Improving Purchasing Activities with a Hybrid Purchasing Structure

Abstract

Purchasing or procurement is undoubtedly one of the most vital function in any business because it secures a smooth flow of needed materials or services at the right quality, right place and price for the operation. There are plenty of problems with purchasing functions depends on the nature of the company and its operating market. Choosing the right purchasing structure is one of the trickiest problems that organization often face, and the hotel industry is not an exception. Unlike the big and international franchised hotel companies which have established fixed purchasing systems and structures, small and local hotel businesses still struggle with figuring out a suitable and efficient purchasing structure for them. The objective of the study was to study the purchasing function at the case company to identify the existing problems and how to overcome them by the choosing the most suitable purchasing structure. It was expected that the analysis and the solution generated from the observation and interviews would provide the case company the overall picture of their current purchasing efficiency and the direction of how to enhance it. The qualitative & quantitative combined research method was chosen to achieve the targeted objectives. Interviews with the purchasing staff and other related departments were conducted, which were then transcribed and analyzed. According to the result, the centralized purchasing structure is proved to cause the inefficiency of the function. The recommended structure with the suggested implementation plan will transform the operation and enable the business to leverage its competitiveness.