AID18863 Amidst Covid with global logistics opening up slowly, it’s important for your organization who is in plastic sheets manufacturer to get their raw material – resins, the main ingredient in this molding process from Turkey.

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Amidst Covid with global logistics opening up slowly, it’s important for your organization who is in plastic sheets manufacturer to get their raw material – resins, the main ingredient in this molding process from Turkey. The raw material is urgently required now as your organization has lots of order to deliver. While market has open yet movement involved lot of risk like delayed consignments etc. What Inco terms once should select to ensure goods are delivered on timely basis and till factory premises? Can choosing right Inco terms also help organization to save money in these difficult times?
Case Study
INTRODUCTION
M/s GETWELL is a privately owned big pharma player. Being Pharma company selection of raw material and packaging material is quite stringent both in terms of specification & dealing with same vendors for years now. M/s GETWELL is a listed organization who strongly believes in innovation. Their R&D team continuously works on getting customer latest product and hence don’t want to change old proven ways of working under name of quality.
M/s GETWELL has grown since 1980s into one of the top 5 Pharma players in India. The company has an annual turnover of $750 million and employs 2,500 staff, including a centralized purchasing function at head office. From past 3 years company growth has been almost flat. A newly hired senior purchasing manager Jacob has been appointed at head office, who is responsible for bringing change in procurement practice and yet not sacrificing savings. During his interview he was also told that last year during annual vendor meet lot of vendors raised concern of need of transparency in procurement process. They also mentioned that they get lot of enquiries but even after ensuing proposal and sample submission as per process, they never get new orders. These vendors are in database of other Pharma companies and are quite keen to work with GETWELL.
Scenario
Jacob is an experienced and qualified purchaser who has worked across the public and private sectors for the last decade. In starting days he is investing lot of time to understand key categories and the critical vendors. He is simultaneously working on updating Purchase Policy.
While undergoing few transactions, Jacob could identify issue in sample approval process. While engineering teams evaluate lot of samples of new vendors, doesn’t provide logical reason for rejecting new vendors even though samples look to fit in specification. Moreover, organization still followed seal envelope quotation process for most of the critical procurement, which takes lots of time. Most of the time cycle of sourcing goes so long that key launches are often closed in haste and hence order are placed with same incumbent vendors with much higher cost.
Meanwhile, Jacob highlight these Gap to Head of Purchase department during his quarterly review discussion. During the discussion Jacob happen to mention that while organization has progressed but still follow old ways of procurement. These progress delays over cycle and also impact new launches. He also mentioned risk that organization is taking by depending on few vendors for years now. Jacob also highlighted how eProcurement process can help them to resolve some of these issues. The Purchase head is quite surprise to understand that changes in process can bring both speed and transparency. And is also worried that cost should not be the only criteria to select new vendors
The Head of Purchase Department has asked him to evaluated overall process and come up with his recommendation. (The information in this case study is purely fictitious and has been prepared for assessment purposes only. Any resemblance to any organization or person is purely coincidental.)
a. Put yourself in shoes of Jacob, mention challenge that you can identify as a Purchase Manager in the Case Study above? How can eProcurement help you to improve you manage to resolve them on longer term?
b. The Purchase Manager Jacob wants to introduce stringent supplier selection criteria in purchase process while evaluating vendors. What are the steps he should value in this case study?
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