Answer:
The Chapter referenced in the question speaks to Global Supply Management.
<em>Global Supply Management</em>: The objective of this practice is to distribute goods and services throughout a trans-national companies' global network n order to maximize profit and minimize waste.
Marc Biron who does not have any experience in Marketing was asked by his CEO to come up with a supply plan for the company's Marketing Group.
Marc's brief was to add value to the global Marketing Spend of a multinational Finance company by centralising the process as his boss had done with the IT Supply process with the objective of maximizing the companies profit, whilst eliminating or minimizing waste.
<u>Some</u> of the purchases related issues which Marc Biron would consider in creating his plan for BCI's Marketing are:
- Source of Service Location and Evaluation
- Lead Time and Delivery
- Expedition of Services/Shipment/Deliveries
- Risk of Supply Interruption due to Political, Labor, and Security Problems
- Quality
Explanation:
<em>1. Source of Service Location and Evaluation:</em>
Marc in his plan would have to detail how he would go about electing responsive and responsible suppliers of marketing services. This is key given that BCI is a global business.
He would therefore require the services of a company that has the capacity to deliver the at that level.
He must first evaluate the capacity of the company. If information about potential companies are unavailable online such as their team, years of experience, financial capacity and similar projects executed, he may have to travel down to the Headquarters of such company.
Traveling down to such a may not be very cheap and as such needs to be properly planned.
<em>2. Lead Time and Delivery</em>
This concern would apply where the transaction involves the purchase of physical or tangible goods. Lead time is the latency between the initiation and completion of a process. For example, the lead time between the placement of an order and delivery of new cars by a given manufacturer might be between 2 weeks and 6 months, depending on various particularities.
In this case, Marc wants to ensure that the lead time for the purchase and delivery of any service is highly minimized.
<em>3. Expedition of Services/Shipment/Deliveries</em>
To expedite means to make (an action or process) happen sooner or be accomplished more quickly.
Because of distance, expediting an offshore supplier’s production/shipment is more difficult. This places a premium on knowing a supplier’s personnel and ensuring that they are responsive. Some firms also arrange to have an expediter on contract in the offshore country or to use personnel from a company-owned subsidiary closer to the supplier to assist with expediting problems. March would have to consider this very seriously given that his company operates in the financial services sector.
<em>4. Risk of Supply Interruption due to Political, Labor, and Security Problems</em>
The heightened risk of supply chain disruptions from terrorist acts, counterfeit goods, or unsafe products increases the time and cost of offshore sourcing. Marc must have and or acquire the knowledge and records about its products, where they were sourced, and how they were transported, because governments continue to increase their requirements for safety standards and compliance reporting.
The cost of correction for a product recall or scandal, including the cost of brand or image degradation, can be huge.
Risk management strategies and contingency planning are of even greater importance in the global economy. Marc must assess risks, establish a monitoring system, and communicate in time to implement a contingency plan.
Finally in this regard, Marc would have to demonstrate preference for a company that has business continuity contingencies as in the Marketing Service Provider selection process.
<em>5. Quality</em>
It is extremely important that there be a clear understanding between buyer and seller of the quality specifications. Misunderstandings can be quite costly, due to the distances and lead times involved. Also, there could be a problem in interpretation of drawings and specifications.
In addition, it is important that both buyer and seller agree on what quality control/acceptance procedures are to be used.
As more services are off-shored, all the challenges of defining and assuring quality services are increased by distance, language, and cultural diversity.
Marc must request a clear and unambiguous statement of work (SOW) from the elected service provider.
Cheers!
