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Needs identification is a process where a firm determines what a consumer in the market wants in a product. The needs reflect on how the customer thinks or perceives the product. Commercial equivalents which assist the company to understand customer’s needs in a product though use of the acquisition process, while giving the company an opportunity for product improvement (Johnson, Leenders & Flynn, 2010).
It is important to separate the two entities because specification of the need should be first and later on there is development of approaches to meet those needs. The statement shows that one has to occur before the other, meaning they cannot be in the same phase. Apart from that, need identification should be separate because it depends on a number of factors such as company location, size and nature. In addition, performance of need identification first will be advantageous to the business as it can result in lower production costs and opportunities to develop better solutions to meet consumer needs.
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ESI process is important as it ensures that a developed product is purchasable and of significant value to the customer. It also has to make sure product is of high quality and it effectively serves its purpose. Another advantage of the process is that it prevents the trouble a business may experience while trying to redesign a product decision after managers approve it. In addition it ensures that there is collaboration between suppliers and manufacturers, while also improving on communication to share skills and experience. The benefits of the process influence the overall status of the business, as it add value to the company’s credibility and brand (Johnson, Leenders & Flynn, 2010).
The advantageous outcomes make it crucial for the process to effective during its implementation. Failure to successful utilize the process in business operation results in adverse outcomes such as huge loses as consumers in the market will not purchase the product, loss of time and resources, increase in cost to redesign the product or perfect it and lose of investments (Schiele, 2010).
The advantages of specifying by performance are such as removal of communication gaps as both the supplier and manufacturer will be able to communicate the requirements to fulfill the needs of the consumer. It also improves the relationship between the two parties, as they will be able to work together more closely (Tenhiälä & Salvador, 2014). The business can also specify the purpose of the product and the approach allows the firm to transfer some responsibilities to seller. The disadvantages are such as if there is no thorough specification of the requirements then the process can have errors. If a business does not specify it expectation or goals, it can also have an adverse effect such as delay in product development/production. Two or more companies can have a contract with the same supplier, which can result in poor performance.
The process of need identification to establish significant demand for a product will require a high level of supply skills (Johnson, Leenders & Flynn, 2010). The most important element, as a supply professional, is to understand strategic requirements, as they will influence the decisions of various factors that affect identification of needs. Another aspect that is of significant importance is the finances of the business. The concentration of this part of the business will ensure there is identification of opportunities that can result in company growth. In addition, the professional has to have a significant level of accuracy to ensure there is accurate description of needs and the production process pays strict attention to them.
- Johnson, P. F., Leenders, M. R., & Flynn, A. E. (2010). Purchasing and supply management (14th Ed.). Boston: McGraw-Hill Irwin.
- Tenhiälä, A., & Salvador, F. (June 01, 2014). Looking Inside Glitch Mitigation Capability: The Effect of Intraorganizational Communication Channels. Decision Sciences, 45, 3, 437-466.
- Schiele, H. (March 01, 2010). Early supplier integration: the dual role of purchasing in new product development. R&d Management, 40, 2, 138-153.