Course: Bus 5116
Assignment: Written Assignment Unit 4
Case Study Procurement
Term 02
Academic Year: 2022-2023
Lecturer: Dr. Juancho Lim
December 2022
1
Abstract
The operations needed to organize, direct, and carry out a product's movement from
materials through production and distribution in the most cost-effective manner, makeup supply
chain management (Daniel D. , 2020 ). It helps businesses manage demand, carry the proper
amount of inventory, cope with disruptions, keep costs down, and satisfy consumer demand as
efficiently as possible. It also offers a number of benefits, including new efficiencies, higher
profitability, lower expenses, and increased collaboration.
The task of procuring an item or service for a client is known as procurement. Ordering,
delivery, distribution, warehousing, and final payments are all part of the procurement process.
Depending on the sort of business, this process may be highly expensive logistically. Anyone
running a procurement agency must have a thorough understanding of the logistical and
distributive processes. The cost of goods sold, often known as COGS, and procurement are
directly related in every firm.( James, 2011)
Any supply chain that relies on logistics expects the quickest, on-time delivery of
materials because anything less could impede their manufacturing line and future anticipated
advancements. Delays in logistics could result in significant downtime for industry, which puts
pressure on their taskforce to finish production on schedule and could interfere with their
production strategy for efficient output. High rejection rates and low output quality may also
result from the task force's heavy workload.
Case Study
In this case study, a proposal is required for the chief procurement officer to answer a multitude
of questions. There are 3 suppliers that have been listed with different statistical data given to the
2
researcher to grasp which agency would be more lucrative. A variety of considerations need to
be taken into account because the company's decision to outsource the value change is so
important. The selection of the ideal supplier for the three-year period is essential to the project's
success. Within the industry, customers anticipate high-quality service, competitive pricing, and
prompt delivery. All three of the mentioned vendors receive scores that fall within certain ranges.
It is essential to conduct a thorough analysis of each subsection before picking the best choice for
the firm.
The selection based on personal processes and research will be chosen by the following criteria;
(Murphy, K. 2022)
1. What the supplier is providing and how it meets the needs of the organization.
2. Who has the best quality rates for delivery, price, and quantity.
3. Service Levels
4. Financial Management
What supplier would you select?
I would select Supplier A. Supplier A, has the product and quality at a range of 90% and
delivery at a range of 95%.
Rationale Behind Supplier A
The supplier A establishes the overseas sourcing where they have access to the best tools,
resources, and networking opportunities. The statistics show high-quality goods at reasonable
prices, which could support the maintenance of business quality control while still generating
3
profit margins for the company. Even the delivery statistics are quite suitable for the needs of the
organization. The main disadvantage, though, might be that there wouldn't be as many business
relationships established because of the overseas source, and it might be difficult to create a
defect return for discovered defective raw materials.
1. Supplier A , compared to supplier B although the rating is at 100% is in a financial crisis.
This means in the near future there is a possibility of implosion.
2. Despite being close by, supplier C delivers goods of poor quality, which is not a benefit.
When seen in a broader context, the high rejection rate of incoming material would
increase workload strain on employees and result in severe damages to machinery,
shortening the lifespan of that equipment.
What supplier would you select if price and quality were the underlying factors? Would
your POV( Point of View) change depending on the supplier?
Based on the figures of Suppliers A-C, my choice would not change in regard to the supply
chain management and procurement.
Supplier A- Price and Quality are at 90% and the price is favorable compared to the other
Suppliers where their figures are 100 % ( for one who is in a financial crisis) and 85% (whose
benefit is only proximity.) However, compared to Supplier C the price and quality remain
inferior.
The main reason my election would not change is due to the fact that Supplier A has room for
improvement. In the shipping sector of the distribution channels, even though the lead time is
outlined as 3 weeks that can possibly change relying on many factors. Furthermore, when
making a sound decision business wise it is never a good idea to invest and go with a business
4
who is already having financial issues. Lastly, quality is what makes a good service. Product
satisfaction, brand reputation, and brand recognition lead sales within the 21st century.
Conclusion
The supplier selection procedure must be managed in the context of the business's growth
objectives. Whether the firm is huge or little, selecting a reputable supplier can make or break the
supply chain and distribution channels. Marketers and business plans must include a backup
strategy in case the factors affecting the supplier of choice change. According to (Stevens, C.
2020), there are five phases to take into account:
1. Establish Criteria
2. Browse Options
3. Create the possibility of bidding
4. Review your offers
5. Keep track of vendor performance
I believe that this company can make a sound decision once they consider the criteria above.
5
References
● Daniel, D. (2020, November 10). What is Supply Chain Management (SCM)? ERP.
Retrieved December 4, 2022, from
[Link]
● James, T. (2011). Operations Strategy. [Link] retrieved from
[Link]
● Murphy, K. (2022, September 28). The supplier selection process. PLANERGY
Software. Retrieved December 4, 2022, from
[Link]
● Stevens, C. (2020, November 20). How to choose the right supplier for your business.
[Link]. Retrieved December 4, 2022, from
[Link]
er-for-your-business/