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PROCUREMENT MANAGEMENT
Internal Assignment Applicable for December 2020 Examination
1. A chain of premium jewelry brand is launching new business in India. Being a global chain, they want to maintain same look and feel of global store experience. It is obviously not possible to get everything from global vendors as cost is also a criteria. As Purchasing Buyer you have been asked to procure major capex for the stores chain. Explain with detailed steps how you will approach this assignment focusing on what factor will be different as against typical raw material procurement? What challenges one may face in Capex Procurement? Take examples of Capex you can think of in above scenario & explain process around it in your answer accordingly.
Answer 1
Introduction
Procurement is planning done to purchase raw materials in the phase of scarcity. Every procurement process has a definite type, such as Request for Information (RFI), Request for quotation (RFQ), Request for Proposal (RFP). To launch a new business of jewelry in India and making it global as the purchasing has to be done with proper funding. A procurement manager’s job is to procure precious
2. Amidst Covid with global logistics opening up slowly, it’s important for your organization who is in plastic sheets manufacturer to get their raw material – resins, the main ingredient in this molding process from Turkey. The raw material is urgently required now as your organization has lots of order to deliver. While market has open yet movement involved lot of risk like delayed consignments etc. What Inco terms once should select to ensure goods are delivered on timely basis and till factory premises? Can choosing right Inco terms also help organization to save money in these difficult times?
Answer 2
Introduction
During Covid, both the private sector and the public sector have gone through some loss. Transportation has stopped because the delivery of goods and raw materials needed for the industry has failed to reach its destiny. As the situation is getting typical day by day, the market has to go back to its
3. Case Study
INTRODUCTION
M/s GETWELL is a privately owned big pharma player. Being Pharma company selection of raw material and packaging material is quite stringent both in terms of specification & dealing with same vendors for years now. M/s GETWELL is a listed organization who strongly believes in innovation. Their R&D team continuously works on getting customer latest product and hence don’t want to change old proven ways of working under name of quality.
M/s GETWELL has grown since 1980s into one of the top 5 Pharma players in India. The company has an annual turnover of $750 million and employs 2,500 staff, including a centralized purchasing function at head office. From past 3 years company growth has been almost flat. A newly hired senior purchasing manager Jacob has been appointed at head office, who is responsible for bringing change in procurement practice and yet not sacrificing savings. During his interview he was also told that last year during annual vendor meet lot of vendors raised concern of need of transparency in procurement process. They also mentioned that they get lot of enquiries but even after ensuing proposal and sample submission as per process, they never get new orders. These vendors are in database of other Pharma companies and are quite keen to work with GETWELL.
Scenario
Jacob is an experienced and qualified purchaser who has worked across the public and private sectors for the last decade. In starting days he is investing lot of time to understand key categories and the critical vendors. He is simultaneously working on updating Purchase Policy.
While undergoing few transactions, Jacob could identify issue in sample approval process. While engineering teams evaluate lot of samples of new vendors, doesn’t provide logical reason for rejecting new vendors even though samples look to fit in specification. Moreover, organization still followed seal envelope quotation process for most of the critical procurement, which takes lots of time. Most of the time cycle of sourcing goes so long that key launches are often closed in haste and hence order are placed with same incumbent vendors with much higher cost.
Meanwhile, Jacob highlight these Gap to Head of Purchase department during his quarterly review discussion. During the discussion Jacob happen to mention that while organization has progressed but still follow old ways of procurement. These progress delays over cycle and also impact new launches. He also mentioned risk that organization is taking by depending on few vendors for years now. Jacob also highlighted how eProcurement process can help them to resolve some of these issues. The Purchase head is quite surprise to understand that changes in process can bring both speed and transparency. And is also worried that cost should not be the only criteria to select new vendors
The Head of Purchase Department has asked him to evaluated overall process and come up with his recommendation. (The information in this case study is purely fictitious and has been prepared for assessment purposes only. Any resemblance to any organization or person is purely coincidental.)
a. Put yourself in shoes of Jacob, mention challenge that you can identify as a Purchase Manager in the Case Study above? How can eProcurement help you to improve you manage to resolve them on longer term?
b. The Purchase Manager Jacob wants to introduce stringent supplier selection criteria in purchase process while evaluating vendors. What are the steps he should value in this case study?
Answer 3
Introduction
The purchase department plays a vital role in an organization by keeping it financially healthy. This department introduces procurement policies and procedures to assure that their company is run with integrity in the marketplace. A purchase manager’s role is to look upon procuring goods and services for the use of the company or to resale it. They purchase goods in available quality by negotiating the product’s cost and bringing profit to an organization. The supplier selection process is essential for an organization as it reduces the cost and improves the product
Hello MBA aspirants,
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Mail us at: help.mbaassignments@gmail.com
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