Part 1, The task force realized significant savings from single sourcing. What are the risks with single sourcing and what processes would you put into place to ensure the central department properly weights the risks to the SBUs of a single supplier strategy? PART 2, One result of this initiative was the creation of strategic suppliers who serve several SBUs. In the event of a temporary supply shortfall from a strategic supplier, what process would you put into place to allocate the supply across the SBUs?

History and Background: The Result The shared services function went live on their ERP system fifteen months after the start of the task force. The combined seven SBUs had reduced their total number of suppliers from 34,000 to around 900. The number of items they purchased was reduced from 110,000 to 15,000 and a centralized department was put in place to monitor and approve new items and new suppliers as they were required. Although the company saved 10% in the first year after implementation, it was estimated savings could reach 15% in subsequent years based on the results of the task force. Now that the shared service centralized purchasing department is in place, please consider these questions going forward: 1. Although the company realized significant savings from using the shared services approach, what are some of the trade-offs (potential problems) with the creation of a central department to monitor and approve new items and new suppliers? 2. The task force realized significant savings from single sourcing. What are the risks with single sourcing and what processes would you put into place to ensure the central department properly weights the risks to the SBUs of a single supplier strategy? 3. One result of this initiative was the creation of strategic suppliers who serve several SBUs. In the event of a temporary supply shortfall from a strategic supplier, what process would you put into place to allocate the supply across the SBUS