Part $1$: Analysis of Procurement Savings Program

Format: Written report $(4-5$ pages$)$

Description: Read Case $17-1$ thoroughly. Evaluate the procurement savings program at Wirth Corporation as presented in Case $17-1.$ Analyze the current policies, processes, and organizational structure, and propose improvements.

Case Synopsis: In early September, Lina Rodrigues, procurement manager at Wirth Corporation $($Wirth$),$ was made responsible for the procurement savings program by Andrew Russell, director of procurement, who was scheduled to retire at the end of December. Lina started by examining past

savings reports and later talked to the purchasing managers and buyers about their experiences

with the program. Following her review, Lina wondered what action, if any, she should take.

Objective: Analyze and improve procurement cost$-$saving programs.

Expectations:

$-$ Review the six guidelinesfor the current procurementsavings program.

$-$ Evaluate the savings reported on specific items $($e$.$g$.,$ battery enclosure$).$

$-$ Assess the organizational structure and its effectiveness.

$-$ Recommend actions Lina Rodrigues should take on the savings program.

You may refer to the following questions to guide your reflection:

$-$ Do you believe that $$900,000$ is reasonable savings for expenditures of $$75$ million?

$-$ How would you go aboutsetting a savings target?

$-$ What is your assessme nt of the guidelines used in Exhibit $2$ for reporting purchasing savings? Discuss each guideline carefully.

$-$ What is your assessment of the savingsreported on the battery enclosure $($Exhibit $3)?$

$-$ What are the potential problems and opportunities associated with creating a procurement savings program?

$-$ What changes would you make to the procurement organization structure at Wirth?