Determination of the best ordering policy in organisation, Corporate Finance

Determination of the Best Ordering Policy in Service Organisations

In service organisations, the role of procurement is less developed than in manufacturing. This has been due to the intangible nature of the service product and the significance of the costs involved. Recently Barclay's bank has estimated that it spends in excess of £40m per annum on basic supplies of stationery materials, less than 10 per cent of this total is managed through a single centralised budget. The rest is controlled by individual branches who have freedom to buy from any supplier.

The scope for centralised purchasing through a single vendor prompted Barclays to work with the Oracle Corporation to produce an internet store that will link all branches to a limited range of suppliers. Branches simply order what they want from an internet store while behind the scenes orders are grouped to ensure efficient batch ordering costs are managed. For hospitals, airlines and restaurants, the procurement function is critical. Boeing must order 1.5 million different part numbers for a 737 sourced from 16 different countries. Procurement in non-manufacturing organisations may be less controlled and have fewer quality standards to support it than in manufacturing companies. In procuring service products such as food preparation, cleaning, building maintenance, deliveries, waste disposal, security or education there is usually reliance on the setting of service level agreements (SLAs). These agreements establish the minimum acceptable standards and usually the means by which these standards will be measured.

The setting and measurement of service standards is a major challenge for procurement management as is the management of capacity and the matching of supply and demand in a service situation. In manufacturing environments, raw material, parts or finished goods inventory can provide a buffer to absorb fluctuations between demand and the manufacturing process. This option is not available for service products, which are usually consumed and produced simultaneously. There are exceptions - for instance, in the production of meals, which can be inventoried, or education, or even entertainment which could be videoed but not usually so in health care, retail management, distribution or financial services.

Posted Date: 3/14/2013 5:53:56 AM | Location : United States







Related Discussions:- Determination of the best ordering policy in organisation, Assignment Help, Ask Question on Determination of the best ordering policy in organisation, Get Answer, Expert's Help, Determination of the best ordering policy in organisation Discussions

Write discussion on Determination of the best ordering policy in organisation
Your posts are moderated
Related Questions
The tax rates are as shown. Your firm currently has taxable income of $79,000. How much additional tax will you owe if you increase your taxable income by $30,000? Taxable Income

Hi, I''m looking for a tuttor that can help analysing free Cash flow for a Company - for an exam I''m preparing for.

Summarize the key statistics for the stock and the industry (choose 8 items you believe informative, such as P/E ratio, market capitalization, dividend yield, ROE, sales etc.tion..


what will be impact on the operating leverage of a firm if it proceeds for additional borrowings

1- Suppose that on January 1st the annual cost of borrowing in Swiss Francs is 5%. The spot rate of USD on January 1st is CHF/USD0.98. Six month forward rate was quoted as CHF/USD

differentiate between pricing efficiency and allocative efficiency

#questionSelecting Kanton Company''s Financing Strategy and Unsecured Short-Term Borrowing Arrangement. Morton Mercado, the CFO of Kanton Company, carefully developed the estimate

I purchased an answers document from your site 5 hours ago and it isn''t still delivered. It said that it would take up to 2 hours but it isn''t still delivered. When will it be de

Assignment Describe in detail one method for improving the accuracy of option prices and the first two 'Greeks', Delta and Gamma, calculated using the binomial tree. You should giv