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Psm 506 Procurement Management Kitengela Campus Question Paper
Psm 506 Procurement Management Kitengela Campus
Course:Masters Of Business Administration Procurement And Supply Management
Institution: Kca University question papers
Exam Year:2014
UNIVERSITY EXAMINATIONS: 2013/2014
EXAMINATION FOR THE MASTERS OF BUSINESS ADMINISTRATION
(MBA) PROCUREMENT AND SUPPLY MANAGEMENT
PSM 506 PROCUREMENT MANAGEMENT KITENGELA CAMPUS
DATE: AUGUST, 2014
TIME: 3 HOURS
INSTRUCTIONS: Answer Question One and Any Other Three Questions
QUESTION ONE (31 MARKS)
Whirlpool’s Case
For companies looking to improve processes and profitability, supply chain management expertise is
rapidly becoming one of today’s most sought-after skills. Given the complexity of supply chains
within national and multinational corporations, it can be difficult to pinpoint the root causes of
problems impacting the entire chain. It takes highly qualified professionals to identify and correct
issues, target new opportunities and institute real, meaningful change.
While the Whirlpool brand has long been associated with reliable household appliances, its delivery
performance in 2000 was anything but reliable. In every measurable way, the supply chain was failing
to meet expectations – inventory quantities were either too low or too high, or they had the wrong
items in inventory, or they had the right inventory delivered to the wrong place. These inconsistencies
were frustrating to retail partners and customers alike, and it was clear to executive leadership that
these supply chain management issues had to be fixed.
Of course, this situation that Whirlpool found itself in did not come about overnight. In fact, many of
problems that led to this crisis were a result of the company’s geographic expansion and business
acquisitions. With many different systems and procedures cobbled together into an unwieldy mess, the
supply chain management team found that this complex, patchwork reporting made it exceedingly
difficult to track and control all of Whirlpool’s production and distribution processes.
1
Due to these supply chain issues, the company’s overall availability rate – which measures how often a
product is in the right place at the right time – was only 83% in 2000. Relative to industry standards,
this was considered a dismal failure. The unfortunate irony of the situation is that availability was low
even while total inventory levels were often too high. In terms of supply chain management, Whirlpool
was at a competitive disadvantage.
To remedy these extensive problems, the Whirlpool supply chain management and IT teams took on
the massive task of replacing their myriad production scheduling and distribution systems with a
streamlined, standardized solution. The new system had a central platform for master scheduling,
inventory planning and deployment planning, plus collaborative tools for forecasting and
replenishment. This foundation allowed for great strides in supply chain management, with greater
efficiency and cost savings across the board.
While the system improvements were rolled out in phases – staring in North America – the initial
enhancements led to dramatic advances in supply chain management. Shortly after the new system
went live, Whirlpool was able to reduce forecasting errors by 50% and inventories of finished
appliances by more than 20%, while saving 5% on warehouse and transportation costs. Furthermore,
its overall availability rate rose from 83% to 93%, and reached 97% within five years of
implementation. These accomplishments demonstrate the impact skilled supply chain management
personnel can have on a company’s system-wide performance and profitability.
Required:
i)
With regard to the case given clearly illustrate the role of procurement management in this
supply chain and how it can be used to improve operations this supply chain.
ii)
(8 Marks)
By breaking down the supporting activities into distinct processes, managers can identify where
the supply chain efficiency and cost can benefit from automation, lead time or other factors.
With regard to the case above explain how TCO method of cost analysis could have been used
while acquiring the new system and enable the manager achieve the supply chain cost
efficiency.
iii)
Explain why Whirlpool would have considered using outsourcing strategy to acquire the
system.
iv)
(8 Marks)
(7 Marks)
One of the procurement management objectives is to develop integrated purchasing strategies
that support organizational strategies. Discuss effective purchasing strategies that play the key
role in achieving the corporate goals.
(8 Marks)
2
QUESTION TWO (23 MARKS)
a)
The most telling way to determine the maturity of a procurement organization is to look at their
goals and really understand where they’re focused on improving and what they are delivering
to the business. Aligning priorities is critical for becoming a more advanced, strategic business
function .This is evidenced by the stage at which the procurement function is in the
organization. Discuss this statement.
b)
(6 Marks)
The reasons for implementing e procurement systems all boil down to one critical metric:
ROI. Explain.
c)
(9 Marks)
Explain the applicability of different types of E-procurement. Use illustrations. (8 Marks)
QUESTION THREE (23 MARKS)
Strategic cost management is the juncture between managing pure cost in the supply chain and
recognizing that pure cost is not the only criteria for making strategic sourcing decisions. Clearly
explain how each of the methods is used to analyze procurement costs.
QUESTION FOUR (23 MARKS)
Describe and illustrate how a procurement manager can use the following portfolio management
techniques to manage supplier relationships and explain the strategies suggested by each portfolio.
a) Supply positioning model (7 Marks)
b) Supplier preferencing model (8 Marks)
c) Market management (8 Marks)
QUESTION FIVE (23 MARKS)
a)
Discuss outsourcing/in sourcing issues and explain how they affect the outcome of the
decisions made by the management.
b)
(10 Marks)
Global sourcing implies that a particular organization has adopted a single sourcing strategy for
its worldwide business units and that this strategy is aimed at providing a competitive
advantage to business units on a global scale. Discuss.
(13 Marks)
3
QUESTION SIX (23 MARKS)
a) Elaborate on the principles of effective inventory management
b) Clearly explain inventory management techniques for different types of demand. Illustrate
your answer.
(10 Marks)
(10 Marks)
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