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Procurement Case Study Blozis

1503 words - 7 pages

Executive Summary

My decision is to immediately perform a process analysis of our entire procurement process. To this extent I will perform an analysis of the current roles and responsibilities of each person involved in the procurement process from “Need Recognition” through to “Payment”. This will involve defining and changing the roles and responsibilities of some departments and personnel. It will also involve tightening our inventory control practices. I will also be initiating the hiring requisition form to arrange for a new parts driver to perform pick-ups and deliveries.

Key assumptions

• The problems that we are currently experiencing will continue unless clear definition ...view middle of the document...

Managers not approving Purchase orders
Technical training required for Supply Department

Criteria

In this case, a good decision will result in Blozis Supply Management team, working in conjunction with the engineering and production teams, implementing and enforcing a new set of policies and procedures in regards to the full procurement process. By following these procedures we will attempt to completely negate the instances of late supplier payments resulting in additional costs due to missing out on discounts. We will also be able to more accurately track our inventory and not have any more instances of “missing” inventory.

Analysis

Currently we are not maximizing some aspects of our market. This is due to a few issues that we can address by implementing the JITD initiative. Carrying an unnecessarily high level of stock at our manufacturing plants is currently impeding our cash flow. This cash could be freed up to allow improvement to our manufacturing facilities as either improved equipment or building improvement/enlargement to increase output. The high levels of stock at any given point are taking up large amounts of space that could also be better utilized to improve processes and increase output.
Due to unacceptably high incidences of stock-outs we are not maximizing our sales potential and are possibly restricting our available market share. By ensuring that the

Analysis cont’d

DO’s have the necessary stock levels at all times we could reduce the incidences of these stock-outs dramatically. This would increase our sales levels and possibly our
market share. It would also reduce the possibility of the end-consumers possibly purchasing our competitors products during these stock-out periods and maybe even switching to our competitor brands in the future.
Our transportation costs are higher than they should be due to the necessity of having to ship on demand rather than having the logistics managed by Barilla SpA. By implementing the JITD initiative we would be able to forecast the DO’s requirements more accurately and plan our transportation requirements in advance rather than having to react to order levels as and when we receive them.
We can implement various different initiative schemes for both the Barilla SpA employees and the DO’s to improve the morale of the persons involved and affected by the change over to the JITD initiative. Barilla SpA could reward all employees with a new bonus structure scheme based on the effect of the improvements to our increased profits. The sales staff would also see an increase in their commission due to the reduction in stock outs and an additional increase would come from the market share increase due to our Supply Chain improvements. For the DO’s firstly the incentive would be to reduce the inventory they carry, reducing the storage requirements for our products, also by reducing the incidence of stock-outs which will in turn lead to increased sales. In addition to this...

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