Improving procurement process efficiency and optimization strategies of Shopfront Limited (ShopUp)

Abstract

This practicum is an attempt to summarize and analyze the experience as a Procurement Specialist in Shopfront Limited (ShopUp) and is prepared as a requirement of the Masters in Procurement & Supply Management program of BIGD, BRAC University. This report provides my experience and insights from my tenure here in ShopUp. The report focuses on the procurement processes and optimization strategies at Shopfront Limited (ShopUp), a leading B2B commerce company in Bangladesh dedicated to empowering from micro-entrepreneurs to large multinational companies. During my tenure as a Procurement Specialist, I observed that ShopUp's procurement department plays a crucial role in enhancing profitability and reducing operational costs. However, several challenges were identified, including the use of multiple systems (ProcureX, NetSuite, and CRT) that hinder efficiency, average supplier relationship management affected by lead times and payment terms, and limited performance metrics focused only on purchase saving reports. Additionally, inadequate data visibility delays informed decision-making, lengthy approval cycles for purchases above BDT 50,000 create process bottlenecks, and sustainability initiatives within the procurement process are minimal. Current cost control measures are also being challenged by global inflation and fluctuating commodity prices, further complicating procurement activities. To optimize ShopUp's procurement processes, several strategic recommendations are proposed. Integrating a singular procurement software or ERP system would streamline operations, enhance efficiency, and ensure compatibility and data security. Developing a supplier segmentation strategy and fostering regular communication with key suppliers can build long-term partnerships, drive innovation, and mitigate risks. Utilizing data analytics for accurate demand forecasting and implementing Just-In-Time (JIT) inventory management will reduce excess inventory costs while ensuring product availability, particularly for nationwide distribution centers and RedX hubs. Expanding key performance indicators (KPIs) to include metrics such as cost savings, supplier performance, and process efficiency, along with conducting regular audits, will drive continuous improvement. Simplifying the post-facto approval process with CEO & Procurement Committee approval, allowing competitive sourcing waivers in specific circumstances, and creating a robust supplier dispute resolution policy along with flexible policy revision process regardless of all procurement aspect will further strengthen the procurement framework. By adopting these strategies, ShopUp can achieve significant improvements in procurement efficiency and overall performance, supporting its mission to revolutionize the e-commerce market and foster entrepreneurial success in Bangladesh. The procurement department of ShopUp works for all its business units. Procurement is considered as a strategic function in ShopUp that serves to improve the organization's profitability and lower the 'bottom line”. This report reflects the overall procurement operational flow and practices ShopUp follows to ensure optimum growth and smooth operation. Since, ShopUp is a startup and comparatively new company, it has many limitations. There are several recommendations which I believe will help ShopUp to bring positive outcomes to the procurement process & help optimize it.