Procurement and Supply Chain Management †MyAssignmenthelp.com

Question: Discuss about the Procurement and Supply Chain Management. Answer: Introduction Organizations will be facing problems when there will be the introduction of global sourcing to AusCotton. The opposition of the organizations buyers for learning the ways for evaluating the global sources is the main cause relating to the problems. Supply management is becoming very significant for the survival of the offshore organizations. In some industries, the use of foreign suppliers will be reducing the overall costs. The major global issues having relevancy to the strategic sourcing area are having the influence regarding national interest as well as the risky working conditions in certain foreign countries needs to get assessed. AusCotton is required re-analyzing the prospective new international as well as domestic suppliers as well as studying the constituents of cost regarding the product or service. In addition to it, the organization will be reviewing the marketplace of the suppliers in respect of risks as well as scopes. The senior management of AusCotton will be cond ucting meetings as well as discussing in respect of issues that will minimize the risk as well as costs. In addition, the major strategic aspects will be looking into the competitiveness of the suppliers. Effectiveness of the current ordering system at Sapphire Energy Sapphire Energy is having the responsibility to provide authentic electric service to consumers in 10 cities that are Ballarat, Bendigo, Geelong, Mildura, Melton, Sunbury, Shepparton, Traralgon, Wangaratta as well as Wodonga. Sapphire Energy is using 1/0 AWG aluminium triplex cable for providing electric service. The Eastern Power Storeroom does the procurement of the cable (Waters 2014). In this context, Eastern Power will be requiring 155,000 metres of service cable in the coming year. As because, the cable is being used exclusively regarding routine service work, all of it will get installed during the 5 normal days of work. In this respect the present carrying cost regarding this cable is $1.35 per metre. Concerning this current arrangement with the suppliers, the Eastern Power storeroom is required taking one-twelfth of its annual requirement every month. In the absence of the agreement, lead-time will be about 12 weeks. The suppliers are requiring a minimum of 4,500 metres be on an order. The Eastern Power storeroom is having the storage space regarding the maximum of 90,000 metres. There is an ordering cost of $50 concerning each shipment of cable and the inventory carrying costs are 10% of the purchase price per unit, per year (Sanderson 2015). With the present ordering system, Sapphire Energy will be ordering approximately 12, 917 metres of cable in the coming year. The optimal number of units per month will be, EOQ = ? ((2*D*S) / (H)) = ? ((2*50*155,000) / (1.35*0.1)) = 10,715.1675 Annual Cost = (D/Q)*S + (Q/2)*H Current system of Q = 12,917 Total Annual Cost = $1,472 Optimum # units/order = 10,715 Annual Costs = $1,446 Difference = $26 annually Expected time between orders = T + # working days per year / N 5 Normal Workdays * 52 weeks = 260 workdays annually Amount of time between orders = T = 260/14 = 18.6 days - - more efficient T = 260/12 = 21.7 days In reference to the supply issue, there will occur improvement of the current ordering system when they will be working on the inventory management. Each shipment will be costing $50 in addition to the 10% of the inventory charges that will be creating the problem. According to the agreement, the minimum order is 4500 metres and it will be taking five days for the implementation of the cables. Sapphire Energy is required reducing its cost of inventory as $1.35/ metre is the carrying cost that is not feasible and when the carrying costs number will decrease then there will be decrease in the cost (Mangan 2016). In the same manner, per order of shipment charge is $50 therefore, when the minimum order metres will be increasing to 9000 metres then there will be a decrease in the shipment charge and this will be reducing the carrying cost. By doing this, Sapphire Energy will be reducing some of its cost and when Sapphire Energy will be introducing discounts then sales will be increased th at will again be reducing the carrying cost (Amann 2014). The current system will certainly get improved by ordering the optimal number of units, which is 10,715. For meeting the yearly demand of 155,000, they are having the requirement for changing the number of orders per year to 15. There will take place the order of 160,725 metres yearly. Major global issues having relevancy to the strategic sourcing area Organizations will be facing problems when there will be the introduction of global sourcing to AusCotton. The opposition of the organizations buyers for learning the ways for evaluating the global sources is the main cause relating to the problems. Supply management is becoming very significant for the survival of the offshore organizations. In some industries, the use of foreign suppliers will be reducing the overall costs (Wisner 2014). For instance, the major global issues having relevancy to the strategic sourcing area are having the influence regarding national interest as well as the risky working conditions in certain foreign countries needs to get assessed. The list of probable international issues that will be having relevancy regarding the strategic sourcing area is mentioned as under, AusCotton will be facing limitation towards the management of every commodity as well as category of material that will depend on the supply as well as spend characteristics Dilemma towards selecting the strategy for outsourcing that is made or purchased To achieve optimal portfolio regarding the suppliers that will be satisfying the requirements of the suppliers per commodity of the category (Johnson 2014). Impacts of less-than-perfect demand forecasts for AusCotton products Timely as well as accurate demand forecasts are necessary for the manufacturing of supply chain Management as a less-than-perfect demand plan that will be resulting in supply differences like meeting the request of the customers. Therefore, the accuracy regarding the demand forecast is always critical towards the appropriate resource allocation (Rushton 2014). The steps that need to be followed that is to be used for mitigating the areas of problem are, To build an alliance amongst the customers as well as the suppliers for the improvement of the accuracy regarding the forecast To have faster response regarding demand changes that will be minimizing the impact as well as the cost regarding the forecast error (Stadtler 2015) Elements of the strategic sourcing process for improvement The elements relating to the strategic sourcing process that are considered being the top candidates in respect of improvement at AusCotton are considered as under, Supply Market Analysis AusCotton is required re-analyzing the prospective new international as well as domestic suppliers as well as studying the constituents of cost regarding the product or service. In addition to it, the organization will be reviewing the marketplace Management of the suppliers in respect of risks as well as scopes (Sanderson 2015). Developing a strategy The senior management of AusCotton will be conducting meetings as well as discussing in respect of issues that will minimize the risk as well as costs. In addition, the major strategic aspects will be looking into the competitiveness of the suppliers (Ross 2013). Benchmarking and tracking results This is the major component relating to the strategic sourcing process that will be required in getting evaluated again. It will be providing the business specialist, the current status regarding the commodity or category (Monczka 2015). Assertion regarding the involvement of producing illegal merchandise In respect of tackling the aspect of producing merchandises that are illegal by contract manufacturers, the below mentioned steps will be taken into consideration, Hiring a new president of the supply chain that will be evaluating the process of strategic sourcing as well as will be trying to do the improvement regarding errors The new company owner will be asked in taking out time as well as visiting the international facilities of the organization as well as becoming aware regarding the circumstance as well as challenges the organization is facing (Christopher 2016). Conclusion To conclude the assignment, it needs to be stated that The senior management of AusCotton will be conducting meetings as well as discussing in respect of issues that will minimize the risk as well as costs. In addition, the major strategic aspects will be looking into the competitiveness of the suppliers. Eastern Power will be requiring 155,000 metres of service cable in the coming year. As because, the cable is being used exclusively regarding routine service work, all of it will get installed during the 5 normal days of work. In this respect the present carrying cost regarding this cable is $1.35 per metre. Concerning this current arrangement with the suppliers, the Eastern Power storeroom is required taking one-twelfth of its annual requirement every month. In the absence of the agreement, lead-time will be about 12 weeks. The suppliers are requiring a minimum of 4,500 metres be on an order. The Eastern Power storeroom is having the storage space regarding the maximum of 90,000 me tres. There is an ordering cost of $50 concerning each shipment of cable and the inventory carrying costs are 10% of the purchase price per unit, per year. Reference Amann, M., K. Roehrich, J., Eig, M. and Harland, C., 2014. 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