Procurement and Supply Chain Management

This report investigates the inefficiencies and challenges of Sapphire Energy and AusCotton as per the given case. The report evaluates the efficacy of the present ordering system and applied the model of “Economic Ordering Quantity (EOQ)” for recommending the changes which are required optimizing the inventory for “Sapphire Energy”. The report also evaluates the global business environment of AusCotton with the market and supply sources. The report discusses the actions for illegal merchandise which results in competing with the fake branding.

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.........................................4
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..........................................................................................................................5
Conclusion.......................................................................................................................................6
References........................................................................................................................................7

2PROCUREMENT AND SUPPLY CHAIN MANAGEMENT
Introduction
The report has investigated two important facets of business portfolio under Laburnum
Group. The main discussion of the study has considered both quantitative and qualitative
perspectives of the inefficiencies and challenges of Sapphire Energy and AusCotton as per the
given case. Laburnum Group is depicted to continuously monitor the activities of the diverse
portfolio of businesses which is essential to their corporate strategy decisions”. The important
elements of discourse have addressed the specific questions frame by the top management in
both energy and clothing business portfolios of “Laburnum Group”. The first part of the study
has evaluated the efficacy of the present ordering system and applied the model of “Economic
Ordering Quantity (EOQ)” for recommending the changes which are required optimising the
inventory for “Sapphire Energy”. The next part of the report has evaluated the global business
environment of AusCotton with the market and supply sources. The important elements of the
descriptions have also included the issues associated to areas of strategic sourcing. The study
will also discuss about the actions for illegal merchandise which results in competing with the
fake branding (Pimenta & Ball, 2015).
Sapphire Energy Case Study
“Effectiveness of the present ordering system”
The main assessments as per the “Sapphire Energy” case study has highlighted on total
ordering system of 4500 meters of cable. The total stocking cost for the given standard is
depicted as $ 9318.75. The implementation of the EOQ model is seen to be conducive in
ordering only 3388.43 meters of cable. Henceforth, as the ordering quantity is seen to be less
than 4500 meters the strategy of implementing EOQ is not recommended.
EOQ for AWG aluminum triplex cable
Unit
Meters Dollars
Annual Demand (D) 155000
Present Order Quantity (Q) 12917

3PROCUREMENT AND SUPPLY CHAIN MANAGEMENT
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”
As per the depictions made in the present study the ordering system has been discerned
with a total savings of $ 4574.39 and implementation of the strategy for savings in stock will
allow the company to save $ 4744.36. However, the scope of the ordering more units is evident
with the given case. The main recommendation for Sapphire energy needs to increase the
quantity to 4500 meters of cable.
AusCotton Case Study
“Major global issues relevant to the strategic sourcing”
The problem associated to changing market environment is understood as the main issue
to address the consumer behaviour. This trend is depicted with the changes in the globalization

4PROCUREMENT AND SUPPLY CHAIN MANAGEMENT
and technological facets. The role of social media is considered with pressure from the consumer
which will be able to conform the utilization of these sources of information to respond to
changing preferences to stay interesting and relevant. The main challenge at a global scale have
been realized with a shorter life cycle for rapidly changing demand in the market. The different
types of the enterprises for the cotton production are facing several issues associated to cotton
production and keep “itself up to date with the latest trends and innovations”. The integration and
data management are considered to solve the main problems related to data management. This
will be done by connecting the “manufacturer’s supply chain management systems with those of
their suppliers and partners”. The problems related to the supply chain integration may be
affecting the operations at ground level (Council of Supply Chain Management Professionals,
2015).
The important aspects related to the technology is able to discuss about the new issues
which is seen to be related to the non-awareness for the product demand. There have been
several issues which are seen to be considered for the inappropriate demand forecast. In several
situations the issues are related to the “inaccurate demand forecasting is seen due to
unavailability of the data”. In several cases the consideration of “raw information coming from
suppliers, partners, and even customers” includes the unstructured data which makes it more
challenging for the enterprises to generate and analyse the insights from unrelated information
(Pimenta & Ball, 2015).
The companies may be further facing several problems related to the managing of the
commodity and the category of the materials which depend on the spending characteristics of a
supply. There may be dilemma in choosing the appropriate outsourcing strategy. This is
understood to be critical for the answering whether the important decision needs to be based on
the buying the product from third party or make on its own. The factors for achieving the optimal
portfolio is able to reflect the different requirements for the suppliers as per the individual
category of commodities (Lummus et al., 2014).
“Impacts of less-than-perfect demand forecasts for AusCotton products”
The main form of the opportunities for the exact requirement for the conjectures are
depicted to be fundamental for the assembling of the various components of value chain. This is

5PROCUREMENT AND SUPPLY CHAIN MANAGEMENT
necessary to meet the demands of the customer without defaulting with incorrect requests. It has
been further considered to be important to ensure that there is a timely forecast for the factors
which are critical to allocation of resources (Chopra & Sodhi, 2014). The different initiatives
taken to resolve the issues has been discerned with creating an alliance with the customers and
suppliers to improve the accuracy of the forecast. The spontaneous response to the changes in
demand is aimed at reducing the error in cost of forecasting. The resolution of the problems
needs to be done by entering into a partnership with the suppliers on the clients for measuring the
susceptibility to the changes in demand. Therefore, the accuracy in forecasting is depicted as a
critical factor for proper allocation of resources. The different types of initiatives taken to
eliminate the problems among the customers and suppliers is also seen with creating an alliance
in the customer than the suppliers for better forecasting. The focus of the company to respond to
the changes in customer request should be followed with such a strategy which will be able to
minimize the impact of cost (Martínez-Jurado & Moyano-Fuentes, 2014).
“Elements of the strategic sourcing process do you feel are the top candidates for
improvement at AusCotton”
The diverse factors associated with strategic sourcing for the top candidates at AusCotton
is recognized with developing a benchmarking, tracing results and conducting a supply market
analysis. The application of supply market analysis is often useful for reanalysing the various
types of global perspectives to know more about the cost constituents of a service or product.
AusCotton has the scope of reviewing supply marketplace for knowing about the associated risks
and opportunities. The strategy development as per the top management will be able to discuss
on the issues of minimizing the risks and costs. Additionally, the top management will be able to
discuss on main strategies of supply competitiveness by conducting a meeting (Wiengarten et al.,
2015). The various types of initiatives such as “benchmarking and tracking of results” are seen to
be having a significant role in process sourcing and identification of the need for re-monitoring.
It is important for the business specialists to know about the present status of a category or
commodity. In addition to this, AusCotton should look forward to improve the supply-chain
assessment. It is necessary to understand the possible suppliers who may be most influential in
the sourcing strategy. This needs to be followed with supply research and identifying the
opportunities to remain on contract or to be considered for the contract. The main attention

6PROCUREMENT AND SUPPLY CHAIN MANAGEMENT
should be given on strategy elements and monitoring the key issues for the business specialists of
a category (Chin, Tat, & Sulaiman, 2015).
“Responding to the assertion that some of the contract manufacturers are involved in
producing illegal merchandise”
The main response of assertions of contract manufacturers is observed with producing
illegal merchandise which goes through several stages. The first stage is depicted with and
getting into a new contract negotiation. The intellectual property protection maybe also
beneficial in meeting the demands of manufacturers. It is important for AusCotton to know about
the results of an investigation process. The company needs to identify the true facets depicted
from the investigation. The procedure of investigation is seen to be conducive for tracking any
legal proceedings which needs to be taken after knowing about any anomaly (Fahimnia, Sarkis,
& Davarzani, 2015).
The issues associated to illegal merchandise, needs to be done by contract manufacturers
by hiring of a new supervisor for supply-chain activities. This needs to be further estimated with
process of sourcing focused on minimizing the errors. Moreover, the new owner of the company
may be asked to visit the global facilities. This will be able to create awareness of a situation and
follow with the legal proceedings. It is important to set as a good example for suppliers and
vendors. In addition to this, the manufacturers need to assess the documentation process and
approve the actual order placed by the company. This needs to be followed with a manual
procedure rather than depending on automation (Gold, Trautrims, & Trodd, 2015).
Conclusion
The interpretations made from the study has been able to reveal that the effectiveness of
present ordering system at “Sapphire Energy” is not a feasible decision. This is evident with
EOQ model being conducive in ordering only 3388.43 meters of cable. Henceforth, as the
ordering quantity is seen to be less than 4500 meters the strategy of implementing EOQ is not
recommended. The main strategy for improving the present ordering system is recommended
with total savings of $ 4574.39 and implementation of the strategy for savings in stock will allow
the company to save $ 4744.36. The main recommendation to “Sapphire Energy” is for the

7PROCUREMENT AND SUPPLY CHAIN MANAGEMENT
depicted with increasing the scope for more number of orders. The interpretations for assessment
of the challenges in global supply-chain for AusCotton is identified with changes in the
globalization and technological aspects. The main challenge at a global scale have been seen
with a shorter life cycle for rapidly changing demand in the market. The various types of “impact
of less-than-perfect demand forecasts for AusCotton products” is further identified with to
resolving the issues by creating an alliance with the customers and suppliers to improve the
accuracy of the forecast. The response to illegal merchandise and branding needs to be taken care
off with appropriate legal proceedings.

8PROCUREMENT AND SUPPLY CHAIN MANAGEMENT
References
Chin, T. A., Tat, H. H., & Sulaiman, Z. (2015). Green supply chain management, environmental
collaboration and sustainability performance. In Procedia CIRP (Vol. 26, pp. 695–699).
https://doi.org/10.1016/j.procir.2014.07.035
Chopra, S., & Sodhi, M. S. (2014). Reducing the Risk of Supply Chain Disruptions. MIT Sloan
Management Review, 55(3), 73–80. https://doi.org/10.1017/CBO9781107415324.004
Council of Supply Chain Management Professionals. (2015). CSCMP Supply Chain
Management definitions. Retrieved from
https://cscmp.org/imis0/CSCMP/Educate/SCM_Definitions_and_Glossary_of_Terms/
CSCMP/Educate/SCM_Definitions_and_Glossary_of_Terms.aspx?hkey=60879588-f65f-
4ab5-8c4b-6878815ef921
Fahimnia, B., Sarkis, J., & Davarzani, H. (2015). Green supply chain management: A review and
bibliometric analysis. International Journal of Production Economics.
https://doi.org/10.1016/j.ijpe.2015.01.003
Gold, S., Trautrims, A., & Trodd, Z. (2015). Modern slavery challenges to supply chain
management. Supply Chain Management-an International Journal, 20(5), 485–494.
https://doi.org/10.1108/scm-02-2015-0046
Lummus, R. R., Vokurka, R. J., Texas, A., & Station, C. (2014). Defining supply chain
management : a historical perspective and practical guidelines. Industrial Management &
Data Systems, 99(1), 11–17.
https://doi.org/http://dx.doi.org/10.1108/02635579910243851
Martínez-Jurado, P. J., & Moyano-Fuentes, J. (2014). Lean management, supply chain
management and sustainability: A literature review. Journal of Cleaner Production, 85,
134–150. https://doi.org/10.1016/j.jclepro.2013.09.042
Pimenta, H. C. D., & Ball, P. D. (2015). Analysis of environmental sustainability practices
across upstream supply chain management. In Procedia CIRP (Vol. 26, pp. 677–682).
https://doi.org/10.1016/j.procir.2014.07.036

9PROCUREMENT AND SUPPLY CHAIN MANAGEMENT
Wiengarten, F., Humphreys, P., Gimenez, C., & Mcivor, R. (2015). Risk, risk management
practices, and the success of supply chain integration. Intern. Journal of Production
Economics, 171, 361–370. https://doi.org/10.1016/j.ijpe.2015.03.020