Course Assignment - A Case Study Analysis On Purchasing

Case Study Analysis

 

Introduction

            In business institutions, people have different responsibilities to do and each of them should be able to ensure that they are doing their responsibilities and duties well. In this case study, the subject is about the conflict in the responsibilities between Rose Silver and Dr. Earl Spiller about purchasing new equipment for the Heights General Hospital. In this regard, the main goal is to analyze the scenario and provide recommendation about the requirements in purchasing new equipments in an institution.

Justification

            Based on the case study, the conflict is between the responsibilities of Rose Silver against the order of the Dr. Spiller regarding the purchasing of new equipment. In this case, it shows that Rose is against the purchasing of the L-971 high-intensity X-Ray processor from New Age Radiology Inc. for the hospital. Silver is hesitant in purchasing this new equipment since she wanted to point out some significant matters to Spiller, however, Spiller seems to have a final decision and did not let Silver to explain her side. For this situation, it can be said that both parties have their own point in the purchase process. In the part of the Spiller, he just wanted to buy this product since he quite knew that although the equipment is quite expensive, it is very significant in the hospital to provide quality health care.  Herein, base on his own decision, Spiller is sure about the quality of the equipment to purchase; hence he ignored and circumvented the normal procedure of buying new equipments for the hospitals through bidding.

            It can be said that such actions of Dr. Spiller can be seen different errors specifically in terms of disregarding the process of purchasing in the institution. Herein, Spiller also disregards the authorities who handle the procurement of equipments and other hospital needs. As a general rule, it can be said that each department or institution obtain products, services or even new equipments through a purchasing process, which are governed by the procurement policies as well as within the purchasing process. For most process, Spiller should consider a requisition which should be generated by the department as well as forwarded to purchasing services for review and approval. In this regard, Spiller have disregarded and ignore the rules and regulations of the purchasing department by having his own decision without even considering the standpoints and view of Silver who has greater responsibilities for this matter.

Risks and Ethical Problems

            Accordingly, purchasing of new equipments for an institution should be committed to fair and ethical business approaches which promote fair and open competition in the best interests of the institution and also work toward the success of having strategic relationships with the supplier.

            It can be said that the hospital institution has at its center the aspect that considering new equipments is best achieve by going to an appropriate and efficient purchasing process. In this regard, if Silver will consider the order of Spiller of buying such new equipments, there are certain risks and ethical problems that can be faced. Not being able to consider the correct purchasing process can lead to problems when it comes to the efficiency of the purchased equipments. In addition, if they will ignore the purchasing process, this may have risks in the future, in terms of the design and price risks within the entire process (Kubitscheck, 2000).  In a hospital setting, the life of the people are at stake in every decisions made, hence, if the decision are done without considering the rules and regulations in purchasing process, major ethical process in the future can be faced, not only by Spiller but also with Silver if she let this happen. However, in this case, the career and job of Silver is also at stake since if she will not follow Spiller’s order, there is a tendency that this might create conflict between them, leading to redundancy and turnover.

In the discussion above, it can be argued that purchasing new equipment for hospital setting is more prone to risks and ethical problems if rules and regulations in purchasing process will not be considered (Williams, 2000). Risks and ethical problems occurs when such decision encounters schedule slippages or cost overruns or produces deliverables which do not meet the needs of the patients. In this regard, people involved in this kind of decision making process, recognize that the worst kind of risks and ethical dilemmas to encounter when one is carrying out such decision which is not satisfactory. 

One of the reasons behind such premise is the notion that having new equipments is a complicated task to handle.  Herein, the risks are very obvious when Silver will follow Spiller without considering the purchasing department and considering or tendering bid for buying this kind of equipment. Some of the reasons for risks and ethical problems of this includes technical risks, human risks, and financial risks.

Technical risk is highest when the purchasing processes thread new terrain or when they entail working with highly complex new equipments which is usually encountered in purchasing process. Basic research and new equipments integration purchasing process are notorious for their technical surprises, specifically if the equipment is still new. On the other hand, financial risk is another reason for I risks and ethical problems (Williams, 2000), since the equipment to purchase is very expensive. Sometimes risks and ethical problems also occurs in the technology used, if the equipment is new and there are not individuals and staff who have enough knowledge on using such equipment (Shoniregun, 2004). Such aspects are being ignored when one is not considering the normal purchasing process.

Financial risk comprises risks having to do with cash flow of the hospital industry ity. The most significant reason for Purchasing process risks and ethical problems is the human resource problems. Human risk happens from the fact that the human players in the said purchasing process— purchasing process staff, managers, customers, and vendors—are complex and only marginally predictable beings.  In this regard, this process will be constantly plagued with problems of human resource reliability, competence, and availability. They are further buffeted by the consequences of other political struggles (which is happening in the case of Spiller and Silver), the turnover of key players, and the fickleness of the patients.  In this manner, the purchasing process can be said to be more complicated that is why failure occurred more if the management do not consider efficient purchasing process.

Area of Responsibility

Considering area of responsibility has been known to be an significant process in implementing various tasks or purchasing process in institution like purchasing new equipments. Area of responsibilities however, requires a number of resources and processes to support it. Specific objectives, risk management techniques, leadership approaches, coaching and mentoring as well as communication skills are some of the essential aspect of area of responsibilities. In this case, it can be said that the area of responsibility of Rose Silver includes the assurance that the equipment to be purchased should go under the efficient purchasing process.  

It can be noted that the purchase process, In our review of the purchase process, we draw on the six-step rose silver can consider six-step process as formulated by Van Weele (2005).

In this regard, the area of responsibility of Rose Silver includes the determination of the specifications. Here, Rose Silver along with the purchasing department should be give the chance to identify specifically for the new equipment. Next is to select a suitable suppler for the said equipment by considering tender to bid for different suppliers to ensure that efficient equipments are being purchased. After, this contracting should be made in which the chosen supplier should be monitored and controlled in the entire contract and purchasing process.

            In this regard, it can be said that Rose Silver have greater responsibility in the entire purchasing process in which Spiller should not be taken for granted, since Rose Silver should know best.

Hospital Department Assistance

            In this case, the hospital should have a purchasing department who has the responsibilities of purchasing and handling and ensuring the efficiency of the purchased equipments. Herein, the purchasing department should have the final say in buying the said equipment and not Spiller since he is not the right person to consider buying this equipment. Although Spiller has specialties and knowledge in what equipment to consider in the hospital, it is still Rose silver and the purchasing department along with the board of directors of the hospital who will be responsible in the purchasing process.

In order to have efficient purchasing process, the hospital institution should have purchasing department who will be involved in purchasing and considering efficient and effective equipment in the hospital setting.  The financial department should also provide assistance for the purchase process since they are the ones who have greater knowledge if their budget can still consider purchasing expensive equipments.  

Recommendations           

There are many purchasing technique and approaches that Silver can consider in order to buy or purchase new Equipment for the hospital, these approaches are known as the procurement technique.   It is very significant that an institution will prefer the appropriate technique in order to maximize the result of the purchasing process.  Consequently, the institution must be able to utilize the Purchasing process and methods that they choose for them not to waste money, time and effort. 

The hospital institution can use the consultants and Purchasing process and methods.  Here, the institution can choose such technique,  in order for the hospital to have total control over the purchasing process and can also seek help from other equipment consultants that would meet the hospitals demand.  The consultant and contractor technique is also an approach that may utilize outsourcing and in-house development.  The major role of a consultant is to provide advice dealing with technical skills as well as contractors is the ones who limit the technical people. Silver can choose consultants and contractor technique to buy or purchase the new equipment so that they can call some outside or external help in using this equipment.  Consequently, this procurement technique is being divided into two categories; consultants and contractors. Silver can use the consultants to provide them the technical skills that they have while contractor will be utilized in order to provide the number of staffs needed required for the new equipment.  Here, the institution per se, can maintain their core technical people to direct and maintain continuity of the purchasing process.  In this technique, the institution can have the right to have the service of other external consultants that may be used in order to have the right equipment needed as mentioned by Spiller.

. These are, recommended approach for the conceptual design, recommended approach for the configuration of a single client, design philosophy, a purchasing process plan, identification of key roles including Sponsor, controller Stage manager and Purchasing process Board membership, logistics issues, early estimates of internal and external resourcing, estimated total cost, identification of benefits and avoided costs and identification of risks that might be encountered. In addition, the company  can also use another approach to buy the new equipment without having risks and ethical problems to be faced in the future.

The concept of Invitation to Tender (ITT) is that, for the institution who wants to buy or purchase the new equipment of certain provider, the management of the institution should engage itself in a market mechanism auction. Here, the institution must include in its Invitation to Tender (ITT) actions, the following context such as the hospitals requirements specification, their proposed purchasing process plan, contextual information, quality aspects and issues, the possible risks, skill or the product sought and the criteria of success.  When the procurer has given the Invitation to Tender (ITT) to the provider of the new equipment, the provider will then perform an assessment of opportunity and produced costed proposals. In addition,, when the institution seeking for a purchasing process provider have received this proposal, the institution will then evaluate the set criteria, draw up  request for provider’s best and final offers from the supplier. After such long process, the two involve parties will settle their final negotiation thus enters signing of contract.

Reference

Kubitscheck, V. (2000). Risk Management: Finding The Value Within. In   Balance Sheet, Vol. 8, No. 5.

Shoniregun, C.A. (2004). An investigation of information systems project failure and its implication on organizations. Int. J. of Services Technology and Management 2004 - Vol. 5, No.1  pp. 25 - 41

Van Weele, A.J. (2005), Purchasing and Supply Chain Management: Analysis, Strategy, Planning and Practice, Thomson Learning, London.

 

Williams, T. (2000). Systemic project risk management - the way ahead Int. Journal of Risk Assessment and Management, Vol. 1, No.1/2  pp. 149-159