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Allen Park Powder Procurement

Essay by   •  April 23, 2019  •  Case Study  •  1,448 Words (6 Pages)  •  1,249 Views

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PROCUREMENT

CASE STUDY: ALLEN PARK POWER

SUBMITTED BY: JOHNOEL ASTUDILLO

INSTRUCTOR: SULMAN HAIDER

DATE: APRIL 17, 2019

Table of Contents

EXECUTIVE SUMMARY1

INTRODUCTION2

ISSUES IDENTIFICATION3

ENVIRONMENT & SWOT ANALYSIS4

ROOT CAUSE ANALYSIS5

ALTERNATIVES &OPTIONS6

RECOMMENDATION7

MONITOR AND CONTROL8

APPENDIX9

REFERNCES10

EXECUTIVE SUMMARY

  • April Song, VP of Supply Chain Management at Fashion Unlimited in Toronto, has been tasked with researching offshore production locations for the company’s clothing line. The purpose of this report is to identify and evaluate a potential country for expansion. The challenge is developing an evaluation grid and then evaluating each country whilst trying to satisfy the criteria provided by Executive Team members. New CEO, Elizabeth Jennings, with a background in ‘Fast Fashion’ was brought on several months ago. This has indicated a new shift in focus for Fashion Unlimited.

INTRODUCTION

  • Allen Park Power Ltd. (APPL) was founded in the early 1900’s as a municipal power company for the city of Allen. The company provides electrical generation, transmission, distribution and sales for the citizens and industries of Allen Park.

  • In 1997, city council saw an opportunity to enter in a non-regulated international market. With an impending deregulation, council restructured the department into a separate corporation. By 2008, they were operating in Australia, the United Kingdom, and the United States as separate business units.
  • Graham Link, Director of Supply Chain Management was tasked with leading a team in planning the outsourcing of business-related IT Systems; such as, Accounting, payroll, humans’ resources and purchasing. He has also been asked to examine other areas for potential outsourcing.
  • Reg Borkowski replaced Randall Chu following their retirement in 2009. Reg comes from a legal background and has years of experience working in quasi-public sector. He has been brought in to tackle international projects and to become a major Canadian player through continued growth using private sector methods.

ISSUES IDENTIFICATION

ISSUES

IMPACT

URGENCY

SHORT-TERM

Carlyle on strike

Unable to supply transformers at the rate of demand. Creating delays in construction. Transformers entering starvation sate.

1

Transformer supply & demand

Transformers are rushed ordered.

News reaching local business media – no longer low profile

2

Sellers market in electrical equipment

Alternative suppliers charging 40% markup from original bid.  

3

LONG -TERM

Financial squeeze – cost to produce

Price for electricity, steel and copper continue to rise significantly resulting higher manufacturing costs

1

Decreased bidding pool

Reduced competitiveness from suppliers to bid on projects <$250,000.

2

Greenhouse reduction

Bid criteria include environmental factors. Transportation savings vs. environmentally friendly products offered in global market.

3

ENVIRONMENT & SWOT ANALYSIS

FAVORBALE

UNFAVORABLE

INTERNAL

STRENGTHS:

  • Geographical monopoly on all aspects of the power industry.
  • Increasing expertise in global sourcing.
  • Outsource IT systems and customer call centre

WEAKNESSES:

  • Company operated in the public’s eye.
  • Rates and tariffs for transmission controlled by a government agency – restricted rate increases. Capital-intensive.
  • Company wide push to reduce greenhouse gas emissions.
  • Estimated forecasting for customer demand – done manually.
  • Sole-sourcing for critical parts of electrical transmission.
  • Political and community pressure to become major player in Canadian market. Public opposition in change on strategy

EXTERNAL

OPPORTUNITIES:

  • Wholesale market for electrical power
  • Strong economic growth in the industrial economy – increased retail sales and demand for new housing  
  • Outsourcing Accounting, payroll, HR, purchasing & call center operations
  • Outsource construction of the transmission and distribution systems – transformer installation and line connection.
  • Refurbishment work on heavy industrial electrical equipment
  • Offshore manufacturing can reduce cost and increase production.

THREATS:

  • Significant increase in the price of raw materials: Steel and copper
  • Trending towards deregulation of the power industry bringing in more competition to the power industry
  • Construction of electrical generation plants is regulated. Industry made up of commissions, boards, government agencies Demand for transformers has put upward pressure on transformer prices.

With a limited supply of electrical generator plants and an increased demand for electricity in industrial and retail industries, the price for wholesale electricity will rise steadily. In addition, the price for copper and steel has significantly impacted the cost to produce transformers.

ROOT CAUSE ANALYSIS

1. Carlyle on Strike – Halt in Transformer Production 

2. Transformer Supply & Demand 

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