Case study - Contexts of Procurement and Supply

Question : Explain how regulation impacts on the purchasing activities at BRB

Regulation impacts on the purchasing activities at BRB are followed

Making specification of filter: For low emission , BRB have to purchase specified filter which is pass the certification process and ensure air quality of the city .

Select the supplier : for regulation impacts BRB has to select the supplier who is capable to supplier the preferred air filter.

Certification : for the regulation , BRB need certificate for the supplied filter. Withour certificate , BRB may have to pay £ 200 per day to enter in the low emission zone.

New product innovation: for regulation and update the service , BRB have to need frequently modification of digitally recorded commentary in several language and other high wear parts replaced.

Spot purchase: for maintaining the regulation and continue the service , BRB need spot purchasing of a lots of parts and others materials

Cost increasing : for spot purchasing the spare parts and other materials , cost in increasing day by day

Time wasting : due to spot buying and miss communication , BRB received some invoice with out purchase order , which waste time of both buyer and supplier.

Question : Discuss the benefit to BRB of Astra purchasing the filters and ensuring their certificate

Financial benefit: without filter and ensure the certificate , BRB can not continue its business as a tourist bus company. They have to pay £ 200 per day to enter in the low emission zone which may cost a lot. There fore , Astra purchasing of the filters and ensure certificate , BRB are financially benefited.

Enhance profitability : By ensuring certificate , BRB can provide as sightseeing tours throughout the capital city using a red open top double -decker bus which is enhance the profitability of the company.

Environmental benefit : using filters and ensuring certificate BRB is producing low emissions which is ensure the air quality of the city. Thus filters and certificate help to keep the city environment air pollution free.

Business benefit : for the certificate they can continue the business whithour any service penalties , So this is a business benefit for BRB

reputation benefit : Purchasing filters and ensuring certificate BRB can operate the Highly regulated Tourist bus service in the capital city .this service enhance the attractiveness of the city and ensure tourist satisfaction which is a reputation benefit for BRB.

Ensure tourist satisfaction : Using filters and ensuring the certificate , BRB's vehicle can operate the service thoughout the city and ensure the satisfaction of the tourist.

Safe and sustainable bus service : they are offering safe and sustainable bus service using the filters and certificate.

Enhance the attractiveness of the city: BRB's tourist bus service ensure tourist to visit the important place of the city in a safe and relaxed way which ensure tourist satisfaction and enhance the attractiveness of the city.

Question : discuss advantage and disadvantage of BRB of spot buying

Spot Buying : Spot buying is the practice of buying to meet immediate requirements, rather than for stock or to meet future demand. Frequent orders are raised at the prevailing price at the time the order is placed. When a commodity price is falling, spot buying may minimize total expenditure.

The advantages of a spot buying
A spot purchase may be particularly suited to circumstances where flexibility of provider is required. Additional potential benefits include:

• Promotes choice and flexibility in responding to changing needs
• Supports the development of more individualized services and price and enables commissioners to specify individual outcomes for service users
• May allow for closer matching of resources to individual needs
• Represents a low risk purchasing strategy in striking a balance between other contract options that are available to commissioners
• Provides an environment where it is easier for commissioners to shift to new supplier
• May present an easier route than other contract options for new providers to enter the local care sector.
  

The disadvantage of a spot buying
A significant use of spot contracts is not conducive to care sector stability. Other potential disadvantages include:

• The lack of guarantee offered to providers can be detrimental to service consistency and continuity;
• Insecurity of supply for commissioning organisations
• Lack of security for providers, which may result in a lack of capital investment
• Potentially higher prices arising from a lack of economies of scale
• An inhibition about closer working relationships between commissioners and providers
• Monitoring is difficult in an environment where there is a high volume of spot contracts
• Spot purchase are deficient as a planning tool
  
• It is difficult to predict the exact time period and strike price of the products. This can make it more difficult to achieve goal for the business. Fortunately, different types of SPOT options help mitigate this disadvantage.
  

Model form contracts

Model form contracts are published by third party experts incorporating standard practice in contracting for specific purposes within specific industries and ensuring a fair balance of contractual rights and responsibilities for buyer and seller. The most common model form contracts are used in the construction and engineering industries, but other industries - such as logistics and facilities management - are also beginning to develop them. Here are some examples. CIPS has published a range of model form contracts and contract clauses, which members are licensed to use in support of their employment  

ADVANTAGES :

• Helps reduce time and costs of contract development 
• Avoids 'reinventing the wheel' - but can be adapted to suit particular circumstances
• Industry model forms are widely accepted, reducing negotiation time and costs 
• Designed to be fair to both parties 

DISADVANTAGES :

• Terms may not be as advantageous to a powerful buyer as if contract was negotiated 
• Terms may not include special clauses or requirements to cover the buyer's position 
• legal advice is still required if significant amendments or variations are to be made 
• Costs of training buyers to use model forms

Article Review - Managing contract and relationship

Harley-Davidson is a legendary motorcycle preparing company of USA. After teetering the brink of Bankruptcy in the year 1989s Harley roared through the 90s with a rejuvenated brand. During this period of sales and production growth, Harley developed incompatible business practice and IT system in different parts of the company. Now Harley is a financially strong company where last year revenue rose 13% to $ 4.6 billion, net income was $761 .

Harley is completion a project began more then two years ago, that it web portal. But it is not only a portal,this is the major key of Harley procurement and supply chain and its developed. Using this portal nearly 300 suppliers of Harley can view the receiving inventory, replenishment altars, shipment notice , performance and financial status. It automated inventory -replenishment process , notice and altars more faster and cheaper then ever before. Inventory management is the process of efficiently overseeing the constant flow of units into and out of an existing inventory. There fore using the portal Harley is getting the full benefit of inventory management and achieving their annual growth rate. With the use of the EDI -based invoice system , supplier paid their payment within seven days of submitting of a invoice . Supplier of Harley also can manage the payable and revealable amount from the portal . This is a financial benefit of supplier. This is a commercial relationship with supplier and Harley-Davidson , Supplier give more 1% extra benefit for quick payment system. This is a cost benefit of Harley.

In the context of relationship management , Harley play a vital roll in the manage of its suppliers. To cut production cost Harley used different Invoice , schedules and business procedure for each of its main factories. Mark Dickson , senior system manager says : So we put in place a set of tools suppliers can view to consolidate requirements. Thus Harley's relationship management help them to make profit. Harley-Davidson also very much aware about the risk management , to face the risk they have implement the MRP system which can help them to minimize the risk of business. Harley's success depend on cutting cost in supply chain , according to analysis who track the company stock.

Using the portal system they can analysis data , make forecast , cutting inventory , distribution and process cost and making revenue day by day . In the view of equity firm analyst , Bryan Knoepp “ They ( Harley's) use many unique process in their supply chain ''. Harley's is working with longtime suppliers to hit annual goals of lower costs , consistent quality , improve delivery performance and continue investment in new technology . This portal is making goals and Harley's want to setup this kind of portal for all factories. By the using of portal Harley's ensuring commercial relationship, cash benefit, risk management and longterm contract with his supplier , on the other hand making low cost product,consistent quality product and good service to its customer,

Sourcing in procurement and supply - CIPS, at NZCC

Now I taking preparation for my class exam. Today I have read some important definition in  chapter 5- Financial appraisal of suppliers ,  They are following

Assets : An assets is something which is owned by the  business and  use for achieving the business objective .

 
Liability : Liability is a sum owned by the business to outsiders ( eg amount owning the trade and outstanding load , overdraft , tax and wages.)

 
Income or revenue : this is the amount earned by the organization .
 eg  from sales,  interest of deposit , dividend of investment


Expenditure : The amount spend by the organization . 


Assets = Fixed assets + current assets


Net Current assets =  Total current assets - total current liability


Turnover : Turnover means what amount of good sold during  the year, whether or not the cash was actually received during the year.