Sourcing & Procurement

(Final Project)

Selected Company: Clean & Care International

Address: 17Km Raiwind Road, (Hashmi Chemicals)

Email:

Phone:

Chief Executive: Usman Sadiqi

Year Established 2014

TEAM MEMBERS

Hamza Afzal BBHM-F14-004

Asif Ameer Khan BBHM-F14-012

Hassan Farid BBHM-F14-056

M. Noman BBHM-F14-000

Usman Iqbal BBHM-F14-000

Submitted to: Mr. Imran Taseer

Acknowledgement:
Table of Contents
Introduction of the Company: ......................................................................................................... 5
Current Supply Chain Operations: .................................................................................................. 5
Diagram of Supply Chain of Major Products: ................................................................................ 5
List of Routine Purchased material: ................................................................................................ 5
Adapt Supply Management Strategies associated with business unit strategy and corporate
strategy: ........................................................................................................................................... 6
Portfolio analysis for purchased material: ...................................................................................... 6
Critical Material: ......................................................................................................................... 6
Routine Material: ........................................................................................................................ 6
Leverage Material: ...................................................................................................................... 6
Bottleneck Material:.................................................................................................................... 6
Sourcing Strategy for purchased material (with Justifications/Objectives):................................... 7
Consider the option of in-house production for leverage materials (Make or Buy): ...................... 7
Lists of expectation ......................................................................................................................... 7
Preferred Sourcing alternative for material classification (portfolio) ............................................. 7
Determine the method for Supplier Evaluation and Selection for each group (Portfolio) ............. 8
Develop Key Supplier Evaluation Criteria ..................................................................................... 8
On time Delivery......................................................................................................................... 8
Cost Structure.............................................................................................................................. 8
Quality of the product ................................................................................................................. 8
Develop performance measurement criteria for each material group ............................................. 9
Quantity Ordered versus Quantity Received .............................................................................. 9
Lead time/ Delivery On-time ...................................................................................................... 9
Quality product ........................................................................................................................... 9
Ordered price versus invoiced price ......................................................................................... 10
Payment Terms ......................................................................................................................... 10
Develop supplier development criteria for each material group ................................................... 10
Develop formal purchasing process along with standardized documents .................................... 10
Develop human resource plan for the execution of procurement plan (responsibilities) ............. 11
Procurement Manager ............................................................................................................... 11
Senior Procurement Officer ...................................................................................................... 11
Procurement Executive ............................................................................................................. 11
 Executive Summary:

Introduction of the Company:

The Company Clean & Care International established in 2014 by Mr. Usman Sadiqi in Lahore.
The Company deals in various clean & care products like hand wash, dish wash, floor cleaner
and liquid surf etc. The Clean & Care International purchases its raw material every end of the
month by its procurement department itself from the market.

Current Supply Chain Operations:

Clean & Care international deals in different kind of cleaning and caring products like Hand
Wash, Dish Wash, Hand dryer etc. Their major products related to cleaning products like hand
wash, dish wash, floor cleaner, liquid surf etc. Almost all the raw material imported from
different countries by different importers in the country and the company purchase its raw
material from those importers directly from the market by itself. Company sales its products to
businesses directly like Corporate, University/Collages, Factories etc.

Diagram of Supply Chain of Major Products:

Raw Material Import

Raw Material Purchase Company's Production
from Different Company's Warehouse Consumer/End User
from Local Supplier Plant
Countries

List of Routine Purchased material:

The routine purchase material are:

 Shampoo Base
 Conditioner
 Galas-Orin
 Storex
 KD Chemical
 Salt
 Fragrance
 Color
 Sulfonic Acid
 Caustic Soda/Soda Ash
Adapt Supply Management Strategies associated with business unit strategy
and corporate strategy:

Portfolio analysis for purchased material:

Critical Material:
 Storex
 KD Chemical
 SLS – Sodium Lighter Self-aid
 Sulfuric Acid
 Caustic Soda/Soda Ash
 Caustic Patri
 Soda Ash

Routine Material:
 Shampoo Base
 Conditioner
 Galas-Orin
 Storex
 KD Chemical
 Salt
 Fragrance
 Color
 Sulfonic Acid
 Caustic Soda/Soda Ash

Leverage Material:
 Shampoo Base
 Fragrance
 Color
 Conditioner
 Salt
 Water
 Galas-Orin

Bottleneck Material:
 Packing Bottle
 Stickers
 Color
 Salt
  Fragrance

Sourcing Strategy for purchased material (with Justifications/Objectives):

They purchase the raw material from two markets. One is the local and the second one import
from the china. The raw material of Fitness related items imported from China. The fitness
related material is play a vital role in the contribution of the profit. For this purpose, they use two
vendors. They apply dual strategy on all the markets either they purchase from the local market
or import from the china. They buy raw material and produce the product in the market. For the
other material which they purchase from local market. They also use the dual sourcing strategy.
For each material which they purchase from the local market. Therefore, when they purchase
locally, so they used the dual sourcing strategy. By using this strategy, they divide the purchase
order among the vendors and then according to that they receive the material from the vendor.

Consider the option of in-house production for leverage materials (Make or

Buy):
Clean & Care International purchase most of the material. The raw material purchased from the
local market. They purchase raw material from the importers in local market and then convert it
into the finished goods items. The leverage material include Shampoo Base, Fragrance, Color
etc.

Lists of expectation
For their critical, leverage and bottleneck material, their future plan is to develop a strategic
relationship with their partners. Because they are being for a long time. Therefore, now their plan
is to go with a single sourcing strategy. For their routine purchase items, they also decided to go
with single sourcing strategy and for the local material. Their plan is go with single sourcing
strategy. Their three important materials is imported from china and using the dual sourcing
strategy. The only routine material is purchase from the local market. Therefore, their plan is to
go on single sourcing and develop a strategic partnership with the vendors.

Preferred Sourcing alternative for material classification (portfolio)

Their preferred sourcing material is those, which contribute very much in the profit margins.
Therefore, the fitness related material contributed very much in the profit margins. Therefore, the
suppliers is very much important to them. Because if the material is not supply on time. Then the
company bears a lot. However, in the case of local vendors. If one vendor does not deliver
material on time. Then they place the order to the other one. They use dual strategy and the
objective of this is that the alternatives that if any vendor does not provide material on time.
Then they can place the order to the other one and their production does not stop.
Determine the method for Supplier Evaluation and Selection for each group
(Portfolio)
For the supplier selection different key points are focus by the Clean & Care International.
These are as follows:

 Supplier capabilities
 Supplier working experience
 Supplier professional team
 Quality of material provided by the supplier
 Cost of the material
For the evaluation, the Clean & Care International use same strategy.

 Deliveries
 Quality
 Cost

Develop Key Supplier Evaluation Criteria

To evaluate the key supplier, they focus on three different things.

 On time Delivery
 Cost structure
 Quality of product

On time Delivery
The first one is on time delivery of the product. They evaluate their vendors that how many times
they give late deliveries. Because when they did the agreement with the vendor they decided
that, they deliver the product on time. Rather there is some kind of serious problem. So, first of
all they evaluate them on their delivery time. They check that in a specific time of period how
many times they deliver the product on time.

Cost Structure
The second thing is they evaluate their vendors based on cost structure. The cost structure is
fixed. Vendor does not allow to increase the price until they increase the final price of the
product is increased. Because if the vendor does not increase the final price of the product. Then
it effects a lot on the profit margins. Therefore, if the vendor want to increase the price them the
cost structure of the agreement is revised.

Quality of the product

The next one is which is very important is quality. They do not compromise on the quality of the
product. Because their objective is to provide the quality product to their customers. So they do
not compromise on it. If the vendor compromise on the quality of the product they finish the
agreement with the vendor. Therefore, before receiving the product in the warehouse first, the
quality of the product is checked and after the complete satisfaction, the product is unloaded and
stored at their designated position.

Develop performance measurement criteria for each material group

 Quantity Ordered vs Quantity Received
 Lead time/ Delivery On-time
 Quality product
 Ordered price vs invoiced price
 Payment Terms

Quantity Ordered versus Quantity Received

To evaluate the performance of supplier is very important. Therefore, there are some metrics on
which basis we evaluate the performance of the vendor. Therefore, the first one is ordered
quantities and the quantities received. Its means that if we order 100 units and in return how
much quantities delivered by the vendor. We check that how many times the vendor delivered
according to purchase order. Because if the vendor does not delivered the PO’s quantities then
our demand does not fulfill. Therefore, we cannot easily fulfill the demand of the market. In
return, there are a chance of losing the customers and the profit margin of the company is
reduced. Therefore, it is most important criteria on which we evaluate the performance of the
vendor.

Lead time/ Delivery On-time

The second metrics is lead-time of the vendor. It is also very important. In this, we check that the
vendor delivered the product under the lead-time. For example, if the lead-time of vendor is 2
days after the Purchase order. Then we check that how many times they delivered the material
within 2 days. If they delivered sometimes more than 2 days. Therefore, we check what reason
behind that. Therefore, we set the criteria in the specific period that the vendor can deliver the
material for more than 2 days but in the critical conditions. Because if the vendor does not
deliver the material on time. Then the company face the major problem. Their production can be
stop due to shortage of material and they cannot survive in the market for the long period.

Quality product
Quality of product is very much important. Apollo does not compromise on the quality of the
product. Because they know that if they provide the quality product to their customers then they
can easily capture the customers. Because their objective is to satisfy the customer demand. Due
to this, they do not compromise on the quality of product. They provide excellent quality and
does not compromise on it. They properly check the quality of the product and after the
evaluation, they accept the material. Otherwise, they reject the material. Because if the b pair
material is accepted then they cannot produce a pair material. Therefore, they cannot provide
their customer a pair quality product. Therefore, they much focus on it.
Ordered price versus invoiced price
The other metrics ordered price and the invoiced price. They evaluate the performance on that
basis. Because there is a contract between the vendor and the manufacture that they does not
increase the price. If the price is increase then the retail price is also increase. According to that
agreement, the vendor does not increase the price of the product. If they increase the price then
they do not follow the agreement. So they also evaluate that the vendor increase the price of the
product or not.

Payment Terms
The other metrics is payment terms. On the time of the agreement, the next thing decided that
either company pay the cash or the credit. If the company give payment on the credit basis. Then
how many days they give the payment. Either on weekly basis or fortnightly basis. Therefore, we
also check that the vendor follow the agreement instruction or they break any of them.

Develop supplier development criteria for each material group

To develop a supplier, the following points we should keep in mind.

 Trustworthy relationship between supplier and buyer

 Routine information sharing
 Flexible terms and conditions
 Maintains a stable and profitable business
 Sharing innovative ideas
 Cooperative and reasonable with requests
 Share technology
These are the key points on which a supplier is developed. The first one is we should have a trust
relationship with our vendor. Both have the parties should have trust on each other. They share
their basic information with each other. So that both parties can get the benefit from the market.
The agreement between them have set on flexible terms and the condition. The payment criteria
is also included in it. Because as the price of raw material is increase, so the companies does not
increase the price due to agreement. Therefore, the companies does not have to do this they have
to focus on the win-win situation. They have to share the innovative ideas with each other and
other important information that give benefit to each other. So, if the vendor and buyer have very
strong relationship with each other. Therefore, they can also share the technology with each other
and integrate their systems to reduce their cost.

Develop formal purchasing process along with standardized documents

Develop human resource plan for the execution of procurement plan
(responsibilities)

For the execution of procurement plan, the Clean & Care International has Procurement
Manager, Senior Procurement Officer and the Procurement Executive.
Responsibilities of these are as follow:

Procurement Manager
 Work with different vendors to do best deals for the company
 Evaluate pros and cons of different vendors based on price, quality and the speed of the
delivery
 Decision-making
 Negotiating with different vendors
 Approve the vendor

Senior Procurement Officer

 Evaluation of the vendor
 Discuss issues with the vendor
 Deal with foreign vendors
 Generate PO’s in case of foreign vendors

Procurement Executive
 Deal with local vendors
 Make PO’s for local purchasing
 Resolve issues of local vendors
 Identify new vendors
 Set min/max level