Blozis Company Case Study

Blozis Company

Procurement & Supply Management

Executive Summary

As part of Platinum’s Box new expansion into the US market, there is a requirement for us to source new presses in order to be able to meet the projected demands. The bids that were received were evaluated based on 5 criteria; Average Production, Total Cost, Warranty, Experience, and Downtime. After thorough review, my decision is to multi source the presses from Jabaking and Pnutype. Pnutype has a new high quality technology that we be beneficial to Platinum Box in the expansion into the US market. Jabaking will provide us the reliability and ongoing close relationship that we will need for this new expansion.

Using a weighted evaluation system, the three bids were evaluated with Pnutype receiving the highest score of 4, followed by Jabaking 3.6, and Merakuri with 3.5. Each bid had their strengths, but Pnutype had the greatest quality, warranty, downtime, and came 2nd in production capacity. Jabaking came in 2nd and they will provide the experience, production, and warranty. The total cost analysis showed that Pnutype had a cost of a little over $10million, Jabaking $15.8 million, and Merakuri at $17million.

Problems

There are several problems with the organization that is costing the company time and money. It is clear that there are undefined roles, responsibilities, and a lack of organizational structure. The supply department has no control over the pickup and delivery process. There is no standard work in place for the expediter who picks up the goods from the supplier and delivers to Blozis. The lack of receipts and acknowledgements are causing delays, discounts being missed, and tardiness in meeting the net date on the bills. There is also no visibility for the requestors when supplies do enter the plant.

The department also exhibits a lack of control in the supply management department. This is caused by the undefined roles and responsibilities. Requisitions are being submitted without the approval of supply management. This is due to the fact that the supply department has to rely on others from outside the department to decipher the technical specifications that is required. The expediter is the only person in the facility that can decipher the technical terms and he sometimes converts the oral description into commercial specifications which can potentially lead to improper specifications. The expediter also has the ability to submit purchase orders even though that is not his role in the company.

Causes

The problems that are occurring at Blozis all stem from the president. His “informal” way of operating the company with his nonchalant demeanor has cost the company time, money, and frustration with his employees.

Although the president operates in an informal matter, the root cause does start with the employees not being technically trained as well as allowing them to perform various tasks around the organization that do not pertain to them. This type of set-up does open up the door to unethical transactions. The expediter should not have access to submitting requisitions or purchase orders. His job is to pick up rush orders and to supervise the stock room only. Requisitions should also only be submitted by the supply team and no other department.

There is a lack of documentation from providing the suppliers with order confirmations, to pick-up and delivery receipts.

The supply manager should have had a technical background and if not, he should have been encouraged to advance his skills and get some technical training on the items that are purchased. Personal development is key to growth in a company.

Analysis

All of the issues that were mentioned could have had a greater negative impact on the company. Since Enron, organizations have had to restructure and ensure every employee did not have access to departments or operations that did not pertain to them. Blozis is a prime example of what could have gone wrong had an employee been unethical.