Procurement and Supply Chain Management

PROCUREMENT AND SUPPLY CHAIN MANAGEMENT
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Executive summary:
Towards the continuation of this study, the researcher has stated the discussed critical
situations and challenges within Sapphire energy and AusCotton. Based on the challenges,
relevant solutions have been provided to mitigate the issues. Along with this, the researcher
has stated possible EOQ standard to control costs and increase profit in business. This study
has covered the issues regarding the company Laburnum Group, which has faced several
issues throughout their supply chain management system. Along with this, few common
global issues of supply chain management have also been discussed to support the answers.
Towards the continuation of this study, the researcher has justified the impact of demand on
supply chain management.
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Table of Contents
Introduction:...............................................................................................................................4
Energy portfolio- Sapphire energy:............................................................................................4
1. Evaluating the current ordering system:.............................................................................4
2. Discussing the improved inventory system:.......................................................................5
Clothing portfolio- AusCotton:..................................................................................................5
1. Investigating major global issues that will be relevant to the area of strategic sourcing at
AusCotton:..............................................................................................................................5
2. Investigating the impacts of less-than-perfect demand forecasts for AusCotton products:
................................................................................................................................................6
2.1 Examining the volatility of transport services from manufacturers to distributors:.........7
2.2 Strategies to be used to mitigate the issues of the organisation:......................................7
3. Elements of the strategic sourcing methodology for improvement at AusCotton:............8
4. Respond to the assertions that some of the manufacturers are involved in producing
illegal merchandise to end competition:.................................................................................8
Conclusion:................................................................................................................................9
Reference list:...........................................................................................................................10
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Introduction:
Supply chain management is an important aspect of each manufacturing business unit;
because this is the only way to deliver the products to market and customers. In supply chain
management, the manufacturers will need to monitor the channel of distribution so that
competitors cannot create high competition (Christopher, 2016). This study has covered the
issues regarding the company Laburnum Group, which has faced several issues throughout
their supply chain management system. Along with this, few common global issues of supply
chain management have also been discussed to support the answers. Towards the
continuation of this study, the researcher has justified the impact of demand on supply chain
management. At the end of this study, relevant strategies have been provided towards the
mitigation of challenges faced by the company.
Energy portfolio- Sapphire energy:
1. Evaluating the current ordering system:
The current ordering system is provided below, where it can be seen that the company has
been provided less order compared to received order. That means a less capacity has
identified from the given ordering system. Here, EOQ model should be used for reducing the
issue.
EOQ for AWG aluminium triplex cable
Particulars Unit
Meters Amount $
Annual Demand (D) 155000
Current Order Quantity (Q) 12917
Yearly cost for carrying per unit (C') $ 1.350
Yearly cost per order (S') $ 50.00
Total Annual Inventory Cost (Q/2) x C'+(D/Q) x S'
Total Annual Inventory Cost (TAIC 1) $ 9318.75
Economic Order Quantity SQRT(2xDxS')/C
Economic Order Quantity (EOQ) 3388.43
Total yearly Inventory Cost in case of implementing Economic Order Quantity
Total Annual Inventory Cost (EOQ/2) x C'+ (D/EOQ) x S'
Total Annual Inventory Cost (TAIC 2) $ 4574.39
Table 1: Ordering system
(Source: Created by author)
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