Question

ASSIGNMENT WEIGHT 50%

CASE STUDY

You are strongly advised to read carefully and analyse the information in the case study before attempting to answer questions 1 and 2.

CASE STUDY – MacKaey GROUP PLC

Edem is busy preparing for his interview for the role of the new Procurement Manager for Services at the MacKaey Group Plc, a diversified company that operates in the transport, marine and financial services sectors. Edem originally joined the company as a school leaver and, having started his career working in the transport and distribution division, became an assistant buyer in their procurement function. Edem had then progressed to become a category specialist. He knows that his interview is important as the new role represents a significant promotion and he is expecting tough questioning on his suitability for the role. If appointed, Edem would be managing a team of sixteen procurement staff that would specialize in services procurement.

In preparing for his interview, Edem expects that the Procurement Director and the Head of Human Resources will examine not only his own capabilities for the role, but also his views on how to improve the function. Edem has seen a great deal of change at the MacKaey Group Plc.
The company has continued to expand its sales to in excess of Ghc 5 billion and now operates across 15 different countries. Until the current Procurement Director took over, working in procurement had been very bureaucratic and process driven. More recently, there has been a greater focus on achieving outcomes and results for their stakeholders rather than an emphasis on compliance with procedures.
As a result, there has been less conflict with the procurement function’s stakeholders within MacKaey.
However, the procurement department is sometimes criticized internally for being too remote as it is a group function that has to serve three different business divisions. Edem believes that the function’s personnel should be encouraged to make better use of technology to enable them to work more effectively with geographically dispersed stakeholders.


Although the company is generally seen as a good employer and is respected for encouraging training and equal opportunities, difficulties have been experienced in the procurement team particularly with its comparatively high rates of staff turnover, supplier development, and corporate strategy due to several environmental factors impacting on supplies. Some key members of staff have recently left the company to gain senior positions with other firms. Edem therefore feels that more needs to be done to encourage better teamwork and group cohesion in order to return profit for shareholders. The current structure of the function is geared around the specialization on ccategories and so Edem believes that procurement and supply chain staff tends to work on their contracts and with suppliers in a very isolated way. Many of Edem’s colleagues have left to pursue their careers elsewhere, where a team based approach was encouraged and knowledge management creates competitive advantage. He is keen to address this and to create a more effective supply team within the MacKaey Group Plc. Edem also thinks that more can be done to encourage learning from each other, as the specialization of the function by categories does not help the sharing of knowledge. Edem is also mindful that he would need to gain acceptance from his colleagues if he were to be appointed as the new Procurement Manager for Services.
If successful, Edem is also keen to develop more flexible working arrangements to address the different time zones in which the function’s stakeholders operate. Decisions of the following thematic areas (supply risks; outsourcing, quality improvement methodologies , lean application, supply strategic development, changing market due to globalization and supplier relationship management) are dear if Edem team is to succeed in highly competitive and demand driven supply environment.


The information in this case study is purely fictitious and has been prepared for assessment purposes only. Any resemblance to any organisation or person is purely coincidental.






REQUIRE:

Individual Written assignment based on analysis of MacKaey GROUP PLC case study and generate proposals for improvement (3000 words) 50%

1. Critically evaluate all aspects of a buyer-supplier relationship at MacKaey Group Plc and make recommendations of appropriate purchasing strategy and contract requirements for the company (15 marks)
2. Using PADI (Performance, Administrative, Development and Integration) framework, how will you ensure Mackaey Group Plc strategically develop and implement supply chain collaboration to achieve competitive advantage (12 marks)

Answer 1

Answer 1:

• Following are some of the key issues that are detrimental to the buyer-supplier relationship at MacKaey Group PLC.

1. Greater focus on achieving outcomes and results without setting an appropreate chain of control.
2. Greater emphasis on category specialisation ignoring the fact that company operates in diversifed divisions.
3. Ignorance of geographical coordination across 15 countries.
4. Failing in retntion of staff and suppliers.
5. Lack of knowledge and experience exchange due to lack of group cohesion.

• Critical evaluation of the above mentioned points:

1. Firstly, as an organisation each and every process should have an appropriate chain of control or a standard operating procedure. As mentioned in this case study we can infer that the main focus of the firm is only to get the result but for that purpose it is compromising the operational efficiency. In short term this decision may give some good results but by the time when the organization’s clientele develops and it has to deal with large number of activities in that scenario this approach doesn't work. Because it will become very tedious task for the organisation for tracing the transactions while operating on a larger scale.

1. Secondly, knowing the fact that company is operating in diversified businesses like transport, marine and financial services sectors and still the company is ignoring the fact and focusing on the category specialization. This approach is good when the company declares all the units as SBUs but this information is not given in this case study. So assuming that the organisation is not operating in SBU structure it is very harmful for the organisation to concentrate on the specialization because all the units are somewhere linked with financial chain. But when the organisation go for the category specialization in that case the other business activities may be disrupted and may suffer from losses which will ultimately detrimental to the organisation as a whole.

1. Thirdly, since the procurement department of the organisation is working in isolation it is clearly evident that the coordination in the various country operations are not there which can adversely affect the global efficiency of the organisation and can definitely become troublesome situation for the organisation to continue its operation in various countries for longer period of time. Any organisation while operating in geographically diversified countries then it has to formulate the standard operating procedure in every countries to streamline the processes and to establish a common organisational culture.

1. Fourthly, as in the case it is mentioned that even though the company is generally seen as a good employer and is respected for encouraging training and equal opportunities, high rates of staff turnover and supplier development is there then it is very thoughtful situation as an organisation why are these happening? It is clearly stated that the employee turnover is high and also the supplier development is high that means company is failing to retain the employees as well as the suppliers which is not good at all as an organisation. In this case it is stated that the experienced employees are leaving their jobs and going elsewhere just due to lack of group cohesion in the organisation. This clearly indicates that company has to do something in that direction. Further the company is failing to retain the suppliers which can result into the relationship development cost in terms of money and time both.

1. Fifthly, in line with the fourth point it is clearly evident that there is no group cohesion due to which the knowledge and experience exchange is very less in the organisation which is very vulnerable situation as an organisation. If knowledge exchange does not take place than it is very difficult for the organisation to get the competitive advantage over other competitors.

Recommendations of appropriate purchasing strategy and contract requirements for the company:

1. Formulate a procurement council:

The function of the procurement council is to give direction to the company to align the procurement strategy to the company’s overall goal. The council should consists of: Procurement head, Procurement manager, and company’s executives. The council can control the flow of authority which ultimately benefit the organisation in group cohesion.

2. Give appropriate authority to the executives:

By giving appropriate authority to the executive the organisation can shoe its trust to the employees and can make the process less resistant it does not mean that the executives are free from reporting they should justify the reason for exercising the authority to the council.

3. Establish strategic alliance with group of suppliers:

Good organisations work closely with suppliers. It is called supplier relationship management. It is a two way communication which abides both buyers and suppliers.

It contributes towards:

1.     Sets a mechanism for good relationship

2.         Gives quick solution to the issue.

3.         Helps in performance measurement.

4.         Ensure goal achievement for both.

Answer 2:

PADI Framework

Performance: The company should be driven by performance of procurement department and suppliers altogether.

Administration: The company should formulate the various department under the procurement council like ordering department, billing department, supplier management department, incentives department, logistics department etc.

Development: Company can develop the unique supply chain management suitable for their organisation by exchange of knowledge and by taking the input of the executives in the procurement department.

Integration: Company has to integrate their processes of integration by keeping coordination with the other divisions spreaded across the 15 countries and can make a standard operating procedure