ASSIGNMENT DESCRIPTION

This assignment immerses the student in a real-life situation that actually takes place in businesses that are trying to evolve/grow to the next level of professionalism. It clearly demonstrates the demands put on purchasing and supply chain practitioners. Students will develop an in-depth understanding of the impact of purchasing and supply chain management on the bottom line of evolving organizations.

This assignment has two parts.

In part one, the role of the student is that of a Sault College graduate who is employed by the company as an Assistant MRO Buyer.

In part two, the student is completing an RFI to implement a supplier management outsourcing or 3PL/MRO system. Students will be required to complete all steps in the assignment including a completed RFI.

EVALUATION BREAKDOWN

• This assignment is graded out of 440 points and is worth 20%.
• Refer to the assignment submission folder for the rubric.

MATERIALS AND RESOURCES

Publisher Materials:

• Purchasing and Supply Chain Management by Arjan J. Van Weele.Publisher: International Thomson Business Press Edition: 7^th
• Software:
  • Microsoft Excel, Word
• Resources/Articles:
  • Article: Mancon Third Party Logistics (3PL)
  • Article: Gearmotor Supplier
  • Purchase Requisition Template
  • Purchase Order Template
  • RFI Template
• Videos:
  • Great video on VMI opens in new window
  • Fastenal Vending Machines opens in new window

PART 1: CASE

After graduating from Sault College, you accept a position with Best Auto Parts in the purchasing department as the Assistant MRO (Maintenance, Repair and Operations) Buyer. Your new employer is a large international manufacturer of automotive parts and has sales are over $500 million per year.

When you accepted the job you were advised by HR that the Senior Manager of Procurement is Barry Harris and you will be working very closely with Susan Nottingham who is the MRO Buyer. This is an important job because MRO keeps the plant running and annual MRO purchases represent 1.86% of the company's revenue.

Barry advised that a major area of responsibility of supply chain management is to reduce total costs while increasing productivity. The cost reduction goal for the Assistant MRO Buyer for this year is $100,000 and your ability to meet this goal has a direct impact on the annual bonus. Barry advises, "I know $100,000 sounds like a lot of money, but with Susan's help I know you will successful". Susan nods her head and smiles confidently.

The first week went by very quickly and you learned more than you thought you would. Susan was anxious to have you working with the requisition system. Susan spent a few hours with you on the requisition process and then a millwright, Paul Bartman, came into Susan's office to request a purchase for next week. Susan asked you to work with Paul to complete the requisition.

Paul advised, "I already did all the research on what we need and the best supplier, so this should be easy for you. I need a Baldor gear motor, Part # GF1524BGD15 for next Wednesday night for preventative maintenance. It's stocked at our preferred supplier, Toronto Factory Supplies (supplier code TO3290) just a few miles away at 520 Industrial Road. The gear motor costs $2883.00 USD. No need to expedite this item, just process the requisition and we pick it up ourselves with the company van. With the company van we can get things quickly and with no delivery costs. Just make sure the supplier gets the PO a few days ahead of time."

The company purchasing guidelines state:

• Purchase order signing authority: if total dollar amount is under $500, Assistant Buyer's signature is required, $500 to 2,500 Buyer's signature is required, and over $2500 Manager's signature is required
• Requisitions can be sent via interoffice mail for additional signatures or walked through the system if it is a rush order
• Requisitions are to be sent to the department administrator to produce a hard copy using the company's customized software after it is signed according to the signing authority guideline. The administrator will send the purchase order to the supplier.
• MRO items purchased locally are picked up with the company van 24 hours prior to the due date. Items to be picked up should be consolidated where possible.

Wednesday arrives; Paul is looking for the gear motor since maintenance overtime is scheduled for changing the gear motor on the machine tonight. Paul comes into your cubicle and asks about the status of the order; unfortunately you have no idea what the status of the order is. You panic and go straight to Susan, who advises that the first thing we have to do is find the requisition. Susan knows she signed it the same day it was produced and she put it in interoffice mail for the next signature per the signing authority guidelines.

Your next stop was the administrator's office who issues the POs. The authorized requisition has not made it to the administrator for processing yet. Therefore, the requisition has not been completely authorized. Unknown to you, Barry, took some last-minute time off due to a family emergency. The administrator checks Barry's in-basket and finds the interoffice envelope with the requisition waiting for his signature. Due to the urgency of the purchase request and Barry's absence, the secretary advised to take the requisition to the Financial Controller for a signature. The administrator produces the PO immediately and Susan calls the supplier. Everything is set up. Fortunately they had one of the items in stock.

Susan passes the PO back to you and suggests you should go with Paul to the suppliers' location so you can meet the Sales Manager at Toronto Factory Supplies and give them a hard copy of the PO (which the millwright does not have the authority to do).

PART 1 ASSIGNMENT STEPS

1. Read handouts (articles) to provide further insight to the services provided by third-party logistics suppliers.
2. Provide a written response and summarize five key facts of the case.
3. Describe the roles of Barry, Susan and the Assistant MRO Buyer. Also research the job titles (Senior Manager of Procurement, MRO Buyer, and Assistant MRO Buyer) to help you describe the roles.
4. Describe how the Senior Manager of Procurement, MRO Buyer, and Assistant MRO Buyer positions can contribute to the importance of Purchasing and Supply Management.
5. Using the templates provided, complete the requisition and the purchase order based on the information in the case.

PART 2: CASE

You and Paul are on your way to Toronto Factory Supply. You go to the back of the production facility and there is the van. You are surprised by what you see: a 13-year-old, 12-passenger commercial van converted to a 2-passenger van. It looked pretty rough: rusted and dented. As you and Paul drove to Toronto Factory Supplies, the brakes squeaked and the vehicle was not driving straight. When you arrived at the supplier's facility you noticed the tires on the company van were almost bald.

The Toronto Factory Supplies facility was surprisingly large; the external grounds were well maintained. As you walked into the building, it was clear this was a very organized business. Paul was greeted by Joe Gust, who is the Sales Manager for Toronto Factory Supplies. Paul went with the supplier's warehouse worker to observe the gear motor being loaded into the van, so you and Joe have a chance to talk alone.

Joe was curious why we still pick up our own parts when they provide a Supply Management Outsourcing solution that is a 100% vendor managed service, which is guaranteed to save the company money. Joe ran through a list of benefits:

We go beyond the typical 3PL solution, we are a full Supply Management Outsourcing solution

Every time you generate a PO it costs you approx. $200, which would no longer be necessary with our system since we are onsite

We would set up a parts cage (at no expense to the Best Auto Parts Company) with a secure entrance at your facility and we would manage it ourselves. The cage would remain our property and we would supply the personnel to manage the cage and ordering system for $30,000/year

Our typical cost reduction for all of your MRO purchases as experienced by most of our customers is 7% to 13%

We would provide one invoice per month with a detailed report on usage for your auditors

We would take care of everything: delivery requirements, reverse logistics, and all obsolescence and overstock issues

Your millwright is the most expensive delivery driver on the planet considering his hourly rate, guessing $40/hour. "I see Paul here so much I mistake him for one of our guys. He is here usually 3 or 4 times a week."

Our transport vehicles are maintained to the highest standards.

Joe advises that if we seriously consider the offer he would be happy to meet with our management/implementation team members (CFT) to provide any and all additional information required. "Toronto Factory Supply is a very transparent supplier and we embrace mutually beneficial relationships."

When you get back Susan (the MRO buyer) is anxious to hear how the trip went. She is surprised to hear about the condition of the van, although she had never been in it. Susan was most interested in the offer made by the supplier; supply management outsourcing or third party logistics/MRO suppliers have not been considered in the past. Susan thinks the timing is right for implementing some vendor-managed inventory systems for non-critical items and has asked you to start working on this project.

PART 2 ASSIGNMENT STEPS

1. Summarize key facts of the case-Part 2
2. Complete the RFI-Request for Information Template. Fill in all the blanks. The RFI can vary a bit depending on the application but should be completed with professional formatting (12 pt, calibri font) and letterhead (on each page) and include but not limited to:
   1. Complete Contact information on template i. Who should they send the completed RFI to ii. Who should they contact if they have any questions about the RFI
   2. Complete anticipated timeframes for evaluation and process. IE. When do you want a response?
   3. Add a section to the RFI that outlines how the supplier will respond. Should it be written in hard copy? Email, fax. Be specific regarding the response method, IE. Hard copy or soft copy
   4. Define business needs. Expand on your expectations of the first two business needs: Consistency of Supply and must be suitable for the application. i. Add three additional business needs per your understanding of the industry and the case.
   5. Complete the estimated MRO expenditure amount.
   6. Define the cost per hour for downtime. Add this to the liability section.

	Purchase Order #______________
	Delevery and Billing: Best Auto Parts, 2 Camshaft Lane, Toronto, ON, 2L2 W4T
	Company (Supplier):						Date:
	Company Address:						Requisition No:
							Supplier Code:
							Shipped via:
							Payment Terms:
	Attn:						Shipping Terms:
	Date Required:
	Item No. or Model No.	Description	Qty	U/M	*Price in Canadian Dollars	Total
							Subtotal
							Tax (13%)
							Total
							*US Exchange rate
			Best Auto Part Authorization Signature
	Important Instructions:
	1. This order is subject to conditions on the reverse side and any changes are not binding
	2. Purchase order number must be shown on all documents, acknowledgements, shipping papers,
	packing slips, packages, invoices and correspondance
	3. Invoices must be in triplicate and sent to Accounts Payable. Invoices will be paid 30 days from receipt unless
	otherwise specified above
	4. If the material specified is not available for the date required we must be notified immediately
	5. An Acknowledgement of this order is required. Otherwise, silence will be considered as acceptance
	6. All materials must comply with specifications, otherwise any unreasonable expenses that may occur will
	be the liability of the supplier.
	7. The supplier shall comply with all Municiple, Provincial and Federal laws of Canada
	8. ASC reserves the right to cancel this purchase order at any time for product that has not shipped.

Requisition # 20130167

Best Auto Parts, 2 Camshaft Lane, Toronto, ON, 2L2 W4T

Supplier Name:

Date:

Supplier Code:

Supplier Address:

Quotation No.:

Budget Account No or Dept:

P.O. Number

Delivery Location:

Item Number or Model Number

Description

Qty

U/M

*Price in Canadian Dollars

Total

Current stock level

Annual usage

Purpose:

Subtotal

Other Notes:

Tax (13%)

Total

Date Required:

Requested By

Date

Prepared By

Date

Department

Authorized by

Date

Authorized by

Date

*US Exchange rate=

Request for Information-

Issue Date:__________________

Sent by:_____________________

Due Date:___________________

Introduction

This Request for Information is an invitation to a select group of companies to submit information that will be used at a later date for the selection of supplier(s) that can provide supply management outsourcing of our current and future MRO needs including all 3PL services. Services will be required to provide a seamless transition with flawless implementation. Also include any other information not outlined below that may not be directly within the scope of this RFI but which you believe is relevant such as alternative products, systems or suggestions.

Respondents who are selected for further consideration will be:

• Visited by our supplier selection cross functional team
• Required to make an on-site presentation to our management team
• Demonstrate your SCL philosophies and systems
• Cost reduction proposal

All questions and inquiries regarding this RFI should be directed to: