The paper "Procurement and Purchasing Strategies" Is a great example of a Management Case Study. This report endeavors to establish the best practices in the component procurement process adopted by Advanced Computer Logic (ACL) within the organization. The report first provides a description of the current procurement issues faced by the company and sets out each of these challenges. The importance of identifying the issues is necessary because, in order to find a solution to these issues, it becomes necessary to have a clear understanding of what is to be resolved. The report then assesses the strategic importance of these actuator components to the organization.
In assessing the importance of these components, the report uses the Kraljik's procurement model and sets out four categories of components in an organization. This model provides these categories based on the supply of the components and their effect on the company. The model aims at removing supplier vulnerability and maximizing the potential of the company. This concept is necessary in the company as it assists in establishing the significance of the component to the company in order to develop a more reasoned strategic approach to solving the existing issues.
Understanding the significance of a component is the primary objective that determines the most appropriate approach to attaining a more effective procurement process. After the signing of the component is established, the following step is to provide a process of obtaining appropriate suppliers for the components. This process is also beneficial as it determines the reliability of the supplier and determines the price of the components based on the market structures. The most effective approach in this situation is using Kearney’ s seven steps for strategic sourcing.
These steps provide an effective strategy in the process of obtaining a competent supplier as it looks at all the aspects involved. The steps cover the needs of the company, the significance of the component, and the environmental factors surrounding the supply of this component including the supplier. In developing the most effective strategies, the report also considers the option of manufacturing the components in house. In considering the option of manufacturing the components, in the house, the report looks into the advantages of outsourcing as well as its disadvantages and uses this analysis in considering whether to manufacture the components in the house or outsource the supply of components.
Manufacturing in-house might seem to be the best alternate for the organization but in order to opt to in house manufacturing, it is essential to establish the viability of this option thus the report provides this analysis and establishes the best approach to this option. Accordingly, the report provides recommendations on the issue and recommends that: 1.The company should adopt purchasing strategies that aim at reducing logistical complexities and administrative costs. 2.The company should develop a strategic approach in selecting competent suppliers at the same time reducing the costs involved in the process. 3.The company should approach the outsourcing process with diligence to ensure effective results. Current Procurement Issues The procurement issues being experienced by the company touch on its procurement of actuator components.
The problem is that there are several suppliers who supply identical components to the company. These suppliers are contracted by the company but through the various departments. It is evident that these departments have various reasons for engaging with the suppliers, which range from the performance of suppliers to informal advice given by these suppliers.
The departments pose valid reasons for engaging with different suppliers but this situation significantly affects the company in terms of cost.
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