A step towars better purchasing practices

Abstract

Purchasing as a business discipline has gained a lot of attention in recent decades. This is not very strange since purchasing costs often represents the majority of an organization's total costs. However, one way to consider the purchasing when working on improvements is from a process perspective. This can be very advantageous since it helps the organization to develop a common understanding of how purchasing is conducted and therefore also enables a culture of continuous improvements. One company wanting to review their purchasing processes is Speed Logistics in Borås. Their current purchasing processes can be described as rather immature and insufficient, as no official process maps exists at the moment. Without a common understanding of how the purchasing is conducted it is difficult for Speed Logistics to work on improvements by for example optimising the processes or the work around them. The purpose of this thesis has therefore been to provide Speed Logistics with a process mapping of identified purchasing processes, as well as to identify potential improvement areas connected to their current purchasing processes and provide recommendations for better purchasing practices. This thesis has been conducted with a deductive research approach and the purpose was achieved through a performed literature study, which culminated into a theoretical framework of relevant theories. These theories were then compared and interpreted with empirical findings, so that gaps and insufficient purchasing practices could be identified. The empirical findings were mainly collected and gathered by qualitative semi-structured interviews with employees responsible for the purchasing activities at Speed Logistics. As a main conclusion and result of the analysis, it has been shown that Speed Logistics purchasing processes are fairly consistent with theory and when there were gaps identified, these had a rather logical explanation. However, the analysis did highlight some improvement areas connected to the purchasing processes. These are compiled into a shortlist of bullet points and covers areas regarding roles and responsibilities, purchasing routines and manuals, limited exploration of the supplier markets, current purchasing processes being largely dependent on experience and knowledge, limited amount of evaluation and follow-up activities and lastly, an identified internal benchmarking opportunity. A more detailed explanation of each improvement area is provided in the conclusion chapter. It is moreover suggested that Speed Logistics document their purchasing processes and establishes purchasing routines and manuals, clarifies roles and responsibilities, more frequently examines the supplier market for forklifts, creates a ‘body of knowledge’, make more use of evaluations of suppliers performance and see over the possibility of benchmarking the rest of their purchasing processes against the process for IT-related materials