Part 1: Executive Summary
Blozis Company is facing several procurement process issues due to an absence of communication, control and leadership from the top down. The organizational culture and attitude toward the business process has led to dysfunction and increased costs. The supply department is exhibiting weak control over materials handling and the overall supply management performance. The implementation of a supply management process will give the organization back the control over its operations and business culture. The potential contribution to effective organizational operations is essential in the function of an inventory cataloged system for recurring material purchase items, structure and discipline across the organization and position focus and restructuring. By recommending and successfully implementing purchasing procedures and material receiving control Blozis will be able to better utilize strengths already within the organization and hone on new found strengths through proper management structure and advanced technical specification training. Part 2: Issue Identification
The primary issue faced by Blozis Company is an absence of communication and control throughout its procurement process. Uncertainty and misalignment is evident across their decentralized and informal supply chain. Anyone in the company can initiate requisitions and material can be purchased with minimal to no approval. The informal presence and lack of leadership from the top down contributes to a number of important issues that need to be addressed in order for Blozis to continue being successful.
First off, roles and responsibilities within the organization are not clearly defined. The supply department must rely on outside departments to decipher the technical specifications; this is significant since the $16 million gross sales of the company consisted primarily of units designed to customer specifications. The expeditor, part of the Production department, periodically issues purchase orders for rush items and in other cases, has picked up materials without a confirming order. This problem produces an influx of issues downstream in the supply process ending with missing materials and outstanding payments to put it mildly.
Secondly, there is a lack of control over the supply process leading to improperly received and accounted for materials at the receiving dock. Proper notification is not given to operations or production personnel when materials are received, leading to long overdue payments to suppliers and more importantly, missing sizable discounts with failure to meet the net date on several bills.
Finally, the overall organizational culture and attitude or “informal” business presence has led to weaknesses in the overall supply management performance including poor best practices and mismanagement of product. Issuing a purchase orders after shipments have been received not only damages business relationships within the organization and with suppliers but is not SOX compliant and can have serious legal implications against the company. Part 3: Environmental & Root Cause Analysis
The lack of leadership, communication, and control is creating chaotic procurement process and increasing costs for the company. The communication barrier has evolved over time due to the highly technical nature of the company and the fact that even the supply manager has no technical training in this highly technical equipment manufacturing business. Although something can be said for experience, in this case a “fair grasp” of the engineering terminology used in the field, evidently is not adequate for the level of expertise required for Blozis. However, even when employees do have some technical training and knowledge as in the case of the expeditor who has been stretched thin across the company’s departments, if their skills are not focused in the right areas with the appropriate amount of workload it will...
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