Capital Budgeting and Debt Administration, Essay Example

Standardization, by definition, is the process of developing and implementing technical standards. These could be a standard specification, standard test method, standard definition, or standard procedure. Standardization means there is a global understanding of the process or item. In supply chain management, standardization is used in the purchasing process and procurement of goods and services. (Wikipedia, 2012)

Where standardization is the process of implementing technical standards, specification is an explicit set of requirements that a material, product, or service must meet. Specifications are one kind of technical standard created during standardization. (Wikipedia, 2012)  Specifications help to avoid errors and suppliers, purchasers, and users must understand and agree on specification requirements. (Wikipedia, 2012)

In regards to the purchasing process, “the use of standard purchasing procedures should reduce the possibility of errors and ease the tasks involved in identifying the root causes of a problem in the purchasing process.” (Sanchez-Rodriguez C., 2006) Implementing standardization allows purchasing managers to spend time on other activities, such as cost/value analysis and supplier development. Features of standard purchasing procedures include being used as a reference to evaluate performance, providing a basis for training, auditing, and diagnostic activities, and providing a method for managing knowledge. (Sanchez-Rodriguez C., 2006) Though the use of standardization and specifications are generally seen as improving the purchasing process of businesses, there are some difficulties faced when implementing standards. One is that technology changes, and so standards and specifications require continued updating. If existing systems are not compliant with new specifications, then there may be additional costs to convert and update. If standards are not implemented in full at the same time, conflicts among businesses will result. (Sanchez-Rodriguez C., 2006)

There are many factors that have an effect on governmental risk. The identification and consideration of external and internal risk factors is important in evaluating governmental risk. Processes are created to identify and consider the implications of external and internal risk factors. External risk factors include economic changes, changing sponsor, community needs or expectations, new or changed legislation or regulations, technological developments, and natural catastrophes. Internal risk factors include new personnel, new information systems, changes in management responsibilities, new or changed educational or research programs, and unit morale. (Stanford University, 2004) Prioritization is another factor affecting government risk. Prioritization is done by evaluating the likelihood of a risk’s occurrence and the risks potential negative impact. Risks are then categorized as tolerable or requiring action. (Stanford University, 2004) The approach to studying risks, and if the approach is cost-beneficial and in-depth, also has an effect on government risk as it directly determines the amount of information analyzed regarding the particular risk. The process for monitoring is another factor affecting government risk. This involves developing and putting in place a risk management program for monitoring and minimizing exposure to risks and to the damage caused by any unavoidable risks. (Stanford University, 2004) The final factors that have an effect on government risk are the attitude toward consultation with external and internal advisors. External advisors are often consulted when supplemental advice from those outside the situation is needed. The attitude external advisors are treated with may affect the quality of advice concerning the risk that is gained. The same is true for internal advisors; quality of work and information comprised can be affected. (Stanford University, 2004)

References

Sanchez-Rodriguez C., H. D.-L. (2006, November 1). An empirical study on the impact of standardization of materials and purchasing procedures on purchasing and business performance. Retrieved October 10, 2012, from Emerald Insight: http://www.um.es/docencia/jjgarvel/archives/paperCristobalHemsworth2006.pdf

Stanford University. (2004, May 20). Internal Control Factors. Retrieved October 10, 2012, from Stanford University: http://www.stanford.edu/dept/Internal-Audit/docs/internal_controls.shtml#ra-r

Wikipedia. (2012, October 2). Specification (technical standard). Retrieved October 10, 2012, from Wikipedia The Free Encyclopedia: http://en.wikipedia.org/wiki/Specification_(technical_standard)

Wikipedia. (2012, October 4). Standardization. Retrieved October 10, 2012, from Wikipedia The Free Encyclopedia: http://en.wikipedia.org/wiki/Standardization