Case Study Analysis of Sapphire Energy and Aus Cotton

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Running head: CASE STUDY ANALYSIS
Case study Analysis
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1CASE STUDY ANALYSIS
Table of Contents
Introduction......................................................................................................................................2
Case Analysis: Sapphire Energy......................................................................................................2
Evaluation of effectiveness of the current ordering system of Sapphire Energy.........................2
Ways of improving the current ordering system of Sapphire Energy..........................................3
Analysis: Aus Cotton.......................................................................................................................4
Personal thinking on strategic sourcing in context of Aus Cotton...............................................4
Impacts of less than perfect demand forecasts for Aus Cotton....................................................5
Ways of mitigating the issue of Aus Cotton................................................................................6
Elements of strategic sourcing process........................................................................................7
Evaluation of the assertion for Aus Cotton..................................................................................7
Conclusion.......................................................................................................................................8
References........................................................................................................................................8

2CASE STUDY ANALYSIS
Introduction
Laburnum Group is established in 1920 and it is considered as one of the largest
Australian groups of companies having their main area of revenue is coming from their two
companies which are the Sapphire Energy and Aus Cotton. The main objective of this group is to
maximize the returns of the shareholders. It is seen recently that the two companies under this
group is facing some challenges and inefficiencies which is actually making the top management
of this group to rethink their business strategies and the current processes for maximizing the
returns to their shareholders. The main area which is considered s the challenge for the group is
basically related with the procurement and the supply chain. There is the development of the
cross functional team to be deployed for managing and identifying the areas which needs to be
improved (Kim and Chai 2017). The study is focusing on how Laburnum Group will be
identifying and managing the challenges they are facing recently from their two business
portfolios. It is also describing the qualitative and quantitative analysis of the loopholes created
and the mitigation of the challenges are needed.
Case Analysis: Sapphire Energy
Evaluation of effectiveness of the current ordering system of Sapphire Energy
It is observed from the case study that Sapphire Energy has the contract with Eastern
Power storeroom who is procuring this cable so that the electric service should be delivered at
the different areas of Victoria. It is seen that now Eastern Power actually need around 155,000
meters of cable for providing the best electric service to the customers. The challenge the
company is facing is basically the carrying cost of the cable is very high and there is around

3CASE STUDY ANALYSIS
1/12th part of the annual cost is paid to the Electric Store room for delivering this cable to
Sapphire Energy. There is an agreement to be made with Electric Store for reducing the lead
time. There will be no discounts on the volume of this cable to be made and the supplier is
indicating that the discount will be offered only if it has the minimum order volume of 4500
meters. It is also seen that the ordering costs is also high which is around $50 and the inventory
carrying costs on all the items is around 10 percent of the purchase price which is also high as
this will add up and the total price for supplying this cable for the customers gets enhanced
which is adjusted in the electric bills.
From the case scenario it is depicted that the ordering costs for the cable is around $50 so
the ordering cost is dependent on the annual demand. This tells that of the ordering cost is
increased then the annual demand will also increase. This indicates that the customer across the
different cities of Victoria have large demand of this cable which the Eastern Store should have
to meet it. This is also dependent on the value of economic order quantity. If the economic order
quantity increases the annual demand also increases. So in this case the effectiveness of the
current ordering system is very high for Sapphire Energy as the ordering costs for this cable is
very high. So this depicts that Sapphire Energy has the high demand of this cable for the future
which will be maximizing the sales and this results in maximizing the shareholders of Laburnum
Group as well.
Ways of improving the current ordering system of Sapphire Energy
The ways of improving the current ordering system is to increase the ordering cost for the
cable. The next could be the increase in the annual demand met by Sapphire energy year by year.
The annual demand the ordering costs for the cable is directly related with the economic order
quantity of that product. This depicts the improvement in the financial performance of Sapphire