Blozis Company is a manufacturer of highly technical equipment for use in industrial applications. Part of their business is selling pre-fabricated items off the shelf. However, the majority of their business is related to building specialty technical equipment to the customer’s specifications.
Blozis has run into some issues with being long overdue with payments to vendors. In nearly all instances it was delayed because there had been no record of receiving the items. This was largely due to the expediter who went out and picked items up at nearby suppliers and brought them in and directly to the requestor, not stopping to give any paperwork to the receiving clerk.
Blozis operates with an informal purchasing policy where anyone can request items for purchase. This is highly uncommon and it needs to change. For Blozis to fix their various purchasing and supply issues they need to institute a formal purchasing procedure. In addition, they need to control the expediter and limit the responsibilities that he has, because it seems that this is where many of the problems are stemming from.
Upper management will have to write a formal policy where only certain people can issue requisitions, and those requisitions are approved prior to being forwarded to the supply department for purchase. Next they will need to initiate some sort of goods receiving notification system, to notify the requestor that their item has arrived in the Blozis warehouse and it can be picked up by the requestor only. This should alleviate any confusion whether or not items have been received, and help ensure that the correct person receives the correct items.
If Blozis properly implements a purchasing procedure it will allow them to save money by paying their bills on time and receiving discounts from their suppliers. Additionally, it should allow them to keep better track of items bought and received in the warehouse.
Blozis Company operates with an informal purchasing procedure. The current purchasing policy is not working for Blozis as here have been many complaints and issues stemming from all departments. The complaints and issues that have arisen are all a directly related to the fact that there is no formal purchasing procedure in place at Blozis company. Some of the more specific issues that have arisen at Blozis are as follows: 1.Invoices are not being paid promptly
Suppliers are complaining that invoices are long overdue. The usual cause of the delinquency in payment was that there was no record of receipt of the item, and therefore Supply would not approve the invoice for payment. The past due payments on invoices were causing Blozis to lose discounts from suppliers. 2.Goods Receipts are not being issued
Blozis employs and expediter who goes out and picks up items at nearby locations. It seems that sometimes when he brings items back from suppliers that he is not stopping to give paperwork to the receiving clerk to prepare the receiving report. Additionally, the requestors are not being notified when their items have come into the warehouse. 3.Everyone can make a purchase requisition
There is no control on who can order items; and requisitions are not approved prior to being sent to the Supply department. There is no control over who can make purchases other then the Supply Manager signing off on the items. Because the supply manager has no technical expertise when it comes to the production of the goods, he cannot decide if the items are absolutely necessary or “nice to have”.
Blozis is a manufacturer of highly technical industrial items with $16 million in gross yearly sales. The majority of the company’s gross sales were in their specialty equipment department where units were designed and built on a job-shop basis to customer specifications. The other side was pre-fabricated control equipment that was sold on an off-the-shelf basis....