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Institute of Business Administration, Karachi

MBA-Executive Program
Name: Assignment #1 Seat #:

Strategic Sourcing and Negotiation Skills

Mr. Faisal Jalal

Important Dates
Assignment: 24th October, 2021
Soft Copy (.doc file) by email (faisaljalal@iba.edu.pk): 5th November 2021
Hardcopy: 6th November 2021
Points: 20.0
(NOTE: Late submission ZERO Marks)

Q#1 You are strongly advised to read carefully and analyse the information in below paragraphs 20
before attempting to answer this Question.

Cost Reduction Through Improved Strategic Sourcing

Pick a company that you have already selected and interview a senior manager/manger about the commodity
strategy and spend analysis practices only for MRO (Maintenance, Repair and Operations) for the company
as per attached format. Identify the store requirements items like gaskets, valves, welding electrodes, fasteners,
pipes and pipe fittings, and electrical and instrumentation consumables. (Please consider these items just
examples for your reference only; items may vary from company to company). Please review the prevailing
procurement process and identify the following:

What is the prevailing P2P process for MRO in this company (For MRO)? Please develop flow chart with
a) 3.5
proper labelling.
Note: Note: Please try to collect as much as possible documents/formats.

Please suggest Improvements that has to be made in existing P2P

b) 2.5

Select ONE ITEM from any MRO Category and perform following tasks:

0.5
Assess the annual requirements of selected item at company level (at all locations)
c)

Does the company raise the requirements (purchase requisitions) for a longer period of requirement under the
d) 0.5
(annual rate contract) system?

How many PRs (purchase requisitions) and POs (purchase orders) raised at present?
e) 0.5
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What is the lead-time for this item?

f) 0.5

g) Where will you place your selected item in below map, please justify your selection of quadrant. 1.5

Review the number of vendors supplying total quantities of selected item. Perform Supplier concentration
h) 1.5
analysis for selected item purchasing as per below format:
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Review the cost of item in TSC concept (Please do not forget to include the cost in procurement process).
i) 2.0
Please develop Cost Bar Waterfall for selected item as per below format:

----- SUGGESTIONS FOR IMPROVEMENTS -----

After studying above factors, please give some suggestions to the management to reduce the cost. E.g. suppliers’
base reduction, inconsistencies over the price, orders increased to develop a strong business relationship the
suppliers, buying in bulk to reduce the costs, lead time reduction. Please respond the following points for your
potential achievements:

1.0
Is there any possibility to reduce the lead time for this item? You may use following format:
j)
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Is there any possibility to reduce the supply base for this item? You may use following format:
k) 1.0

Suppliers Base Reduction

Estimated Cost Saving. You may use following format:

l) 2.0

Can we reduce the number of PRs (purchase requisitions) and POs (purchase orders) to reduce transaction
m) 1.0
cost and paperwork?

Further suggestions for improvement.

n) 2.0

---The End---