I.Point of View
We take the point of view of the top management in resolving the problem of the Globe Construction Company particularly in their operations policies & procedures.
What system or design should the Globe Construction Company develop in order to improve the effectiveness & efficiency of their operations?
A.GLOBE CONSTRUCTION COMPANY
- Was established by Mr. Eduardo Concepcion & has been in the business for almost 40 yrs.
- During the 70’s & 80’s, the company has been servicing mostly large government projects where they get the bulk of their profits.
- But not until the Aquino’s regime when projects for private sector dominated government projects causing them to reduce their margins due to tight competition.
- Central warehouse is located in Antipolo while Head Office is located in Paco, Manila with distance proximity of around 20-25km.
- 10M worth of materials in the Central Warehouse.
- Wider clientele for construction service (government & private sectors)
- Advancement in technologies
- Calamities (more projects due to damages)
- Government policies
- Other construction companies
- Calamities (delays on on-going projects)
- Inflation in the prices of construction supplies
- Established company (40yrs)
- In demand construction business
- Sufficient manpower
- On-going large projects (18 w/ at least 100M bid price)
- Familiarize the manpower to the newly infused systems that can improve the operations of the company.
- Explore more clientele in both government and private sectors by offering lower bid price.
- Get the project deal by bidding with lesser price.
- Purchase supplies under long term PO basis to benefit from the price stability.
- Concentrated on Government projects
- Poor policies & procedures in their operational system
- Poor communication system between the project managers & purchasing department.
- Make use of new approach (EOQ and online purchasing systems) to enhance the productivity of the company.
- Conduct regular coordination meeting for requirement updates of the Project dept. and PO status of Purchasing dept.
- Schedule for monthly forum to have a venue for discussion, evaluation and performance measure of the company.
- Retain & improve the current organizational set-up by the inclusion of systems & procedures among the department. This can be done thru: a.Grouping the buyers per project category to streamline reporting & monitoring updates on project requirement/purchase orders. b.Regular coordination meeting between the Purchasing & Construction departments.
- Restructuring of the operations department by placing the Purchasing department under Construction department in order to facilitate faster approval of POs.
- Restructuring of the operations department with Construction department directly reporting to the Purchasing to avoid reckless purchases & cost overruns.
- Purchase managers will have more focus in handling transactions due to specificity of projects
- There will be control in the management of funds
- The management can easily identify the responsible person and address the issues in case of delays and other concerns
- Would entail additional investment with the infusion of additional position in the system
- Would cause delay in the processing of PO if not properly monitored & communicated
- Faster approval of purchase orders that can influence faster construction of infrastructures.
- The construction department may have the tendency to over buy construction supplies
- Help avoid reckless purchase & cost overruns
- The purchasing department may cause delays in the construction
V.Decision – justify as according to:
Decision to the problem: (alternative 1) We therefore choose to retain the current organizational set-up by improving & including some system in the departments’ policies & procedures, wherein we add a purchasing supervisor that would be handling specific buyers with specific accounts (government or private projects). The Purchasing Supervisors will be the one to monitor the Buyers. In case of delays in the processing of PO, the purchasing supervisors will be the one held responsible and will have direct authority & responsibility over the Buyers.
It is also the responsibility of the Purchasing Supervisor to do regular coordination with Project Managers in terms of their needs & requirements in the field. The principle behind the Purchasing Supervisors directly communicating with Project Mgrs is to have control in the management of funds unlike the Buyers directly coordinating with the Project Mgrs, this may cause some cost overruns. .
Considering our decision criteria; implementation, cost effectiveness & timeliness. We think that with this kind of organizational set-up & with the inclusion of some system in the policies & procedures, this would be the best alternative to their operations problem. We put emphasis in the implementation of this new system because we believe that with the new policies if only properly followed & applied, the company would in turn be cost efficient & effective in addressing the needs of each department.
- Review of the current set-up of the organization’s policies & procedures.
- The proposal to include new position in the system, Purchasing Supervisor, should be decided among the executive committee.
- Upon approval, Purchasing Mgr will draft job qualification & specification of the new position in coordination with the Project Manager.
- Once the new system is infused, schedule a regular meeting between the two departments to discuss & evaluate their concerns.
- Infuse an EOQ & Online Purchasing System to have a more thorough monitoring system of purchases and to enhance productivity of the company.
Stick to the current operational set-up of the company by not infusing additional position in the system but with the introduction of the new programs & procedures in their operations.