...crop production, hence setting in motion a need for change. Scott McBride, director of purchasing at Iowa Elevators, has been tasked with developing a plan to regain control of purchases made throughout the company in order to increase revenues and cut back on costs. With this in mind, Scott’s task was to develop and present a five year plan for the purchasing department. This plan would identify major issues in purchasing company wide, identify areas where cost could be cut. This would include reducing headcount, overhead expenses, and capital expenditure budgets. In Scott’s plan he would identify annual targets for achieving the reductions. Working with a team of acquisition specialists, sales representatives, and administrative offices, Scott began to work on a plan for cost reductions. Cathy, Scotts’ right hand purchasing analyst, began analyzing corporate spend which averaged $728 million with 20 of the 1,500 suppliers accounting for 45% of total spend and the top five represented 35%. This led to the perception of many things, including the ability to begin making cuts in supplier relations. Cathy designed a table which identified total purchases by category with farm supplies leading in annual spend at over $254,000. In preparation for the meeting, Scott had to develop a plan that was going to make an impact on the future of the company and he had to design a plan so detailed that would leave no room for...
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...XLRI Jamshedpur J. Singh The PGP Company The PGP Company was a large concern making many types of consumer products. It had six plants spread around the country. Their purchasing procedures had never been completely coordinated. In fact, the head office of the company had encouraged each of the plant managers to operate with their staffs as separate independent units in most matters. In 2005, when it began to appear that the company would face increasing difficulty in securing essential raw materials, Mr. Seth, the CEO, recruited an experienced purchasing executive, Mr. Ghosh, as VP in charge of purchasing—a position especially created for him. Mr. Seth gave Mr. Ghosh wide latitude in organizing his job, and assigned Mr. Murthy (who had served the company in various capacities for many years, and knew most of the plant executives personally) as his assistant. Mr. Ghosh’s appointment was announced through the formal channels usual in the company, including the house magazine. One of Mr. Ghosh’s first decisions was to begin immediately to centralize the company’s purchasing procedure. As a first step he decided that he would require each of the executives who handled purchasing in the individual plants to clear with the head office all purchase contracts which they made in excess of Rs. 1 lakh. He felt that if the head office was to do any coordinating in a way that was helpful to each plant and the company...
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...Situation: • Heather Sloman is one of the buyers in the purchasing department of the Southeastern University. o Report to her boss, Glen Meredith, about a new equipment purchase all purchases report to director, Blake Hyatt, • New equipment was purchased without following standard university purchasing polices. • Standard university purchasing procedures: o Submit a purchase request to purchasing department o Additional information may need to be added: such as tax, and duty status, product classification and supplier status o If purchase amount over $7500, at least two written quotations are required; if the amount over $15,000, three or more written quotation is required o Buyer prepares the request for quotation form (RFQ). o Any RFQs over $100,000 had to be posted on the internet. • Current situation: o Walter placed an equipment order that cost $14,000 o Other suppliers offered lower rate or better service plan for similar equipment: $10,000, $11,000 and $15,000 that included one year free service. BASIC ISSUES: 1) University personnel placed the order directly with supplier 2) About 275 cases were signed with suppliers without prior approval each year 3) Some employees often ignore university policy Tasks: • What should Heather do? o Should Heather keep the machine and pay for it? o Status quo • What are alternatives: o Can the equipment be returned? (avoiding...
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...inventory turn for farm supplies are crop protection: 1.9, equipment and supplies: 0.60, fertilizer: 6.2 and seed: 4.2. Many improvements such as adding hybrid centralized- decentralized method to their supply management, hire specialists to only focus on managing supply and inventory rather than give managers too much power and overwhelm them and lastly increase inventory turnover especially on equipment and supplies since its very low but also targeting all farm supplies. Maybe the company can also increase supplier relationship and buy local. 4. Why hasn’t Scott McBride proposed a cost reduction plan in the past? Mr.McBride, the director of purchasing, has not proposed a cost reduction in the past because he was working with a small limited group of team that focused mainly on office supplies, brochures, advertising and other purchases. Iowa Elevators also did not view the purchasing department as a primary importance until new executives stepped in and realized that one can save a lot more by cutting costs in the inventory level (supply management) rather than...
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...Kudler’s Business Purchasing Marietta Esquibel BSA/502 January 21, 2013 Lise Hautzinger Kudler’s Business Purchasing According to (Nickel, McHugh, McHugh, 2010), “Purchasing is the function that searches for high-quality material resources, finds the best suppliers, and negotiates the best price for quality goods and services.” In the past, businesses dealt with many different suppliers so that if one could not deliver the products needed someone else could. However, today businesses depend on just one or two suppliers to deliver their goods on a regular basis. The internet has made purchasing much simpler for a business by providing internet-based services to allow purchasing for business products (Nickels et al. 2010). Utilizing the internet-based purchasing service, Kudler can find the best items at the best price (Nickels et al. 2010). Purchasing items online can reduce the cost of merchandise enormously by purchasing items that are need for the customers. . Kudler’s current purchasing plan for goods and services is limited only to vendors that have been approved by the company. The business purchasing process reflects a number of steps that need to be followed before a purchase order is prepared. The process begins with the purchasing function. At the end of each shift the purchasing function receives the sales data from each location and combines the results to determine if a purchase order should be submitted. There are business rules that are followed...
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...budget there will be cash deficit in March. This would be an indicator to the treasurer that an investment would not be feasible at this point. Quite the contrary it appears that a bank loan will be required in order to keep the company in a positive cash position. If I were the treasurer of this organization I would forecast the cash position for the rest of the year and use that information to determine the correct amount of cash necessary to keep the company in a positive cash position at least through the year. This additional information would allow the company, as well as the banker, to react with the best information possible. The company appears to have a cyclical nature and if that is the case the treasurer would do well to plan for this situation in the future. With the limited amount of information available my best guess is a seasonal business but the organization could have had a...
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...textbook gives us an example of purchasing airplane tickets. When purchasing airplane tickets you are given three options of seating and pricing. Tiered service can also be described as one group of customers getting better services because of the amount of money they spend compared to another customer who does not spend nearly as much. The advantage to using a tiered service would be having more options but the disadvantage would be the unethical aspects of providing special treatment to one set of customers over another. Customers like feeling like they will all be treated special. (Gibson, 2012) The proposed tiered service plan includes rewarding their B2B customers who gives On-Time Technology $100,000 work of business, an end-of-year “thank you payment” that reflects a 5 percent discount on all yearly purchases and they would also receive a commitment to next-day turnaround time on the resolution of all customer service problems. Those customers who purchase $500,000 or more would receive a 10% discount and free delivery but the average sale is only $25,000. So for those customers who do not purchase $100,000 or more in products and services are helped with the most basic of customer service. Assuming the customers know about the perks of purchasing more they could become unhappy with OTTP because of feeling if they are being treated unfairly just because they do not spend nearly as much as another customer does. By changing the service plan they are risking upsetting the...
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...hard to follow up. Personally, overspending my purchases on anything that unnecessary stuffs was my weakness. However, experiencing to plan it as steps to follow; such as, questioning on any purchases, intelligently managing my money, and wisely purchasing helped me to save up to thirty percent of my every single paycheck. Moreover, bringing myself a financial plan. Normally, financial experts suggest us to chase after our financial plan to know where exactly our money is going. It sounds complex a bit, but I believe it helps us much. I am bad with keeping my receipts for any cash spending, so I got suggested to remember note them out in my notebook or the note on my phone for how much cash that I already purchased for the day. It helps me a lot to create my monthly expenses, the information that I harvest, so I could decrease my expenses and I would know exactly how much I could save. Then, avoiding to be impulse purchasing. First of all, with respects for any pennies I made by hours, to give honest answers for whatever questions that I have to wonder myself before purchasing stuffs. My trick is at least go preparing five questions to wonder before going to spend money on stuffs. I continue on the next question what if I can confidently answer yes to the current question. If I cannot pass the whole questions, it will be an impulsive purchasing and I should give up. It trained me up to create my thinking about what if I need money to tend to spend the most money on. It would...
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...Service Plan Rae J Rossignol Kaplan University AB221: Customer Service – Unit 9 Professor Robin Argo June 22, 2014 Mac Gibson’s idea to change from the current service plan to a tiered service plan has its pros and cons. If could help those customers that make those large purchases in the course of a year, then again for those who may not be able to make them, it make not be what is best. For those able to take advantage of the large purchase can take take advantage of the great incentives that will help them. For those that cannot they end up with different perks, which could cause them to start looking elsewhere for someone to help out the “little man”. There could be many types of problems Mac Gibson’s could be facing is just the fact of change. Staff and clients alike may hesitate at the thought of change. Another problem make be the likelihood that proficiency may be lost. Purchasing in a large quality wold have a large impact on the way the current service plan is. Currently clients do not have to purchase large amounts of product to get a good deal or incentives. Currently clients can buy and if they want buy more the next day with the same service expectation. The new proposed plan will help the company have more cash or sales meeting their day to day operational cost. The working capital now improves in this situation, the company produces smaller debt days and be able to pay there bills to supplies on time. When purchasing less then...
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...How does purchasing activities influence the profitability of the foodservice establishment? In an organization such as the food service industry its major objective impacting the maximization of profit, one of the most vital role in an establishment striving towards success is being knowledgeable in the purchasing activities of on establishment. Conversely, the failure to properly control food costs can have a more devastating effect than overspending in most other cost categories. It is not surprising that the primary concern of many operators is their food cost. As costs increase, this concern grows. Rising food costs often force management to re-examine the operation's ordering / purchasing needs. However in the food service establishment after menu planning is completed, the Ordering / Purchasing control point is the next logical step to be addressed. In fact, the menu determines the ingredients to be purchased, the variety of products needed, and the relative amounts. One of the major objectives of Ordering / Purchasing is to obtain the right quality and quantity of items at the right price from the right supplier. The goals are to maintain quality and value, strengthen the establishment's competitive position, and also to minimize the investment in inventory. Therefore, cost avoidance in Ordering / Purchasing has potentially translated directly to the operation's bottom line of the establishment. To be successful, the buyer must possess many skills. Broadly speaking...
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...* Monitor and Control 9 Executive Summary The following report will describe a new purchasing activity and strategies at Newton Valey Public Schools Organization. Throughout the report I will provide a description of every strategy that was executed by NVPS and I will outline key problems of every single project. After analyzing major problems I provide 5 main ideas showing advantages and disadvantages for each of them. As a result I am providing 2 different recommendations for the future purchasing strategies and describe the details of every recommendation, when this options has to be used and what will be the benefits to our organization. Issue Identification Being in charge of whole purchasing department I have implemented couple new purchasing strategies that from the first sight had to end up with a nice cost saving results. After considering some bad feedback from internal employees it became obvious that something is going wrong or was implemented without considering small or big details. We had few different models of cooperative purchasing but all cost saving results were not so great as was expected. Through our 2 purchasing plans which we where using I found few major issues that made our report not that optimistic. Different specs to buy During our first cooperative purchasing with Redditch School Board it was discovered that we were forced by Redditch to buy computers that meet their specs, not...
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...C A S E S T U D Y MasterCard Best Practice Case Study - Harvard University A T - A - G L A N C E Harvard’s GE MasterCard Corporate Purchasing CardTM delivers a range of benefits such as expense reduction with improved efficiency, tighter cost control and saved manhours: • Ease of use and improved productivity for employee • Reduced bank fees • Reduced check costs and related invoice processing costs • No rework- 100% first pass yield • Improved employee satisfaction • Decreased cycle time -from 22 days to 2 days • Enhanced supplier relationships -reimbursement within 48 hours • Enhanced data capture and more accurate accounting information • Accelerated purchasing process • More efficient A/P team -- 30% reduction in check issuance • Fewer vendor records added to the ERP system • Less activity in the customer service group regarding: problem resolution - 20% reduction in supplier calls www.mastercard.com/gov GE Capital's implementation of the MasterCard Corporate Purchasing CardTM solution at Harvard University has resulted in direct cost savings for the organization, greater employee productivity, enhanced efficiency, improved supplier relations, reduced rework and improved cycle times. The GE Capital MasterCard Corporate Purchasing Card has helped the university more effectively manage and control its payment processes. Harvard University, founded in 1636, is the oldest educational institution in the United States. The university currently...
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...new purchase executive is to deliver the company with new ideas and to amend all the past flaws in the company so according to the principals of the purchasing and they are as follows What to purchase? -> Right quality When to purchase? -» Right time How much to purchase? -> Right quantity From where to purchase? -> Right source At what rate? -> Right price At what place to receive? -> Right place The above Six Rights" are the 'Six Rights of scientific purchasing. to purchase from the employee is definitely going to harm the company today or the next day so the purchase executive straight away restrict all the orders for purchasing till they don’t finalize new suppliers Ans.2-- MEMO TO FROM CC DATE SUBJECT the purchasing system the company following is defiantly going to harm the company one day ,the suppliers are our own employees where if something goes wrong it will harm the internal relation and will cause serious effect on companies operation so my suggestion is to take a review of the situation on urgent basis and do some amendments on urgent basis Ans 3 -- the current policy should be changed as it is going to harm the company simply denied it and ask for new suppliers and about the dissatisfaction of employees we can simply organize new bonus plan or ask and let them participate into the selection of new suppliers and if they agree ask them to form a company owned by their relatives not by them...
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...The Low Dollar Purchase (LDP) System provides an efficient distributed procurement method for non-repetitively purchased lower dollar value goods and services where other methods (e.g., Corporate Purchasing Card System, Preferred Supplier Agreements, and Standing Purchase Orders) are not suitable. 2. Discuss the advantages and disadvantages of a procurement card system Advantages/Pros: A major benefit from using procurement cards is reduced purchasing transactions costs. A pre-procurement card study of transactions costs for items that did not have an established contract revealed an average transactions cost of $150. This includes the cost to requisition, place, receive and inspect, and process payment through accounts payable. A study after initiating procurement cards revealed an average transactions cost of $50, which includes user time for reconciliation. Furthermore, users appear satisfied with the procurement card system. Before full-scale launching of the card, purchasing conducted a six-month trial program with 300 users. After the trial period, purchasing surveyed these users concerning their satisfaction with the card program. More than 75 percent were positive about the procurement card program. Negative comments came from high- volume transaction users who were not prepared or organized to do a monthly reconciliation. Although PPL has currently issued over a thousand procurement cards, current...
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...of Economics, there are several that play a major role in my decision to purchase a house. First, we as a family needed to understand that there are tradeoffs that will need to be made in order to budget in a house purchase. Frivolous spending such as eating out and purchasing various technological gadgets will have to be monitored more closely and possibly stopped altogether. Also, any old debt would need to be paid off first to make room in the budget for the new debt of the house payments. In order to understand what items are considered frivolous and what old debt is priority, we will need to develop a short and long term budget that addresses where we are currently and where we want to be, and lays out a course of action to meet those goals. Also in the budget and course of action we would need to identify the incentives of purchasing a house, as well as the consequences that can occur. For example, what are the positives of the neighborhood and schools in the area? If one or both of the income providers lost their jobs or became unable to work, what plan of action would take place? These questions and many others would have to be taken into consideration to understand the pros and cons to purchasing a...
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