A written Research Report would be a maximum 2,000 words, demonstrating the application of the theories, methods and techniques of purchasing and procurement on the case study selected by the lecturer.
Measuring Purchasing Performance
A CERTAIN COLLEGE
This is a medium sized college. Last year it had a total of 17,000 students enrolled, on three different sites each with a restaurant. It has four main groups of students:
• School leavers in the 16-19 age range, taking full-time GCE advanced level and vocational courses
• Employees of local organisations, studying on a part-time basis for professional and management qualifications
• Students following higher education courses, such as foundation degrees and higher national diplomas and certificates
• Adults taking leisure and recreational courses.
Last year, its income totalled £38 million, while total expenditure amounted to £37.3 millions. Of this, £25.2 million was paid out as salaries and £12.1 million was spent on operational expenses.
The Purchasing and Supply Function
Until the beginning of this year, it did not have a separate purchasing and supply function. All the college’s purchasing was undertaken by budget holders, such as senior and middle managers and certain administrative staff. None of these had any purchasing experience or qualifications and all purchasing decisions were based on past experience. The suppliers used were generally those who had dealt with the college for many years.
Last year the board of governors decided that it would be appropriate to appoint a purchasing manager. The post was advertised, applicants were short-listed and interviewed, and at the end of this process Nathan was appointed. He started in the role on 3rd January this year. One of his targets is to achieve savings of £1.0 million by the end of his first year in post.
One of Nathan’s first tasks is to carry out a review of all the spending. The largest amount of expenditure, £4.6 million, is on catering supplies for the restaurants, on each site. He discovers that each restaurant manager has contracts with different suppliers and there is little coordination between them.
During a meeting with the manager of the college’s main site restaurant, Nathan discovers that there have been many problems with the supplier of frozen foods. Deliveries are often late in arriving, sent to the wrong site, or are not of the quantity ordered. The restaurant manager claims that such poor supplier performance makes it difficult for him to match the standards required.
Nathan discovers that all the budget holders order independently, often from the same supplier of books, stationery and computer consumables. Nathan arranges a series of meetings with various budget holders, but he finds that they are reluctant to give up their power to make buying decisions.
Nathan’s investigations also reveal that some services, such as cleaning and estate management, have been outsourced and these contracts have not been reviewed for more than four years. The cleaning contract costs the college £1.8 million, while the estate management contract has a cost of £1.0 million.
Nathan also finds out that the college operates its own travel agency, principally to provide training opportunities for those students on travel and tourism courses. However, it is college policy that all travel arrangements for staff and students have to be made through its own agency and not through competitors in the town.
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.
Questions 1 and 2 relate to the case study and should be answered in the context of the information provided.
Q1 Describe FIVE problems of purchasing and supply, at the College, that Nathan should investigate in order to save £1.0 million.
Q2(a) Explain the potential impact of poor supplier performance on the ability of the college restaurant managers to provide a quality service.
Q2(b) Describe THREE criteria that Nathan might use to measure the performance of the supplier of frozen foods.PLACE AN ORDER TODAY & GET 15% DISCOUNT(CODE GAC15)