finn, 1998).

For example in hardware company where I am working: In a hardware company that sells

cement, steel rods, tiles, and granite, the purchasing department's internal customers can include:

1. Production Department: The production team needs a steady supply of raw materials,

such as cement, steel rods, tiles, and granite, to manufacture construction materials or

finished products.

2. Sales and Marketing Department: This department requires promotional materials,

samples of tiles and granite, and other marketing collateral to showcase products to

potential customers.

3. Inventory Management Team: The team responsible for managing stock levels relies

on purchasing to replenish inventory based on demand forecasts and sales trends.

 4. Quality Control Department: For quality testing purposes, this department might

require specific types of steel rods or tiles, ensuring they meet the company's quality

standards.

5. Maintenance and Facilities Department: They need various supplies for maintenance

tasks, such as tools, equipment, or building materials like cement and tiles.

In this context, the purchasing department acts as an internal supplier, catering to the

needs of these internal customers. By understanding the requirements of these departments and

providing them with the necessary materials in a timely and cost-effective manner, the

purchasing department contributes to the smooth operation of the hardware company.

Why Purchasing is Sensitive to Ethical Considerations:

The purchasing profession is particularly sensitive to ethical considerations due to its

significant impact on the overall integrity, reputation, and sustainability of a business. Several

reasons highlight the sensitivity of purchasing professionals to ethics (Ho, 2012):

1. Supplier Relationships: Ethical conduct is crucial for maintaining trust and fairness in

relationships with suppliers. Unethical practices, such as bribery or favoritism, can

damage supplier relationships and lead to legal consequences.

2. Fair Competition: Ethical purchasing ensures fair competition among suppliers.

Unethical practices like bid rigging or collusion can distort the market, leading to unfair

advantages for certain suppliers and hindering healthy competition.

 3. Corporate Reputation: The Company’s reputation is enhanced by ethical actions. On

the flip side, unethical behavior can result in bad press, which can damage a brand's

reputation and erode consumer confidence.

4. Legal Compliance: Respecting moral principles guarantees adherence to legal statutes

and rules concerning purchasing and commercial dealings. There may be penalties, legal

action, and reputational harm for breaking these laws.

In the context of my hardware organization that sells cement, steel rods, tiles, and granite, the

following ethical considerations are likely to be important:

1. Sustainable Sourcing: Ensuring that raw materials like cement and granite are sourced

from environmentally responsible and legal sources, avoiding deforestation or other

environmentally harmful practices.

2. Fair Labor Practices: Ethical purchasing involves verifying that suppliers provide safe

working conditions, fair wages, and do not employ child labor in the production of steel

rods, tiles, and other materials.

3. Quality and Safety: Ethical considerations include procuring materials that meet quality

standards and safety regulations, ensuring the end products do not pose risks to

consumers.

4. Community Impact: Hardware organizations might consider the social impact of their

operations, contributing positively to the communities where they source materials,

promoting education, and supporting local development initiatives.

 5. Transparency: Encouraging transparency in the supply chain, such as disclosing sources

and manufacturing processes, is essential. Ethical organizations are open about their

practices, fostering trust among consumers and stakeholders.

By integrating these ethical considerations into their purchasing practices, hardware

organizations demonstrate a commitment to responsible business conduct, sustainable sourcing,

and social responsibility, thereby fostering positive relationships with stakeholders and ensuring

long-term business success.

References

Dubey, S. K., & Singh, R. (2020). A Brief Study of Value Chain And Supply Chain. Mahima

Publications, 194, 177-183.

https://www.researchgate.net/publication/344374264_A_BRIEF_STUDY_OF_VALUE_

CHAIN_AND_SUPPLY_CHAIN

Ho, Y.-H. (2012). A Review of Research on Ethical Decision-Making of Purchasing

Professionals. Information Management and Business Review, 4(2), 72-78.

https://core.ac.uk/download/pdf/288022150.pdf

Marshall, G. W., Baker, J., & Finn, D. W. (1998). Exploring internal customer service quality.

Journal of Business and Industrial Marketing, 13(5), 381-392.

10.1108/08858629810226681

Monczka, R. M., Handfield, R. B., Giunipero, L. C., & Patterson, J. L. (2021). Purchasing &

supply chain management (7th ed.). Cengage Learning

Sweeney, E. (2009). Supply Chain Management and the Value Chain. National Institute for

Transport and Logistics, 10(2), 1-5.

https://www.researchgate.net/publication/254584128_Supply_Chain_Management_and_t

he_Value_Chain