Purchasing and Supply Case Studies

In this case, we are focusing on Southeastern University, one of the largest universities in the state, and its purchasing department. There was recently an issue with a purchase made, because the transaction not gone through the correct procedures a purchase must follow. The purchasing process begins with a purchase request being submitted to the purchasing department, where a clerk stamps and checks it. The policy was to solicit at least two written quotations for purchases in excess of $7,500 and a minimum of three quotations for purchases in excess of $15,000.

A request for quotation form is then made and has specified details, such as product or service description, quantities, FOB point, and terms of payment. The purchasing department maintained a list of approximately 1,200 approved suppliers, which were adjusted every three to five years. Heather Sloman was one of the buyers and stated the main objective of the purchasing department was to achieve the greatest cost savings.

Something that I found incorrect in the department was that although it was university policy that approval from the department was required before any commitments could be made to suppliers, it was not unusual for university personnel contacted suppliers directly. Every year there were around 275 cases where contracts were signed without prior approval of purchasing. Usually, after getting details of the purchase, they are stuck because nothing else can be done. The machine in question was a $14,000 purchase, almost needing three quotations if handled correctly.

Also, the supplier of the machine was not on her approved supplier list. After getting three quotes that varied from approved suppliers, I would not imagine Heather was very happy at the situation. With little time before her meeting with Glen, she was in a bind and had to come up with some strategies to resolve this situation and have something in mind to avoid future problems of this type. I would recommend implementing stricter policies for any employee that is not following procedures and that they be reprimanded (write up) and spoken with about what happened, and why.

Taking some sort of action here is what is going to help this university keep its purchasing costs down and avoid undermining of any sort. Ford Motor Company: Aligned Business Framework In this case, we have Tony Brown, who is senior vice president of global sourcing, constructing a new plan for the company’s new supply chain strategy—“Aligned Business Framework” or ABF. This new strategy would change the relationships between Ford and its suppliers drastically, but for the better, if implemented properly. He was to meet with the company chairman and CEO later with his final proposal.

Some of the benefits of this new way would be reducing the number of suppliers, overall lower costs, while suppliers would benefit from long-term financial stability and profitability. The toughest part seemed to be getting everyone on board with it and having their commitment to follow the principles of ABF. It seemed like Ford was just doing things as they had done in the past, and this changed seemed like it would work and help the supply division overall. They relied on annual across the board reductions, which lead to requests for more reductions, and then created a contemptuous relationship between Ford and its suppliers.

With the foundation of the new ABF strategy, this would change their relationships from confrontational to more cohesive supplier relations. It was apparent that Tony was problem solving issues on a daily basis that seemed to go on for too long, and as he stated “it is clear to me that there must be a better approach. ” With his analysis, if this was implemented companywide, they could expect cost reductions of 10 percent of Ford’s annual spend of production parts by 2010, $7 billion per year, by adopting these practices.

By having a smaller supplier network, it would allow them to be able to work more closely with them where innovation may take place. It would also benefit them to have Ford’s team of experts and engineers working on projects together with the suppliers to achieve quality, cost, and delivery goals. Looking at the bigger picture, this major change would take a lot of work, but with such poor supplier rankings, change would be of the essence. The time it would take to rebuild and repair these relationships could make the company even stronger and more profitable in the end.

If I were Bill Ford Jr. , I would definitely roll with this new strategy and give it a whirl. Air Quality Systems, Inc. This case deals with a plant manager, Patrick Wallace, who has just come across a major issue with their main product line. The foam insulation for a batch of heat recovery ventilation products, which was manufactured there at the plant, had begun to peel off, more than likely causing a malfunction. To add to this, he also believed that some of the defective equipment had already been shipped to customers, making it imperative for him to act quickly.

The heat recover ventilators accounted for two-thirds of their total sales, which were expected to reach $12 million in the current year. 40 percent of the parts necessary were produced in house, and component parts were inspected by operators as part of their responsibilities in the assembly operations. AQS sold more than 300 different products under AirPurity brand name to large distributors, who then sold to wholesalers and independent contractors.

In addition to selling products under its own brand name, it also manufactured about 20 products for over a dozen large companies, which in turn sold these products under their own brand name. These are some very goods facts as to why this problem with the foam peeling off their main product needs to get fixed as soon as possible. AQS would surely not want this to be a huge deal, and lose any business because of this problem. Was this a problem with the batch? And How long before the machine malfunctions because of this? Would be questions I could ask if in his situation.

He did right in stopping any and all deliveries of the HRV until the problem was resolved, another reason to quickly find out how to fix this. Since this company is still fairly new and had been expanding quickly, this road bump would test their skills. AQS also wanted to protect their image of producing good quality products. Patrick should look at all of his options before making any drastic changes. Getting the right component to eliminate any malfunction may be tough, but it is crucial to keeping the satisfaction and continued business from its buyers.