Procurement and delivery strategies, Business Economics

The Scenario

You have just been appointed as the procurement consultant for a large multinational with operations based in Brisbane. Your superior, the Chief Financial Officer (CFO) of the company, has just asked you to deal with a niggling problem (purchasing arrangement) which although not considered strategic, is causing untold grief in the organisation. As the CFO says "It is the mud between our toes".

Synopsis of the task and its context

The company has a large 6 story administration office which houses on average 355 staff. Each staff member has a computer and routed access to printers, scanners and photocopiers. The company has in the past purchased photocopiers and printers for each floor with basic printers and scanners located on floors 1, 3, and 5. There is limited access to specialised equipment i.e. colour photocopiers, high speed printers and colour printers, which are all located on floor 2. All equipment is networked.

All departments have operational budgets and within those budgets, there are line items for printing and copying. Generally staff have been exceeding those budgets. The general view of staff is that what they print, scan, copy etc is necessary for them to carry out their tasks and they are not impressed when asked to curtail the amount they print, scan and copy.

A number of problems have emerged with the current arrangements. They were set in place by the IT and communications department, as they are (or at least were) considered to have the technological expertise to best set up these arrangements, and are as a matter of course responsible for all computer connections, routing etc. No equipment can be added to the network without their involvement and approval.

All equipment is owned by the company and maintained by the suppliers on maintenance contracts.

Issues are as follows

1. The amount of printing and copying is considered excessive especially colour printing. As indicated, budgets are generally being exceeded.

2. The maintenance on copiers and printers has been larger than expected. It has been found that the company has underestimated the demand on equipment so that equipment has been used in excess of its capacity.

3. Warranties have been voided because of over use e.g. printing large quantities on printers designed for low volume usage. More significantly warranties have also been voided because of incorrect usage e.g. leaving staples in paper to be copied.

4. On the other hand, the scanners have not been used as expected since access to the web has provided access to much of the graphics needed by staff.

5. Similarly needs and usage patterns vary from floor to floor, and this was not taken into account in the original purchase arrangements which were based on average usage across all floors. Some departments have been moved from one floor to another and they now have to walk to a second floor to retrieve some of their printing.

6. Instruction on usage of copiers and printers has been a major problem with staff misusing equipment, wasting paper when not using equipment properly and under-using the technology available.

7. Few staff appreciate that photocopying and printing equipment technologies have merged.

8. Staff are inefficient in their use of the equipment e.g. some staff never do double-sided printing as they do not know how to do so. Estimates are that staff only use about 25% of the printers' and copiers' capabilities.

9. If staff had their wish they would all have a high speed colour copier and high speed quality printer located on their floor for convenience.

Management is tired of the complaints - from users dissatisfied with the arrangements, - from accountants claiming that departments are exceeding their budgets, - from IT staff who are constantly being asked to solve printer problems eg paper jams. No one seems happy with the arrangements. Management is interested in a cost efficient, effective outcome from an organisational point of view. As far as possible all users should also be satisfied with the services provided.

Your task

Generally

You are to analyse the situation, and taking account of recommended procurement principles and practices detail how you would determine the best approach to the supply of printing, scanning and copying for staff in the office complex.

Specifically

Suggested steps

Step 1. Discuss the issues provided above in terms of what information they provide and how they impact potentially on a purchasing arrangement. In the process comment on the issues with the current management of supply and the supply arrangements.

Step 2. Add any other issues that you believe should be addressed.

Step 3. Propose how you would determine the best approach to dealing with the supply issues. In the process you should indicate the information you need to deal with the issues and propose a method or methods to gain the information necessary to make an informed decision and to then propose acceptable options to the company.

Step 4. Propose alternative potential supply arrangements to dealing with this supply issues. Note there are a number of practical solutions to this problem. Some though will be better than others.

Step 5. Make final recommendations.

Notes

This item comes under MRO purchases which are considered low risk, low relative value, but the issues are continually taking up management's time. The intention is not so much to control the printing and copying, rather it is simply to ensure that what is needed is obtained efficiently and effectively. You have been asked to become involved in the process of sorting out this mess.

A major issue is that technology has been changing so rapidly and the suppliers often have equipment changes planned even as they are selling what is essentially outmoded equipment. Similarly while there are instruction manuals available, they are written for technicians, and are not designed to be used as training materials nor are they prepared so as to make usage more efficient.

The key requirements as specified by the CFO (your superior) are to

(a) Provide access (but not unlimited access) to the best printing and copying facilities available

(b) Match the equipment to the needs of the individuals and departments as far as practicable.

(c) Reduce costs if at all possible, and if not possible to reduce costs at least maintain costs at the present level per person.

(d) Reduce wastage of paper and inks - this is especially important as the Company is claiming it is environmentally sensitive.

(e) Gain access to the latest information on the technology available

(f) Gain access to the best advice on how to meet the company's needs

(g) If practical, develop a supply relationship with a supplier so that the supplier's interests and objectives and the company's interests and objectives are aligned.

(h) Ensure compatibility with existing computer and communication systems.

Posted Date: 2/21/2013 12:13:08 AM | Location : United States







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