Anechoic Technology provides anechoic and screened room solutions for all EMC and RF Protection environments. It also manufactures cabinets for the telecommunications industry and various other subcontractor works. Their two main clients are British Telecom and Marconi Systems for which Anechoic Technology makes cabinets and private telephone exchanges. Anechoic Technology also makes cabinets for other high speed ADSL Internet service providers and employs 155 with an annual turnover of £40 million. Anechoic Technology operates a well-known brand EBS system with modules for accounting, HRM and operations.
With an annual procurement expenditure of around £15 million and issued purchase orders nearing 200 per month, procurement occupies a pivotal role in Anechoic Technology. At present, procurement has an ‘in-house’ developed procurement system. Currently the stock levels are driven straight out of the procurement database and ‘on demand’. This procurement system generates the purchase orders and, depending on how the supplier wants to receive the orders, they are sent out via fax, e-mail, or post. Currently the organisation has a supply base of around 900 suppliers who cover a multiplicity of products and services and cover most of the procurement needs. The company realises that it is a burden to maintain such a vast array of suppliers and sees a need to reduce this number by at least half. The IT manager justifies having such a vast supply base and widely notes “since our procurement is so diverse, it is warranted that we have such a range of suppliers”. The supply base consists of a diverse mix starting with micro companies to large global distributors. The Managing Director understands that change management is a big issue in implementing new e-procurement processes and that it is not easy to change the mindsets of people who have been used to doing things in a particular way.
You are the Procurement Manager and have been with the company for 6 months and have a strong understanding of the company’s procurement processes. At a recent management meeting, the Managing Director has advised you the company is looking for a 10% reduction in procurement costs and he is willing to support whatever strategy you determine and would like a full report on the total restructure of the procurement process in 2 months. In an informal discussion over drinks, the Managing Director, much to your complete surprise, raised the subject of manufacturing components ‘in-house’
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