Procurement and Supply Chain Management Case Study Analysis

This case study analysis evaluates the effectiveness of the current ordering system and the global issues relevant to strategic sourcing for Sapphire Energy and AusCotton. It also discusses the elements of the strategic sourcing process and how to respond to illegal merchandise produced by contract manufacturers.

Running head: PROCUREMENT AND SUPPLY CHAIN MANAGEMENT
Procurement and Supply Chain Management
Name of Student:
Name of University:
Author’s Note:

1PROCUREMENT AND SUPPLY CHAIN MANAGEMENT
Table of Contents
Introduction......................................................................................................................................2
Sapphire Energy Case Study...........................................................................................................2
Effectiveness of the present ordering system..................................................................................2
Recommendations on improving the current system.......................................................................3
AusCotton Case Study.....................................................................................................................3
Major global issues relevant to the strategic sourcing.....................................................................3
Impacts of less-than-perfect demand forecasts for AusCotton products.........................................5
Elements of the strategic sourcing process do you feel are the top candidates for improvement at
AusCotton........................................................................................................................................5
Responding to the assertion that some of the contract manufacturers are involved in producing
illegal merchandise..........................................................................................................................6
Conclusion.......................................................................................................................................7
References........................................................................................................................................8

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Introduction
The study aims to investigate two different aspects of their business portfolio for
Laburnum Group. The discourse of the report has analysed both quantitative and qualitative
perspectives of the challenges and inefficiencies as per the given case. Laburnum Group has
been identified to constantly monitors the performance across its “diverse portfolio of businesses
which is essential to their corporate strategy decisions”. The main discussion has focused on the
addressing the specific questions framed by the top management of across both the energy and
clothing business portfolios of “Laburnum Group”. The first section of the report has evaluated
the effectiveness of the current ordering system and applied the “Economic Ordering Quantity
(EOQ)”. The second section has applied the knowledge of global business environment for
AusCotton in terms of the market and supply sources. The study has also discussed the various
types of the challenges associated to the major global issues that will be relevant to the area of
strategic sourcing. The report has shown the various aspects of the assertions for responding to
the illegal merchandise which ends up competing with merchandise branded by AusCotton
(Pimenta and Ball 2015).
Sapphire Energy Case Study
Effectiveness of the present ordering system
As per the given ordering system Sapphire Energy has been identified with a total
ordering system of 4500 meters of cable. The prescribed standard for the annual stocking has
been seen to be based on total stocking cost of $ 9318.75. The EOQ implementation model has
been conducive in ordering only 3388.43 meters of cable. Therefore, it needs to be discerned that
the strategy of implementing EOQ is not feasible decision as the EOQ has been depicted with an
ordering quantity less than 4500 meters.
EOQ for AWG aluminum triplex cable

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Unit
Meters Dollars
Annual Demand (D) 155000
Present Order Quantity (Q) 12917
Annual cost for carrying one unit (C') $ 1.350
Annual cost per order (S') $ 50.00
Total Annual Stocking Cost (TSC 1) (Q/2) x C'+(D/Q) x S'
Total Annual Stocking Cost (TSC 1) $ 9,318.75
Economic Order Quantity (EOQ) SQRT(2xDxS')/C
Economic Order Quantity (EOQ) 3388.43
Total Annual Stocking Cost in case of implementing EOQ
Total Annual Stocking Cost (TSC 2) (EOQ/2) x C'+ (D/EOQ) x S'
Total Annual Stocking Cost (TSC 2) $ 4,574.39
Estimated annual savings in stocking costs
Savings TSC 1 - TSC 2
Estimated savings in stocking costs $ 4,744.36
Recommendations on improving the current system
The present ordering system has been seen with a saving of $ 4574.39 and with the
implementation of the strategy of saving in the stocks, the company is seen to be saving $
4,744.36. However, this also suggests that there is a scope of ordering more number of units.
Therefore, the main recommendation for Sapphire energy is to increase the order quantity to
4500 meters of cable.

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AusCotton Case Study
Major global issues relevant to the strategic sourcing
As discussed by Aydin, Cattani and Druehl (2014), the issue of fast changing market has
been identified as one of the main issues associated to consumer behaviour. This has been
recognised with the changes in technology and globalization. Social media is depicted with
creating new pressures for the consumers to “conform while putting pressure on enterprises to
utilize these sources of information to respond to changing preferences to stay interesting and
relevant”. The primary challenges on a global scale is depicted with the shorter life cycle due to
rapidly changing demand in the market (Abidi, de Leeuw and Klumpp 2014). The different types
of the enterprises associated to cotton production are facing several problems to keep itself up to
date with the latest trends and innovations. Several firms are seen to be facing the challenge of
maintaining an appropriate data management and integration. Data management and integration
is identified as the key to solve the problems of data management integration by connecting the
“manufacturer’s supply chain management systems with those of their suppliers and partners”.
The issues pertaining to the integration of the supply chain management is seen to be affecting
the operations at a very ground level (Fahimnia, Sarkis and Davarzani 2015).
As stated by Martínez-Jurado and Moyano-Fuentes (2014), the technological aspect is
further able to present a new challenge which is associated to non- awareness of the demand for
new products from beforehand. This is seen to cause several types of the problems which are
associated to inappropriate demand forecast. In various situations the problems associated to
inaccurate demand forecasting is seen with the unavailability of the data. In numerous cases “raw
information coming from suppliers, partners, and even customers” comprise of unstructured data
which makes it even more challenging for the enterprises to analyse and generate insights from
the disjointed pieces of information (Govindan et al. 2014).
In addition to the problems, the company may face several limitations in managing each
commodity and category of the material depending on the spending characteristics and supply.
There may be main dilemma in choosing the outsourcing strategy. This is related to the critical
question of whether to make the product or buy from a third-party source. It is also important to
know about the factors for achieving an optimal portfolio of the suppliers which is able to satisfy

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the requirement of the suppliers as per individual category of commodity (Wiengarten et al.
2016).
Impacts of less-than-perfect demand forecasts for AusCotton products
The opportunities and the precise request conjectures are seen to be fundamental to the
assembling to the chain. This is considering the incorrect request which may bring about the
supply contrasts in terms of meeting the demands of the client.
As stated by Wang et al. (2015), it is important to ensure that there exists a timely and
accurate forecast to the supply chain as any inaccuracies in the demand plan may lead to
differences in the supply chain which may affect meeting the customer request. Henceforth, it
needs to be understood that the forecast accuracy is always seen as a critical factor for proper
allocation of resources. The different steps taken to mitigate the problems are seen with creating
an alliance between the suppliers and customers to improve the accuracy of the forecast. The
faster response to the demand changes should aim at minimizing the impact of the cost for
forecast error. To mitigate the areas of problem the company may also decide to create
partnership among the clients and suppliers for enhancing the exactness of the gauge. The
quicker reactions to request changes will be able to minimize the impact and cost of the gauge
mistakes (Bode and Wagner 2015).
Elements of the strategic sourcing process do you feel are the top candidates for
improvement at AusCotton
The elements for the strategic sourcing process applicable to the top candidates for
improvement at AusCotton is seen with supply market analysis, developing a strategy,
benchmarking and tracing results. The use of supply market analysis is conducive in re-analysis
of the different perspective of the new and global suppliers and study the different types of the
cost constituents of the service or the product. The company will be able to review the

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marketplace of the suppliers for the opportunities and risks. The development of the strategy as
per the top management will be able to discuss on the issues pertaining to minimize the risks and
costs. In addition to this, the top management will be able to conduct a meeting and discuss on
main strategies for the supplier’s competitiveness (Genovese et al. 2015). The initiatives such as
benchmarking and tracking of results will be conducive in sourcing of the process which needs
to be re-monitored. This will be able to provide the business specialists with the present status of
the commodity or category. AusCotton should look forward to improve the overall supply chain
assessment. It is important to identify the possible suppliers which they may use and develop the
sourcing strategy. This will be help to cover the different areas of supplier research and provide
them with the opportunity to assess the different capabilities to remain on contract or to be
considered for the contract. The focus should be given on monitoring the key strategic elements
provided with the business specialist to present the status of commodity or category (Ho et al.
2015).
Responding to the assertion that some of the contract manufacturers are involved in
producing illegal merchandise
The response to the assertion of the contract manufacturers involved in producing illegal
merchandise needs to go through several stages. The first stage needs to analyse the contract and
agreement which needs to be taken into consideration with the new contract negotiation. The
intellectual property protection could also serve as the penalty to immediately meet with the
manufacturers and set the different types of the expectations which are to be conducted through
investigation. AusCotton needs to finds the true facets from the investigation. In case it is able to
track the legal proceedings then it needs to be track for any anomalies (Chopra and Meindl
2015).
To deal with the problems associated to illegal merchandise, the contract manufacturers
need to hire a new president of the supply chain. This consideration needs to be evaluated with
the strategic sourcing process focusing on improving the errors. In addition to this, the new
owner of the company may be asked to take some time and visit the global facilities. This will be
able to bring the awareness of the situation and different types of the problems faced by the
company to follow the legal proceedings (Apte and Petrovsky 2016). This will be set as a good

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example for thee suppliers and the vendors. The manufacturers need to assert the documentation
procedures needs to be confirmed with the actual order which are ordered by the company. This
should be done in manual procedure rather than relying on automation (Pagell and Shevchenko
2014).
Conclusion
The different types of the depiction as per the case study of Sapphire Energy has showed
that the strategy of implementing EOQ is not feasible decision as the EOQ has been depicted
with an ordering quantity less than 4500 meters. The recommendation on improving the current
system is seen with implementation of the strategy of saving in the stocks, the company is seen
to be saving $ 4,744.36. However, this also suggests that there is a scope of ordering more
number of units. Therefore, the main recommendation for Sapphire energy is to increase the
order quantity to 4500 meters of cable. The challeng4es in global supply chain for AusCotton is
understood with the primary challenges on a global scale seen with the shorter life cycle due to
rapidly changing demand in the market. Some of the other consideration for the AusCotton case
study have shown the main factors for the strategic sourcing process applicable to the top
candidates for improvement at AusCotton is recognised with supply market analysis, developing
a strategy, benchmarking and tracing results. The opportunities and the precise request
conjectures are seen to be fundamental to the assembling to the chain. This is considering the
incorrect request which may bring about the supply contrasts in terms of meeting the demands of
the client.

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References
Abidi, H., de Leeuw, S. and Klumpp, M. (2014) ‘Humanitarian supply chain performance
management: a systematic literature review’, Supply Chain Management: An International
Journal, 19(5/6), pp. 592–608. doi: 10.1108/SCM-09-2013-0349.
Apte, S. and Petrovsky, N. (2016) ‘Will blockchain technology revolutionize excipient supply
chain management?’, Journal of Excipients and Food Chemicals, 7(3), pp. 76–78. Available at:
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Horizons, pp. 453–457. doi: 10.1016/j.bushor.2014.04.001.
Bode, C. and Wagner, S. M. (2015) ‘Structural drivers of upstream supply chain complexity and
the frequency of supply chain disruptions’, Journal of Operations Management, 36, pp. 215–
228. doi: 10.1016/j.jom.2014.12.004.
Chopra, S. and Meindl, P. (2015) ‘Supply Chain Management: Strategy, Planning, and
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chain management practices on sustainability’, Journal of Cleaner Production, 85, pp. 212–225.
doi: 10.1016/j.jclepro.2014.05.068.

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Ho, W., Zheng, T., Yildiz, H. and Talluri, S. (2015) ‘Supply chain risk management: A literature
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