Questions

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 Questions

1.

In an everyday manual buying system, the procedure begins with identifying a need. The

concerned department or people realize the need for goods or services and launch a purchase

requisition. This document typically takes the form of paper and outlines the characteristics

of the items that are required to be made, including quantities, budgets, and delivery dates.

The concerned authority in the organization reviews and approves the purchase requisition.

Once it is approved, the purchasing department receives the requisition and locates potential

suppliers. This could mean asking for or requesting bids or quotes, which can be tedious and

sometimes involve communication through phone calls, through the mail, and even face-to-

face meetings. Once the selection is made based on price, quality, and delivery efficiency, a

purchase order in the form of paper is issued to the chosen vendor. The receiving department

verifies the order with the purchase order as soon as goods or services are delivered and

submits mismatches. This cycle is closed when the accounting department handles invoices

for payment. It is a manual process that is slow and error-prone since it includes many

handoffs and paper tracking.

1.

E-procurement is a system that automates the buying process and integrates it into an

electronic platform that allows easy generation, approval, and management of purchase

requisitions as well as orders. The benefits of this system, as compared to manual systems,

are faster transactions, bypassing errors caused by automation processes, easy tracing and

tracking of orders, a centralized database for ease in file keeping, and simplifying the
analysis process for strategic sourcing. It increases transparency and accountability by

providing real-time information as well as an audit path that is crucial for compliance with

requirements and performance assessment. E-procurement is efficient in many aspects, but it

also has its downsides. It is either too expensive or technically difficult to set up and maintain

such systems in small businesses. There is also a learning curve for staff, and over-

dependence on technology can be risky in case systems fail. E-procurement replacing manual

systems completely being an issue is a complex one. Probably as the leading method,

especially for large organizations, because of scalability and efficiency, small businesses

would continue to use manual systems due to cost-effectiveness, simplicity or insufficient

technical infrastructure. This change might also be slow and uneven, straddling the divide in

hybrid systems.

3.

Purchasing is considered very important in creating an organization's competitive advantage

because it impacts cost structure, quality, and innovation. Purchasing offers a way to reduce

input costs. By sourcing the materials and services that are needed, a company will either be

able to price its products or increase profit margins as a result. Furthermore, by having strong

relationships with many diverse suppliers, an organization will have a reliable supply chain

that can maintain product availability consistent with meeting customer demands, thus

minimizing disruptions. It can then make reliability its own USP. Also, buying departments

can catalyze innovation by identifying and interacting with suppliers that provide the latest

technological advancements or more efficient production methods. This can lead to superior

product offerings or improved operations, which further separates a company from its rivals.

Effective purchasing strategies that establish cost, quality, and innovation in a rational
balance can thus have an important effect on the firm's market position and competitive

stance.

4.

The profit-leverage effect of purchasing demonstrates how cost savings are realized with

effective purchase strategies, assisting in the bottom line. Every penny saved in procurement

will increase profit before tax by much more than an equal enhancement in sales revenue due

to the fact that its impact on the cost of goods sold is direct. This is because these savings

appear in the bottom-cutting section, increasing net profits without the necessary growth in

sales volume that may involve hefty marketing and selling overheads. The issue concerning

the ROA effect is how business purchases may affect an organization's asset base. Improved

ROA can be achieved through proper management of inventory levels, effective negotiation

for better payment terms, and a reduction in the costs of materials purchased by either raising

the net income through cost-cutting or by shrinking the total asset base with improved

inventory control and well-tuned contracts with its suppliers.