Procurement and Delivery Strategies - Case Study Example

Name : xxxxxxxxx Institution : xxxxxxxxx Title : Procurement and Delivery Strategies Tutor : xxxxxxxxxx Course : xxxxxxxxx @2009 Executive Summary The ability of a company to optimally utilize its resources is important in cost cutting hence competitiveness in the highly dynamic modern business world. In trying to come up with a strategy for success, Gold Inc. has identified in efficiency in the use of copying and printing equipment as a major limitation to the attainment of relevant objectives. Among the challenges are high maintenance costs mostly due to overuse. Although there are enough computers for use by all the employees, shared hardware such as printers, scanners and printers are not enough for everyone. This at times leads to staff having up and down floors to access the scarcer services. Another common complaint is the failure of management to incorporate the views of all staff in decision-making that relates to purchases of equipment. Others are the existence of less than adequate instruction, and technological changes that have led to the change in roles, lack of knowledge and rendering of some equipment redundant. In order to deal with the challenges, the company needs to come up with a sustainable training strategy, based on an assessment of whether to include internal or external consultants. More care should also be taken to ensure that new developments are communicated to everyone in a language that is easy to understand. This will ensure that everyone identifies with new equipment hence uses it well. There should towards this end, be the provision of more funds for acquisition of the latest and therefore most reliable machines. When they are provided in adequate numbers, placed at the most appropriate locations within the building and everyone is able to use them optimally, there will be an effective attainment of organizational goals relating to minimization of cost and maximization of profitability. Introduction Gold Inc. is a multinational firm based in Brisbane, California. Brisbane is an average sized city in the northern San Mateo locality of California. The company is marketing consulting firm and has recorded an impressive performance in its past years of existence. Its offices comprise of a six storied office building holding a total of 355 employees. Each individual employee has been provided with a personal computer and can easily access the company’s scanners and printers, in addition to shared photocopiers. The procurement department is active and has bought printers and photocopiers for every floor of the building. The shared printers and scanners are found in the first, third and fifth floors of the building. The employees have some degree of access to the specialized hardware such as color and high speed printers and color photocopiers which are all found on the second floor of the building. The equipment is all effectively networked and every department has an operational budget. In each of the budgets, there is the provision of line items that are supposed to be either printed or photocopied. There has however been a noted inefficiency that has led to the continued over shooting of the budgets targets that have been set in the past. In the employees’ opinion, their extent of machine use, which is indeed considerably high, is necessary if they are to perform their tasks effectively. They feel that having them to reduce the volume of printing, scanning and photocopying that they do using the hardware will limit the effectiveness of their work. Analysis of the Situation and Issues Therein The state of operations in the organization as it is has led to a number of challenges. The arrangements that exist were developed and implemented by the company’s IT and communications department. This is considered to be the greatest authority when it comes to management of the services. They are therefore left with the entire responsibility of routing and computer connections. In day to day practice, they are supposed to authorize every addition of hardware to the network. Every item is the property of the company and maintenance is done by the respective suppliers through maintenance contracts. A number of important characteristics need to be worked on in relation to procurement procedure. First, the printing and photo copying that is performed is too much to be economical. This is particularly in the case with color printing. The budgets for the activities have been surpassed by far in the past few years. There is therefore the need to come up with a change in strategy that will enable the minimization of costs. Secondly, the maintenance costs that are incurred in copiers and printers have always been beyond what is expected. The company has tended to provide estimates that are far below the necessary ones for demand on the equipment. Because of the excessive demand, the usage of equipment is far above the capacity that they are supposed to operate at. In addition, the warranties that are usually provided for copiers, scanners and printers are usually not applicable for the company. This is because of overuse, for instance printing of huge amounts on low volume printers. Other challenges occur due to incorrect usage of the equipment for instance that of not removing staples before they copy papers. There has also been the rendering of some equipment redundant. For instance, scanners, which are considered to be a necessity at any time when hardware is purchased, have failed to be adequately used because web access has offered employees with most of the graphics that are required by workers in their day to day activities. Another problem in the operations of the company is failure to adequately incorporate the needs of all segments of employees in the procurement planning process. For instance, there is usually a difference in the patterns of usage for the different equipment from floor to floor. Throughout all past plans, there has been a failure to consider the fact in purchase arrangements which were based on average usage across all floors. A number of departments have been shifted from floor to floor so that there are cases where individuals are forced to shuttle between floors to go and pick their printing work. Additional Issues to be Considered In addition to the inadequacy of equipment and failure to involve all segments of the organization in the maintenance of equipment, it is also possible to pint out a problem in the provision of instruction. For example, there has been a difficulty in the use of printers and copiers. There has been the problem of workers misusing equipment. There is the wastage of paper through both the failure to use equipment as is proper or under-utilizing the technology that is available. A number of employees realize that printing and photocopying equipment have almost merged. For this reason, the provision of skills as to the use of related equipment may be done simultaneously. The company’s employees are inefficient in using the equipment. For instance, a number of workers do not perform printing on both sides of the paper because of lack of knowledge on how it may be done. From past studies the staff only utilizes about a quarter of the potential of the copiers and printers that are available. There is the suggestion that staff should have high speed color copiers and high speed quality printer placed on every floor for ease of access by everyone. There is a serious noted problem of complaints arising from unsatisfied employees who are not happy with the current arrangements. There is the constant complaint that departments are operating far above their budgets. Employees from the IT department are always confronted by cases where they are supposed to mend machines that have experienced paper jams. The company’s management is in pursuit of cost efficiency and effectiveness in outcomes at an organizational level. There is the need for all employees to be made satisfied with the services that they are provided with. The rate of technological change has also been so rapid that the pace in most cases surpasses that of the company adjusting. The suppliers are at times left selling what are not really the latest designs or models. In addition, while instruction manuals are available, they are often not written in easy and clear to understand terms. Whatever is available is apparently meant for experts in the respective fields. They are not of the kind that can be used as training materials or intended to make the usage of the respective equipment more efficient (Payne & McCormick 2007). The issues arising therefore include extra expenses, which lead to higher operational costs. The present business environment is differentiated by a rapid change in technology and consumer requirements. This consequently leads to a demand for shorter product cycles and better quality. Price competitiveness is the product of lower operational costs and improved efficiency. There is therefore the need to cut the unnecessary additional costs that arise. The high levels of costs are due to a given number of bases. There is an inadequate ordering of equipment, and as a result of this, there is the overworking of whatever is bought and the reduction in efficiency of equipment. Additional costs arise from constant repairs and wear and tear. Human error is also a challenge to be dealt with. There are instances where there is the inappropriate use of printers, scanners and printers, leading to damage upon the equipment. As noted, there is for instance the failure to remove staples before copying, and this lowers efficiency and effectiveness of the machines. Waste of time at work is also a challenge that has been identified. This is partly due to the arrangement of work processes as far as printing, copying and scanning is concerned. Movements across long distances and even floors leads to the spending of more time on issues that would otherwise be dealt with in short spans of time. There is the need to place the machines in places where they can be accessed by members of staff without too much effort. There is the additional challenge of employees not being able to use the machines appropriately. Although the company tries to keep up with changes in technology that lead to more sophisticated needs in skill, there appears to be an inadequate attempt to ensure that all employees have adequate information on how the new technologies need to be effectively handled. Proposed Methods to Determine the Best Supply Arrangements The identification of the best supply arrangement involves the gathering of organization specific information and identification of the least costly and high quality sources of equipment and services. The participation of employees in provision of ideas is an ideal practice in modern management. This is because it enables them to identify the specific needs of the organization as opposed to the more generalized form that is usually pursued and a result of theory rather than practice. The information gathered could for instance be acquired through the carrying out of job analysis for every employee whose work involves the use of the equipment to be supplied. This will help in checking whether work processes are being effectively attained (Noe 2009). There could also be the conducting of a study specifically aimed at coming up with information regarding the use of printing equipment. This would gather information relating to the level of satisfaction that the employees have in relation to their workplace. The study should have a multiple approach to acquisition of information. For instance, in addressing the level of satisfaction in different facets of the job, they may be asked about the level of confidence that they have in their ability to use the equipment and the best positions in their view for positioning of the machines. This would involve the setting of like type questions to get opinions on the level of satisfaction. The questionnaire is about the best method for gathering information from within a large number of people. It should also have open ended question sections where they will comment on their most favored changes in equipment ability and situation. Contacting the relevant supervisors and even employees themselves is also an effective means of gathering information. This is because it enables the expression of observations that may not be otherwise given by employees as a result of which whatever is generated is the most representative of the opinions of the employees. This is in addition to reference to company records for past trends in procurement and the anticipated needs of the company in future (Noe 2009). In addition, there should be a thorough assessment of the effectiveness of the machines that are selected for performing certain functions. Through seeking appropriate advice from specialists in the field of information technology, the company should purchase only the latest equipment and that which is unlikely to become outdated. The procurement of printing and copying equipment is a form of Maintenance and Repairs purchase. This implies the presence of a low degree of risk, and relative value, but the issues continue to take up much of management’s attention. Possible Supply Arrangements which Could be Considered The sourcing of printing and copying equipment may be done in a number of ways. First is direct purchase from the suppliers. Here, the procurement officers will carry out the needs assessment and afterwards set out to get the equipment from a source. There could also be the tendering of the procurement process. Here, there would be the identification of the lowest bidder who would then be given the chance to supply whatever is required. In terms of sourcing consultancy services for training the employees as has been noted, the company has the choice of taking up either an internal or external consultant. The creation of an opportunity for internal consultancy has its advantages and disadvantages. The main advantage is that an internal consultant is likely to be cheaper in the short run, due to their being a member of the company’s workforce. The other advantage is that such a consultant will be more in touch with the needs of the employees and company in general. The main advantage of an external consultant is that he has a greater exposure to varied conditions and therefore the ability to come up with several possibilities in dealing with a problem. The disadvantages of the approach is that the external consultant will tend to require more time to understand the organization’s dynamics and fail to get the kind of goodwill that is likely to be accorded an internal consultant (Payne & McCormick 2007). There is the need to identify and access the best copying and printing facilities possible. There should then be the linking of equipments to the departmental and individual needs as much as possible. Further, there should be the minimization of costs wherever possible, or in case this cannot be achieved, the development of a cost reduction strategy that will help to maintain the costs at the current level per employee. The company’s procurement strategy should be able to lower the rate of wastage for paper and inks. This is especially important in the case of the company because of its constant claim to ensure environmental conservation. The company needs to acquire information on the latest approaches in technology possible. There should be the identification of the best approach to attain the company’s identified needs and if possible, come up with supply-company relationship in which there is a merger between the supplier’s objectives and interests with those of the company. It further needs to ensure that there is the compatibility of policies and practices with the existent computer and communication systems in the market. The challenges have a considerable effect on the purchasing process for printing and copying equipment. This is because they affect the viability of any purchases that are made. The fact that some of the employees may not be able to perform some functions using the equipment leads to a lowered relevance for them. Many machines tend to be more expensive depending on their capacities and this will be arrived at by assuming an optimal level of utilization. The high rates of machine breakdown also have an unconstructive effect on the resilience of machines and therefore wisdom in their purchase. Even in a case where a cheap machine will be opted for, the fact that more than one unit will be purchased within a short span of time will make more expensive. The possibility of replacement and maintenance costs exceeding those of purchase and therefore limiting cost cutting measures (Payne & McCormick 2007). Conclusion and Recommendations The modern company is faced with a number of challenges, mainly occasioned technological and business climate changes. A number of problems have been noted as troubling the company, as a result of which it has not been able to attain its maximum expected potential hence possible profitability. Among the operational problems that are faced by the company is the overburdening of some equipment. For instance, color printing is done at above optimal levels. There have been operations beyond the allocated budgets. There is therefore need to check on the quantity of work that is performed to ensure that unproductive or unnecessary work processes are eliminated. There is therefore the need to come up with a change in strategy that will enable the minimization of costs. Maintenance costs for the relevant equipment are also beyond acceptable levels. Payments given out to maintenance contractors have been beyond the necessary ones. In addition, there has been overworking of the equipment as a result of the excessive demand. There has been the invalidation of warranties provided for the equipment due to a number of reasons. This is mostly due to overuse. There is also incorrect use of equipment either unknowingly or due to negligence. Some equipment has further been rendered redundant. Part of the reason for this is technological advancement that has led to an enhanced role of the internet as a replacement of functions such as those of scanners in graphics. Failure to adequately involve employees is a challenge. Needs of each of the six floors are for instance diverse but procurement planning tends to generalize the needs as being those of all employees. There is therefore a lot of unnecessary movement across floors. This is one of the factors that lead to waste of materials. Lack of knowledge is also a limiting factor as it leads to employees failing to perform some tasks. Because of this, underutilization of equipment is highly evident. Changes to be made in order to ensure a successful procurement and delivery process therefore include the inclusion of staff in procurement decision-making. There is the need to ensure that information is properly collected and surveys conducted to find out what is truly required and what is not. There should also be the enhancement of training programs within the company to ensure that changes occurring in the technological sphere will not have a negative effect on the performance of employees. Continuous on the job training should be accompanied by an inclusion of all departments in the company in making decisions, rather then the current trend where it is all left to the IT department. In addition to the training strategy, management should ensure that communication is improved further within the company. The IT department should ensure the translation of all manuals to a form that is understandable to everyone. If possible, the manuals should be provided at convenient locations, for instance next to the machines. The company should take it upon itself to offer information on how all equipment should be used. The company should always strive to provide as many machines as possible to avoid the overburdening of the ones that are available. There should be for instance the provision of high speed quality printers on each floor so that every one can access the service. Once carried out within the frameworks of existing legal and policy frameworks, there is a great likelihood of the purchasing process experiencing more success as it will be able to play a leading role in cost cutting measures and therefore profitability of employees and the company in general. Bibliography Noe, R., 2009, Employee Training & Development. McGraw-Hill/Irwin: New York Payne, F. & McCormick, B., 2007, Project Procurement Management Study Guide. Macmillan: New York Read More