Question

Eagersaver.com was established in 2005 by the CEO Colette Bevan as an online comparison site primarily focused on car insurance and related products. Since then it has grown, both organically and by acquisition of other companies into an organisation that now compares home insurance, legal insurance, pet insurance, travel insurance, life insurance and accident insurance. It has diversified into other comparison services in financial products, travel services and utilities. It has moved offline with the opening of call centre activities and a TV shopping channel. The company's turnover is £100m. The Managing Director Dirk Bradfield now wishes to float the company on the stock exchange and following a due diligence exercise by Colette's corporate advisors she has been advised to 'professionalise the procurement activities throughout the group.' The due diligence uncovered the following facts: There are five locations within the UK, situated at Chester, Edinburgh, Sheffield, Bristol and Cardiff. They work independently and only one location has a Purchasing Manager (TV shopping channel). The largest spend across the group is on marketing (£12m online and £8m TV). Marketing is centrally managed by the Marketing Director. Most other procurement is undertaken by service heads including IT and agency staff. Numerous media companies are engaged often without competition. The same or similar products and services are procured from different suppliers. There is a range of prices paid for the same product or service, some ranging by +30%. Most contracts are under the vendor's terms and conditions and in some cases there are verbal arrangements. The company has outgrown many of its original supplier's who are finding it difficult to cope with demand and there are instances where contract performance has slipped.

Answer 1

a) Options B and D
There are five locations of the company and purchasing is done through only one location. The company often make purchases without any competition and on verbal contracts. Also, there is an overlap in purchases and because of the high volume demand most of the time there is a delay and considerable price variations from the suppliers.
The company needs to create a corporate procuring department which should handle most of the procurement with proper contracts and agreements. The smaller or only locally fulfilled purchases should be delegated to the independent locations but the emphasis should be on routing through the central department with the contract.
This will ensure that there is no overlap in procuring and price variations from the suppliers. Further, any unreasonable delay means there will be legal recourse to compensate for the financial or operational loss.

b) Options D, E, and F
Managing any function of the organization means there should be a consideration of all the stakeholders. They should be consulted and managed so as to align them with the organization plan or strategy.
The requirement of each department and each location should be taken into account for creating a proper future procurement strategy. The demand from each department or location should be justified by operational as well as a financial point of view.
the next step is developing a long term involvement of the suppliers in the supply chain. This will assure them about the viability of the business company could witness stability in the prices.