The Case Study for A Purchasing Manager

Basic Issue

1. To eliminate back-office operation by outsourcing in order to decrease any overhead cost involved in kit assembly and printing materials.
2. Kara Murphy (Purchasing Manager-“Marshall Insurance Company”) to decide between producing their kits in house or to outsource their work to Gilmore Printing.
3. Decision has to be taken before June 17, during a meeting scheduled for the afternoon with David from Gilmore Printing.
4. Kara’s concern on giving the contract to Gilmore, as they would take over existing contracts with Gilmore and if contracts expire it would be Gilmore to decide who will do printing.

   Also if Gilmore does not perform as per needs and expectation of clients, it creates bad impression on Marshal and company’s reputation might be lost.

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Priority of the Issue:

1. High Importance, High Urgency
2. High Importance, High Urgency
3. High Importance, Low Urgency
4. High Importance, High urgency

Root Cause Analysis:

From the Case Study, we can see that it takes the time of two full time employees for the assembly of kits and printing work.

Also it requires more staff to work on Kit assembly during high demand. Each store room staffs are paid $900 + benefits a week.

Kara being a purchasing manager is responsible for managing 3000sqft storeroom, managing inventory and purchases and other back office operations.

Alternatives:

1. Approve proposal from Gilmore Company and provide full responsibility over printing, kit assembly and brochure distribution.
2. Assign Gilmore Company with only printing and kit assembly.

Decision Criteria:

1. Reduced Cost
2. Reduced high level of work
3. Timely Processing of materials to the client

Analysis of Alternative:

• Alternatives/Decision Criteria DC1 DC2 DC3
• Approve Proposal X X
• Assign few responsibilities X X

Recommendations and Prediction of Outcomes:

Approving the proposal from Gilmore reduces the staff wages, storage space, and inventory cost

The free office space in the storeroom could be used for other works.

Ordering and maintaining inventory records could be eliminated

Implementation Plan

Kara to accept the proposal from Gilmore under a contract stating,

1. Gilmore will secure the confidentiality of clients’ database and will not use client information for other purposes.
2. Contract with Gilmore will be canceled anytime if it causes any damage to Marshal’s reputation
3. The approximate price of $3/kit as proposed by David as the final price for the Kit assembly and all printing works.

Assumptions:

Kara to get quotes from different suppliers and analyze the benefits before accepting the proposal.

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