Q1: My categorization of the purchase categories.
Application support: only one finacle provider for core application support;
Security: only 25/100 providers, market access is relatively low
ATM Services: only three suppliers but high annual spend;
Database & Operating system: numerous suppliers and low annual spend
System Admin: variety service providers with low annual spend
Infrastructure: 6/10 providers with low annual spend (N65mn)
Legal Services: tons of specialists available at a relatively low cost
Network high annual spends and plenty of providers;
Branch Development: more than 50 providers but the annual spend is very high;
Advert & Publicity: high annual expense with vast supplier base
Diesel and other goods and services: lots of service providers, the annual total spend is very high
Q2: My assessment of Amalgamated Bank’s purchasing strategy for these categories
Pro: End-user initiates purchase request, which will prevent unassay purchasing
Too many suppliers, this might cause inconsistent service/product quality. It will be hard to Amalgamated Bank to maintain a good relationship with particular supplier
There are only three suppliers for this category, which is really risky to the Bank because there is no guarantee that all suppliers will satisfy its needs. Amalgamated Bank needs to look for more backups when the current suppliers cannot fulfill the purchase orders.
According to the case, most MROs that the Bank received were not in good condition. The Bank needs to evaluate its current suppliers for this category and eliminates poor-performance ones. The quality check at the receiving point needs to be conducted by managers, RTV (return to vendor) process/system needs to be implemented and improved.
According to the case, most suppliers were referred to Amalgamated Bank by the internal employees or invited by senior managers. This might lead to blind-trust and cause quality issue and result in poor customer service. The Bank needs to actively look for qualified suppliers in the market and maximize its leverage with the suppliers.
Q3: My description of the essentiality of the procurement function at Amalgamated Bank
· Quality: I believe the procurement function will provide the quality of service at Amalgamated Bank. According to the case, most of the service that Amalgamated Bank provides to its customer counts on the quality of the goods that are delivered. The purchase unit ensures the quality of service to the internal users and make their work as easy as possible.
· Speed: Good procurement function enables each service stages at Amalgamated Bank to function error-free. Internal users do not have to take their time to inspect shipments and trouble shoot issues if the procurement unit is functioning well.
· Cost: It is critical for the procurement unit to perform most cost-efficient actions for the Bank. Purchase functions include the selection of suppliers, determination of quantity purchased, types of material…etc. There are lots of cost saving opportunities in all of these activities.
· Safety: Amalgamated Bank needs to make sure that its employees are working in a safe environment. Procurement unit is responsible for all safety equipment at the Bank and reach out to the vendors if the equipment is not functioning well. Also, information security and account security needs to be well managed by the security system.