Project Risk and Procurement Management Decision theory

Question: Describe about the Project Risk and Procurement Management for Decision theory. Answer: Introduction: The project risk and procurement management are necessary for managing all the activities which is done for developing a project in IBM. IBM is considering as the software company in this paper that is founded in the United Kingdom. IBM is a well-established company which provides various software solutions and software services. Project risks are identified at the time of planning to implement the project. Project risk is the event which is uncertain and not easy to manage. It is a condition of defect which can be occurred at the point of development of the project. Project procurement is the activities which are being done in a company at the time of the project development. It is a process that is used for acquiring the service and the software solution in a particular company (Stadtler 2015). The first step of the project procurement is planning and purchasing of required software tools. The outsourcing of the software solution takes place in this phase. The objectives of the project are reviewed at the time of planning the procurement for ensuring the resulted output. It is the process used in IBM to acquire the software solutions and the services. Procurement is the term of the management to define the significant part of non-paid expenditure. Procurement Strategy: The procurement strategy of IBM is the term to plan an approach for purchasing the required tools. The aim of procurement strategy of IBM is to achieve the lowest overall costs for developing the software tools. The procurement strategy is referred to the implement the approach for managing the handling the budget and project risks and opportunities at the time of development (Samvedi et al. 2013). It is very important to understand the working requirements to implement an effective procurement strategy. The working requirements must be analyzed all the factors including the objectives of developing projects and objectives of the business. The procurement strategy is used to develop strategy for the growth of IBM. Procurement strategy is used for the identification of the supplier (Mena et al. 2014). Supplier identification: The company must pay attention to which they paid the invoice. It is used to develop the supplier relationship management and the first step of supplier relationship management is to identify the supplier. Supplier Segmentation: The numbers of the suppliers are identified to whom the company has paid the invoice. The process of segmentation of the suppliers helps the organization to find out those suppliers who can contribute to the business strategy (Theodorakopoulos et al. 2015). Figure 1: Model of Procurement Operations (Source: Mena et al. 2014) Supply Chain Management: Supply chain management is the process to identify and manage the required resources or the tools to develop the software. Supply chain management is the process to manage all the needs and to supply all the resources that are required for the development of the software. Supply chain management is the term defining the activities which are being done at any workplace. Supply chain management includes all the activities and the tools of a workplace such as material or the physical goods and the software services as well as the required resources. Supply chain management is the mix-up of the information, software project and services and the tools or materials and the financial condition of a company (Alexander et al. 2014). Supply chain management is the term to define the activities done by management in a company. It is used to manage the flow of software good and the services in any company.IBM use the supply chain management to manage all the software projects. Supply chain management flow can be divided into three parts such as: 1. Product Flow In the product flow, the supply chain of the software service from the supplier to the customer is described. The flow to supply software services is defined in product flow and the supply of the software may be the supplier to customer and may be the customer to the supplier for the improvement (Valds et al. 2015). If, there s an error occurred at execution time so the customer can revert that software for the improvement. This type of flow of the software and the services is known as the product flow. 2. Information flow: The information flow in IBM is the term where the information foe developing the software tools is exchanged between the customer and the supplier or within the organization to communicate with the employees of the organizations. The information flow takes place when the customer places the order for any service or the software. It is the term which is used to update the delivery information and the payment information. 3. Finance Flow: Finance flow is the way to define the debits and credits done in the company. The charges for providing the software services and the software come under the finance flow term. There is two other type of software supply chain management explained such as to plan the applications and to execute the applications. Supply chain management is used for planning to develop the applications. It is used to implement the development strategy of the software project. The development of the applications is planned using the algorithms. An appropriate algorithm is used to find out the best way to complete development of the software (Christopher 2016). The execution of the application is used to track the status of the software development or the software tools and to track the management of the materials and the financial involvement of the supplier and the customer. Supply chain management is the process based on the open data models that are used to support the data sharing within the organization. Supply chain management is the process to support the sharing of the data outside the organization also (Volk et al. 2014). The shared information or the data can be store d in various database systems or the data warehouses or the clouds. Supply chain management is used to increase the potential for the improvement of the software consumption. Supply chain management is used to reduce the cost of the project development and to reduce the risk of the project which may occur at the time of the development. It is also used for implementing the better supply chain of the current tools and the available resources. It is necessary to manage the resources for the future so that the scarcity problem of resources may not occur. Supply chain management is helpful for managing the development of the website or the various web applications which have been developed in any software company or IBM (Bozarth and Handfield 2016). SCM provides some solutions for managing the development of the software. Figure 2: Model of Supply Chain Management (Source: Bozarth and Handfield 2016) Procurement Processes: The procurement process of IBM is the way of purchasing the software tools or software services. It is the process of acquiring the software services and managing the purchase and sell of the software projects and the software services. The procurement process in IBM is used as a bid process to acquire the software services from the outside or to provide the software products to the other organization or the customers (Rita and Krapfel 2015). It acts to acquire and to purchase the software services from an organization. Procure is the term to handle the marginal benefits, price fluctuation and the delivery status and the placed orders as well. E-procurement: E-procurement process of IBM is the process of business to consumer, business to government and business to the business sale and the purchase of the goods and the software projects and the software services through the internet. The value chain of the e-procurement is made up of the electronic information, electronic tendering, electronic auctioning and various electronic activities which are done using the internet (Fernandes and Vieira 2015). The management of the indent includes the workflow involved in the preparations of the software projects tenders. Indent management part of the workflow is optional that is helpful to provide the best indent process for the procurement. E-procurement Capabilities of IBM: The catalog of the products is tailored with much currency and many language supports. There is an option available for the online product customization so that the customer can avail those IBM products which customer needs. There is an option for automated order entry so that the customer can place the order with less number of errors (Phillips 2013). E-procurement supports some platforms in IBM: SAP Oracle Ariba E-Marketplaces Sustainable Procurement: Sustainable procurement is a process of investment and purchasing. Sustainable procurement is a process that is being used in IBM to control the social and environmental impacts of the investment and purchasing process. This process is used by IBM to fulfill the requirements of services and the work utilities (Morozov et al. 2016). This process is used to meet the required resources to the organizations such as software tools and the services. Sustainable procurement is used to gain the profits in IBM by fulfilling the requirement of all the resources and it is also used for generating the value for money in any organization to make the profit. Sustainable procurement can be used by all the organizations to make sure that the purchasing goals of the company are linked to the climate change and the resource efficiency. Importance of the procurementfor global organizations operating in complex environments: The procurement is very important for the success of the global organization. Procurement is important for purchasing the software and for developing the error free software. Procurement is helping the global organizations in such ways that the old manager never imagined. According to the report of The Boston Consulting Group, the importance of the procurement functions is describing. By using the procurement process, any software company such as IBM can implement the strategy to reduce the risk such as the project execution error. Procurement is important for the rapid growth of the companies (Yan et al. 2016). The procurement process is very important for IBM Company Such As IBM increased its growth rapidly and formed a remarkable transformation over last fourteen years. The procurement team of IBM is stationed in various countries. By using the centralized and decentralized process, IBM transformed its procurement. Procurement enables the companies to outsource and offshore their manufacturing operations. The total turnover can be improved by using the functions of procurement. It is helpful to regulate and improve the production of the company and the services provided by the company. The procurement process is very efficient for making the right decision for the cost of the goods. It affects the overall cost carrying out the decision. The total cost of the software projects and the software service decides by using the procurement by many departments of the company. The procurement process is related to the strategic functions or the strategic working to increase the profit of the company. The prices of the tools used for developing the software can be reduced by using the procurement functions and the total cost of developing a project can be reduced. Procurement process enables the company to find out the best resources to develop the software project or any other projects. The procurement process is necessary to reduce the risk of the failure of any project at the time of execution. The output can be maximized by using the procurement functions regarding research within the available funds. By investing the same capital, the resulted output can be improved of the software solution. In the public sector, the funds for investing comes from the public in the form of student fees paid for purchasing any software and from the grants and from the taxes paid by the public. Procurement is necessary for ensuring that the possible value for the money is obtained at the time of commitment of the expenditure. Procurement functions are used to analyze the result of the project that the resulted out is same with the targeted out or it is not same. The procurement process is used in the global organization to reduce the risk of the failure of the project and to meet the user's requirement. Procurement supports the operational requirements of the companies such as to understand the requirements of the business and the strategy to purchase the software services or goods from the right source and to sell the goods to the specific users. Identifying the opportunity and the objectives of the company is necessary. Contribution of the procurement to IBM: The contribution of the procurement functions is very wide in the global organizations. The role of the procurement in IBM is to sustain the software service and the software projects to meet the internal requirements of the organization. The functions of the procurement are helping the organizations to understand and implement the strategy for purchasing the goods and the software services. The procurement process is important to manage the supply chain process of a company such as to identify the opportunities, achieve the objectives and to manage the internal and external operations. Procurement gives the value to the managers of the company to evaluate and select the supplier to supply the software projects and the software services. The procurement process the purchasing of the tools which is required for developing the software projects. The review of the software specifications is done under the procurement functions. The sourcing teams increased by the procurement function an d the total turnover can also be increased by using the procurement functions (Ferri et al. 2014). Procurement function allows the organizations to take advantages of the discounts and the warranties given to the customers. The procurement allows IBM to negotiate with the local vendors to take the advantages of the discount on the software solutions and services. In 1990s early, IBM was the decentralized organization and the end user' review was very negative for IBM. There was the lack of the sourcing expertise. The process of IBM was very inconsistent and the paper intensive. The technology used in IM was very not high technologies and there was a lack of the basic information. A procurement function contributes the organization in many ways such as to manage all the process well. Now, IBM is one of the top- most IT company. Procurement functions are very helpful for IBM to establish a reputation among the competitive market and to be established in the global market. Contribution Chart of Procurement functions to the global market: Business Metrics Early 1990s Current Report Savings / Competitiveness Unknown Topmost competitor for every IT company Maverick Buying 30 - 40% Increased Satisfactory Audits 55% 99.9% Client Satisfaction 40% 100% P.O. Processing Cycle-Time 30 days Less than a week Contract Cycle-Time Length 6 - 12 months 40 (+) pages Depends on clients requirement (Source: Ferri et al. 2014) Competitive advantages of the Procurement management functions: Procurement management functions enable IBM organizations to gain various competitive advantages. Procurement management helps IBM to develop the strong procurement capabilities using procurement transformation. A procurement management function enables IBM to drive a high-value strategic approach in the global environment. An innovation process is focused on leveraging the procurement capability and synergy. A procurement management function enables IBM to follow the CSCO agenda is used to manage the supply chain, risk and the globalization. Procurement management functions are all about doing the right purchasing works to provide competitive advantages to an organization (Monczka et al. 2015). In 1990s IBM was not highly valued by the top business but in today era, IBM is the well-established company. Procurement management functions enable IBM to handle all the activities very well. Literature review for the project risk for IBM: A literature review is designed for the examining the potential to develop the useful and the error free project. When the software developer is developing a project and the developer is not able to achieve the targeted output then there is the high probability of the risk occurrence. There may be some uncertain or unexpected variation that affects the quality of the project. The project risk management in IT includes tow processes that are risk evaluation before developing the project and managing the risk at the time of the development. The focus of this report is to manage the risk at the development time of the project (Kern et al. 2012). In a study of 56 decision support system, there are four implementation strategies suggested by Alter to manage the project risk. Those four strategies are following as division of the project activities to the responsible and qualified person, to keep the simple solution and the solution should base on satisfactory output and the last is that the developed project should meet the user's requirement. Literature review of the Procurement Management for IBM: Procurement management is the way to manage all the purchasing and selling process of IBM. The literature review of the procurement management for IBM is divided into three parts. In the first section, the dimension of IBM responsibility is introduced. This section shows the various environmental management system and methods. The second section is used to define the supply chain management process of IBM that concentrated on various procurement functions (Yang et al. 2015). The third section of the literature review is the mixed strategy of the first and second part. The third part of the literature is used to transfer the environmental issues into the various phases of procurement accounts. Supply Risk: Supply risk is a process to define the chances of incidents and the chances of the project failure. Supply risk is used to define the risk associated with the inbound supply. Supply risk is the term used in any IT company to identify the risk which can occur at the time of project development. Supply risk can be managed by using the supply chain management (Hoffmann et al. 2013). Conclusion: Project procurement in IBM is independent activity that is carried out at the time of project execution. It is a systematic process to identify and procure the activities done at the development time of a project. Project procurement is the function for the project manager and project procurement is very necessary for IBM or all the organizations to manage the activities and to earn the profit. Project procurement functions help IBM to be established in the global markets (Costantino et al. 2015). The procurement and the supply chain management are the processes used in the various organizations to manage all the activities done in an organization. In short, it can be said that the procurement and the supply chain management is the way to handle the project risk to make the project successful and to increase the value of the company in the global market. Reference List: Alexander, A., Walker, H. and Naim, M., 2014. Decision theory in sustainable supply chain management: a literature review.Supply Chain Management: An International Journal,19(5/6), pp.504-522. 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