Download Supply Chain Management Case study: Purchasing Professional

Supply Chain Management
Case study: Purchasing Professional Services:
The Case of Advertising Agencies
Made by:
Horeyah AL-sayed 200700644
May AL-jafar 200800378
Sajedah Al-Marzouq 200700199
Instructor: Dr.Daliya younis
section: 201
Due Date: 11th of November. 2012
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Table of content:
Abstract …………………………..…… 3
Executive summary ………………...….4
Introduction ………………………...….5
Conceptual framework……………...…6
Technical part …………………..…...…8
Evaluation…………………….……...…9
Recommendation……………….…...….9
Summary………………….………….....9
Our opinion .............................................10
Conclusion ……………………………...11
References…....………………………….12
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Abstract:
Purchasing a service can make divided into two demotions: generics like security the other can
be professional like advertising, legal and engineering, her is the task for purchasing manager
can describe. The managers have to focus on the efficiency of the advertising agency rather than
the effectiveness Commercial contribution rather than a marketing contribution.
The purchasing manager has to collaborative with the market to select, evaluate and mentoring
the agencies. The potential role of purchasing in the agency-client relationship can be readily
explained using a standard model of buying which includes the five roles of: user (who use the
service of an agency)*buyer (negotiated with the agency) influencers: Individuals who influence
the selection process (e.g., define selection criteria). Deciders: Individuals who determine and
approve the final selection of the agency. Gatekeepers: Individuals who guide the flow of
information. Purchasing managers are rarely direct users of advertising agencies, but could
contribute to all the other roles.
A starting point in examining the potential role of purchasing in the agency selection and
development of the agency- client relationship is consideration of the two prevalent Types of
agency- client relationships: the short-term “project” and the long-term “collaborative.” and the
imp group help to obtain understanding the demotion of advertising agency. and that could be
done by three element: product, information and society. Purchasing the advertising services has
no concise warranties of performance.
It is possible for purchasing to evaluate budgeted cost versus actual cost and to analyze costbenefit ratios with services, but effectiveness is very difficult to evaluate. Selection of the
agencies depends on three stages: search, alternative evaluation and choice, each stage has
requirements. The relationship between agencies and clients is often intense and somewhat akin
to a marriage. Whether or not purchasing managers should become involved in sourcing for the
agency, proved to be more controversial.
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Executive summary:
There are several important and basic aspects regarding the job of the purchasing services in
organizations. In business organizations and specifically in big ones there is a department. It will
be important to know how the purchasing a service works and how it differs from purchasing a
good. The other part of the case study focuses on the advertising business, which offer service to
other businesses.
These two professional encountered each other in this case study to give a picture of a service in
which purchasing managers’ poor experience in dealing with buying the advertisement service.
The case study comes out with conclusion that facilitates the combination of purchasing and the
advertisement service into a team approach to services as well as it defined the agency/ client
relationship.
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Introduction
The general principle of business that the there are tow parties represented by a service provider
or a product delivered from one side, and the customer who receives this product or service, this
principle takes new aspects when the service provider is an advertising agency and the customer
is a porches manager.
The case showed that, the purchasing professional services is different from purchasing goods.
Purchasing managers are employees in most companies whose role and responsibilities include
compiling the process of buying services and products that the organization may need. This
nature of the purchase managers, make them to deal with different types of businesses like legal,
medical and of course goods. How they differ, is because service provide is something that
cannot be touched. and this fact affects greatly when it is about advertising service,.
This case showed that the role as in regular organizations, should be commercial only and the
organization’s management to decide and these in ordinary situations look for the effectiveness
of the potential agency. But the fact turned out to be different. It turned out that it is important for
purchasing and marketing departments and to work together when choosing an advertising
agency.
The advantages of gathering these two in the purchasing process include more than one goals
that include adding value, improving commercial and cost efficiency and also the ability to
make good contract negotiation.
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Conceptual Framework
Several sources discussed the role of the purchase manager and also the purchase department.
The sources mention that not all business organizations have purchase department but the big
among them and in some businesses more than the others.
According Barry (2001), the responsibilities of the purchase manager include doing procurement
researches on the sales records and also in the inventory records to be updated with the current
stock. The role of the purchase manager also includes finding suppliers whether inside the
country or from abroad. In general, the purchase manager maintains follow up on the changes
that can happen in any of the supply or the demand of the products and materials needed. Other
sources added details about the job of the purchase managers and their department.
Qaily (2006) added that, the purchasing managers are actually buyers and some times they are
called the purchasing agents. In all definitions the duty and aim is to find the best merchandise
for theory organization and at the lowest possible purchase prices. The purchase department
monitors and plans of the work that the purchasers and buyers conduct. Purchasing managers
supposed to be dealing with such professional services like legal, , computing, and many other
professions including advertising. The sources also discussed the purchase of advertising
services.
According to Elisa (2001) the differences between the process of purchasing service sand the
process of purchasing were both developed based on the review of the relevant fields of business.
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The purchasing managers are usually ambitious employee with some purchasing experience.
According to a study conducted for several interviews they mostly need better understanding of
field differences.
The differences are there between in number of years of purchasing experience and also the type
of purchasing experience .Professional services, Software development, telecommunications, and
advertising are examples of professional services and most of these services are account for
about 71 percent of the GNP (Gross national product), 75 percent of the employment in the
United States, 4 and about 30 percent of world trade.
As we know the difference between professional service and good because the low level of
employment in professional services. There are four assumption explain the difference between
professional goods and service. These assumptions are: intangible (there performance cannot bee
seen) inseparability of production and consumption another issue is Heterogeneity quality may
vary on a day-to-day, customer-by-customer basis Perish ability relates to the issue that services
cannot be saved and stored. But from the purchasing perspective there are some evaluation
stages I have to consider, from easy to difficult. The most concern about purchasing professional
service is the higher risk because if intangibility.
So they are have some way to recover it, they actually use the positive word of mouth (WOM)
and this one of the key way which buyers of service exchange information and reduce the risk.
After risk is happened offcurce there is a losses even in financial, time-based, physical or
pschycosoal (embarrassment or loss of self-esteem) in nature.
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Technical Part
The background of the case supposed to be a purchasing managers who does his regular duties
that include which include together with his staff, the regular marketing actions such as help
selecting, evaluating, and monitoring agencies which could be a potential supplier for the
company’s regular needs whether they are materials or services. This what supposed to be the
regular chores for the purchase manager to do, all of a sudden encounters a new challenge. On
the other hand, advertising companies are also potential service provider for business and heir
access gate to companies are the purchase mangers.
This is how the purchase manager and the advertising agency came to meet. This case study cast
light on this purchase of advertising services. At the end of the case, the purchase managers
found himself extending his duties to respond to the efficiency of the advertising agency whereas
it was supposed to on the effectiveness which is a commercial cooperation not a marketing one..
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Evaluation
As its shows, the case represents a study of the interaction between the purchasing services
management an organizations from one side, and the efficiency of advertising agencies as service
provider. The relationship which supposed to be as service provider and a client, took deep
dimensions. The case study gave an ida about the professionalism, psychology and the
functionality of purchase managers. It also gave deep insight of the advertising business in
general and how advertising agencies deal with their potential clients to reach to the customer.
Summery
There are differences between the process of purchasing services and the processes of purchasing
goods because of the none touchable nature. The advertising agency services are the best
business where the difference between product or service is the clearest. The job of the
professional purchase managers should be just buying, whereas its the responsibility of the top
management to evaluate the effectiveness. It is important that, the purchasing and
marketing/advertising functions to work together when they want to choose the right advertising
agency because such type of purchase purchasing needs to be done as a teamwork.
Recommendation:
The purchase manager’s company should have fully prepared him for roles that his duties may
force him to play. The advertising agency as a service provider should have offered an integrated
service that save the purchase manager’s critical situation.
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OUR OPINION RELATED WITH SUPPLY CHAIN
Advertising Agencies
Advertising and communications agencies, and a variety of associated companies, such as
creative, media, public relations agencies, and direct marketing, (hereafter all will be referred to
as advertising agencies) they generate communication plan ,idea and implement them. he
potential role of purchasing in the agency-client relationship can be readily explained using a
standard model of buying which includes the five roles of “user,” “buyer,” “influencer,”
“decider,” and “gatekeeper. Cagley and Roberts found three key criteria used to select agencies:
1- the quality of people assigned to the account; (2) complete agreement between the agency and
client on goals and objectives; and (3) the need for agency personnel to Thoroughly learn the
characteristics of the client business the interaction.
The short term (project) and long term(collaborative) are the starting point in examining the
potential role of purchasing in the agency selection and development of the agency- client
relationship. The short term can be explained by: Once the agency has offered and implemented
a solution, the relationship is dissolved, in my opinion,in The trade- offs are that there may be a
lack of commitment from either side and a need for greater coordination. But Collaborative
advertising agency-client relation- ships continue to be the norm for medium and larger
advertisers, although the average length of time for agency-client relationships is approximately
seven years. Purchasing managers have rarely had significant involvement with long-run agencyclient relationship. IMP (industrial marketing and purchasing group), is useful to obtain
understanding dimension of agency client collaborative relationships
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purchasing service
I agree with the fact purchasing service is a little pit more complicated than purchasing goods
because the buyer may not be able to assess the quality of the service.
advertising service
However, purchasing an advertising service supposed to be easier than the rest of the type of
services for the fact that, the advertising at the end gives products that can be seen like posters,
motion pictures and other arts.
advertising agency
believe selecting an advertising agency is one of the easiest tasks because, the advertising works
are all over and wherever we go. This makes it just see which add caught your side and then read
the advertiser behind it.
Conclusions
The case showed how purchasing managers may find themselves playing another role during
their transactions with advertising agency. The unexpected role was centered in relation to with
the efficiency of the advertising agency they were dealing with instead of the effectiveness.
Therefore it was a commercial contribution by the purchase manger rather than a marketing
contribution in the agency.
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List of references
Evaluating Industrial Services, Vol. 14, No. 4 (Feb. 7, business journal, 2012), Issue EF12
http://www.rolandberger.com/expertise/industries/engineered_products_high_tech/industrial_
services/
Qaily, S., (2008) Problems in Contracting for Professional Services, Vol.11, No. 4 (Winter
1975), p. 9.
http://www.acquisition.gov/comp/aap/documents/Appendices/APPENDIX%2023%20%20Effectively%20Managing%20Professional%20Services%20Co.pdf
Peter., W., (2004): Total Cost of Ownership in the Services Sector: A Case Study, Vol. 42, No.
1 (Winter 2006), p. 27.
http://management.about.com/od/money/a/TCO.htm
http://www.adoperationsonline.com/tag/advertising-supply-chain/
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Horeyah AL-sayed 200700644
business (abstract, conceptual framework part2, professional service
and advertising agency – opinion 1)
May al-jafar 200800378
business (evaluation, recommendation and conclusion opinion3)
Sajedah Al-Marzouq 200700199
finance(introduction. conceptual framework part , technical part 1,
opinion2)
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