A manufacturing company has a global network of suppliers based in low-cost locations. The company has...

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A manufacturing company has a global network of suppliers based in low-cost locations. The company has traditionally classified purchased parts into 'A', 'B' and 'C' categories where: 'A' items represent 10 per cent of the total number of items but are 70 per cent of the total annual purchase value. 'B' items represent 20 per cent of the total number of items but are 20 per cent of the total annual purchase value. . 'C' items represent 70 per cent of the total number of items but are only 10 per cent of the total annual purchase value. . It buys 'B' class parts in large lots and stores inventory either in central warehouses in specific locations around the world which are then transferred to its assembly plants to produce the finished products. Some 'B' class parts which are used by only a specific plant are directly stored at the plant. The company has few products but multiple variants for each of the products. Demand for individual products varies quite a lot from month to month as well as across geographies. 'C' class items are produced by each individual plant and are stored in large quantities. The company's central procurement function managed the purchase of all 'A' class items as these are highly valued parts. But the individual plants always have complaints about procurement of 'A' class items as central procurement takes a long time to finalise those contracts as the central team, in many cases, is not aware of how and where those parts are used. Question: 1. Discuss how will the company reorganise its purchase portfolio and how it decides whether procurement will be done by the central team or by the local teams at the plants. A manufacturing company has a global network of suppliers based in low-cost locations. The company has traditionally classified purchased parts into 'A', 'B' and 'C' categories where: 'A' items represent 10 per cent of the total number of items but are 70 per cent of the total annual purchase value. 'B' items represent 20 per cent of the total number of items but are 20 per cent of the total annual purchase value. . 'C' items represent 70 per cent of the total number of items but are only 10 per cent of the total annual purchase value. . It buys 'B' class parts in large lots and stores inventory either in central warehouses in specific locations around the world which are then transferred to its assembly plants to produce the finished products. Some 'B' class parts which are used by only a specific plant are directly stored at the plant. The company has few products but multiple variants for each of the products. Demand for individual products varies quite a lot from month to month as well as across geographies. 'C' class items are produced by each individual plant and are stored in large quantities. The company's central procurement function managed the purchase of all 'A' class items as these are highly valued parts. But the individual plants always have complaints about procurement of 'A' class items as central procurement takes a long time to finalise those contracts as the central team, in many cases, is not aware of how and where those parts are used. Question: 1. Discuss how will the company reorganise its purchase portfolio and how it decides whether procurement will be done by the central team or by the local teams at the plants.

Answer rating: 100% (QA)

To reorganize its purchase portfolio and decide whether procurement should be done centrally or by local teams at the plants the company can consider the following strategies 1 ABC Analysis Refinement ... View the full answer