Evaluation of the impact of informal communication on the purchase process in two Hong Kong tertiary institutions : City Polytechnic of Hong Kong and Hong Kong Baptist College : a comparative case study

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Evaluation of the impact of informal communication on the purchase process in two Hong Kong tertiary institutions : City Polytechnic of Hong Kong and Hong Kong Baptist College : a comparative case study

 

Author: Au, Yiu-fong Albert
Title: Evaluation of the impact of informal communication on the purchase process in two Hong Kong tertiary institutions : City Polytechnic of Hong Kong and Hong Kong Baptist College : a comparative case study
Degree: M.B.A.
Year: 1994
Subject: City Polytechnic of Hong Kong
Hong Kong Baptist College
School purchasing -- China -- Hong Kong -- Evaluation
Purchasing -- Case studies
Hong Kong Polytechnic -- Dissertations
Department: Dept. of Management
Pages: 1 v. (various pagings) : ill. ; 30 cm
Language: English
InnoPac Record: http://library.polyu.edu.hk/record=b1152524
URI: http://theses.lib.polyu.edu.hk/handle/200/4777
Abstract: Equipment purchase which constitutes a substantial amount of expenditure in excess of HK$ 176 billion in 1992-95 triennium in the seven government funded tertiary institutions is a potential area worthwhile considering for cost reductions. Effective and efficient purchasing and supply operation through optimal use of available resources is the core area for achieving cost savings over a wide range of purchases. It has been brought to the attention of the Buyers that the User departments have quite commonly recommended acceptance of tenders other than the lowest offers. In most cases, the tender specifications document itself has been written so that only one particular "make" or model could meet specifications fully. Such tender specifications may be copied exactly from a particular product catalogue, thus confining the equipment purchase to the "only" product made by a single manufacturer. This practice dominates equipment purchases to the single source without any fair competition for price, quality, and after-sales service. The above "malpractice" violates the purchasing and supply principle of purchasing equipment based on fair and open competition. Secondly, it destroys the buyer-seller relationship which has long been built on the basis of fair business dealing. Suppliers, other than those involved in the "Back-door Purchase" ones would not waste their time and effort in biddihg for any tender once they notice specifications are copied exactly from a particular product catalogue of proprietary design. Thirdly, the number of Suppliers trading with such institutions with "Back-door Purchase" practice will be rendered automatically and gradually. This leaves the institutions with fewer alternative offers / suppliers for election to tender. Questionnaires are sent to the Buyers and Users in the two institutions to find out following: a. Does informal communication between User and Supplier exist in the City Polytechnic of Hong Kong and Hong Kong Baptist College? b. Does information communication between User and Supplier cause inefficiency and have cost impact on the purchasing and supply function? c. If yes, then what are the cost impacts on such communication on the purchasing function of the two tertiary institutions? d. If it does not exist, can we identify what other factors contribute to the ineffective cost impact on purchasing function in the two tertiary institutions? The results indicated that Users appeared to discuss more with the salesman both personally and jointly and perceive more benefits from discussion than Buyers. This involvement, in comparison with Buyers, might be attributable for the increased price of the product purchased by Users. Those perceived benefits, such as clarification of product specification, might not be worth the increased price of the product. On the other hand, Buyers were more effective in building up relationships with Suppliers. The good relationship with supplier might lead to a lower product price. It is recommended that the setting up of the central library to maintain updated product catalogue, trade directory and tender records in the Purchasing Office could help to achieve the objective of reducing informal communication between Users and Suppliers because Users could easily obtain their needed product information by accessing the central library in the Purchasing Office of the institution, thus reducing chances to have personal contact with Suppliers. It is further recommended for the adoption of an effective implementation and monitoring of the Supplier's Performance Evaluation System. The model of program analysis technique is recommended for use in tracking the supplier's performance. Program analysis is proposed as useful tool to evaluate and highlight problem areas for improvement.

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