Case Study - Purchasing Management
INTRODUCTION
THE PRIVILEGED FLY
As a Privileged Fly I have been allowed to be on the wall of a corporate boardroom to observe the proceedings during the high-powered discussions. The case study is about a manufacturing and engineering firm that has been doing very well in terms sales but has a serious challenge of escalating freight costs. The case study reveals that the root cause of the problem is insufficient inventories and lack of planning and fragmented purchasing process. The case study will provide a detailed analysis of the basic inventory problems confronting the firm. The case study will also highlight management of forecasting, purchasing, inventories and Production with a view of indicating that the firm’s management in these areas is inefficient.
Furthermore, the case study will look at inventory management, inventory control and whether the Purchasing Manager should build up her inventory. It will reflect the need to hold inventory as well as dangers and consequences for poor inventory control. The case study will reflect on materials management as a concept that is applied nowadays in order to streamline process and ensure system efficiency, its advantages and whether the firm must adopted the materials management approach. Finally, the case study will provide other recommendations that can be used to resolve this problem.
1. WHAT ARE THE BASIC INVENTORY PROBLEMS CONFRONTING THIS FIRM?
In every organization the purchasing department forms an integral part of the success of the department in meeting the sales, production and distribution demand and has a critical role to play in order to ensure that the organization meets and possibly exceed the expectations of the customers. It is therefore imperative for communication to flow between the Purchasing Manager and other Managers around the orders received and the status of the production department with regards to materials/parts required for a particular order.
The
THE PRIVILEGED FLY
As a Privileged Fly I have been allowed to be on the wall of a corporate boardroom to observe the proceedings during the high-powered discussions. The case study is about a manufacturing and engineering firm that has been doing very well in terms sales but has a serious challenge of escalating freight costs. The case study reveals that the root cause of the problem is insufficient inventories and lack of planning and fragmented purchasing process. The case study will provide a detailed analysis of the basic inventory problems confronting the firm. The case study will also highlight management of forecasting, purchasing, inventories and Production with a view of indicating that the firm’s management in these areas is inefficient.
Furthermore, the case study will look at inventory management, inventory control and whether the Purchasing Manager should build up her inventory. It will reflect the need to hold inventory as well as dangers and consequences for poor inventory control. The case study will reflect on materials management as a concept that is applied nowadays in order to streamline process and ensure system efficiency, its advantages and whether the firm must adopted the materials management approach. Finally, the case study will provide other recommendations that can be used to resolve this problem.
1. WHAT ARE THE BASIC INVENTORY PROBLEMS CONFRONTING THIS FIRM?
In every organization the purchasing department forms an integral part of the success of the department in meeting the sales, production and distribution demand and has a critical role to play in order to ensure that the organization meets and possibly exceed the expectations of the customers. It is therefore imperative for communication to flow between the Purchasing Manager and other Managers around the orders received and the status of the production department with regards to materials/parts required for a particular order.
The
References: Van Weele, A.J. 2005. Purchasing & Supply Chain Management: Analysis, Strategy, Planning and Practice. 4th Ed. London: Thomson Learning. Hugo W.M.J., Badenhorst-Weiss J.A. & van Rooyen D.C. 2002. Purchasing and Supply Management. 4th Ed. Pretoria, South Africa: Van Schaik Publishers. Burt D.N., Dobler D.W. & Starling S.L. 2003. World Class Supply Management: The Key to Supply Chain Management. 7th Ed. New York: McGraw-Hill.