How would you categorize
the purchase categories at Amalgamated? (see exhibit 1)
IT services belong to leverage.
The bank has over 100 suppliers, and total costs are over 1000 million. ATM
services belong to strategic district. The company only has three suppliers, and
costs are two billion. Branch development belongs to leverage district. The firm
has over fifty suppliers, and costs are over two billion. Legal services belong
to tactical district. The enterprise has over 75 suppliers, and total costs are
250 million. Advert and publicity belongs to tactical district. The bank has 185
suppliers, and total costs are 850 million. Diesel and other goods and services
belong to leverage field. The company has over 300 suppliers, and total costs
are 2.4 billion.
What is your assessment
of the strategy for purchasing these categories?
strategy is chaotic, inefficient and costly. There are lots
of suppliers, but the company couldn’t select appropriate suppliers supplying
appropriate commodities. On the one hand, in
the introduction step, some suppliers are introduced by the company’s
manager directly, so suppliers didn’t register the information and didn’t apply
the application. The company couldn’t
build up the information system of suppliers to judge their capabilities because of the information absence. Consequently, the company doesn’t have
procurement strategy to identify the “supplier list”. Lastly, there are some gaps among departments. Each department
has its own strategy and procurement processes to select supplier and each
department paid different prices for the same product.
According to categories
in question one, the company should implement three strategies according to
different categories, including strategic, tactical, and leverage. In strategic district, the company
should sign medium or long term detailed contracts, analyze and control suppliers,
manage price, and make contingency plan to avoid the decrease of suppliers. In tactical field, the firm should take
system contracting, make purchasing cards, avoid large stock purchasing, apply
EDI, and let vendor held stock. In
leverage field, the bank should sign short term contracts, explore markets,
improve market knowledge, increase flexibility, and implement active sourcing.
How would you describe
the role or the importance of the procurement function at Amalgamated?
On the one hand, an
appropriate procurement process can help the bank improve work efficiency and promote harmonious environment of the
relationship among employees. For example, in this paper, the quality of some
types of items are poor, like the flap of the envelope and bundle wrappers. It
is inevitable that employees complain about the procurement department and
staffs can’t complete works on time. During a long time, it will influence the
relationship between procurement department and other employees and it will
also decrease the work efficiency.
On the other hand, an
appropriate procurement process can decrease
the financial loses or save capital for the company. For instance, also in
this report, the poor quality of wrappers occupy the high stock level, and the
company has to spend three months to exhaust this type of product. These
products are occupy the capacity of the warehouse and the company doesn’t have
more space to stock other important commodities.