World Class Procurement Practices and Its Impact on Firm Performance: A Selected Case Study of an Indian Manufacturing Firm

Abstract

Procurement Management has emerged as a key approach for enterprises seeking to become competitive in the long run. This paper aims to evaluate and describe world class procurement practices and impact on firm performance among various Indian manufacturing organizations. In order to sustain competitive edge in extreme cut throat competition and also global recession has forced producers to reduce cost and improve profitability without compromising with quality of the goods/services which is finally delivered to the customer. Procurement has major impact on direct material costs which constitute around 40%-70% of the total cost of the goods sold (Aberdeen Group, 2006; Bumpas and Betsch, 2009). Thus, it is likely the way purchasing is managed can significantly impact a firm’s financial performance. Our research uses longitudinal case study methodology, which gives a possibility to be close to data, enabling in-depth insight into procurement practices. The study was conducted at a mining and bulk material handling equipment manufacturing company in India with multi location plants across the globe. Procurement directly impacts on the corporate strategic planning process of the firm mainly with regard to aligning the strategic goals of procurement management with the firm strategy. To strategically manage supply, managers must examine the effect of procurement on competitive position and firm performance. Indian firms have increased their environmental awareness due to regulatory, competitive, and marketing pressures and drivers. However, this awareness has not been translated into strong GSCM practice adoption

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