Mondavi Procurement Management
Procurement is the complete process or action of acquiring or obtaining material, property, or services at the operational level, such as purchasing, contracting, and negotiating directly with the source of supply. Procuring goods and services is a larger process than just the label price of wine; the process to buy those items includes major organizational costs, often accounting for half of the product price. When allowing for the vast number of purchases Mondavi makes in a year, it is easy to see how these costs can spiral out of control without careful management.
This paper will describe the contract administration policies, procedures, tools and termination procedure for the Robert Mondavi Winery, external influences on the procurement management process, the role of risk management in contract administration, and how effective procurement management can lead to successful outsourcing by Mondavi.
Mondavi Contract Administration Policies and Procedures
Contract administration policies and procedures for Mondavi and their suppliers revolve around both sides determining what policies and procedures should be included in the contract. Though the legal department generally handles policy and procedures for Mondavi, they are generally negotiated before being turned over for legal to review. They are included in the final draft of the contract and can include guidelines for product return, refund methods due to returning of a product, and the process Mondavi has for accepting the product. The policy and procedures also includes the final cost and methods of payment. Risk management for Mondavi and the supplier is also included in policies and procedures.
Mondavi Contract Administration Tools
Mondavi and the supplier use many different tools in the contract administration process to ensure that the contractual agreement is met. Mondavi's contract administrator applies the tools most relevant to the supplies being acquired, and to the specific supplier Just as each project is unique, the contract administration process tool is also a unique checks and balances for the current project.
A specific example that describes how the tools apply to the administration process is the project involving the packing machine supplied by Orion. Mondavi used a buyer performance review to determine if Orion could deliver a packing machine to solve the problem of damaged cases. This report contained specific points Mondavi wanted to review with Orion on their packing machine. The performance review revolved around seeing the machine in action performing the duties it was designed to accomplish. Using this method, Mondavi determined that Orion's machine still had a problem with crushing cases; because Mondavi insisted on this review process Orion was able to make the needed mechanical adjustments.
Any time the company is looking into software project, there are areas associated with risk such as cost, time and relationship with suppliers. However, for Harley-Davidson, “collocation of suppliers with production facilities and their integration into company’s development process was the essential part of long-term relationship development”. Through a continued focus on collaboration and strong supplier relationships, the company could position itself to achieve strategic objectives and deliver cost and quality improvement over the long-term. Since, at that time company had no centralized system in place to handle relationship with suppliers and consequently, most of company’s time was spent on supplier management activities. For example, reviewing inventory, expediting and data entry. Furthermore, each supplier had different information systems for “Maintenance, Repair, and Operations (MRO), Original Equipment (OE), Parts and Accessories (P&A), and General Merchandising (GM) purchasing activities”. The systems, already provided by supplier, had to be further modified to meet individual need at each location, such as “the OE system at Harley-Davidson’s York, Pennsylvania site was different from the OE system in Kansas City”. However, due to long-standing tradition of gradual change implementation and focus on quality, quick transitions were unwelcome and did not come easy for the company. The size of the project determined how much risk was involved in terms of cost, time, and supplier relationships. The idea of switching to global purchasing system was seen as a threat not only in supplies and production flow interruption, but also in damaged dealer/customer relationships and lost sales. Furthermore, failure of the sy...
The Contract Administrator provides analytical and specialized administrative support on a daily basis to the assigned team(s). The incumbent’s primary responsibilities include
Project management is the application of knowledge, skills, tools, and techniques to project activities in order to meet project requirements (PMBOK Guide, 2008). Using this definition, it is made evident that the parties involved in the Denver International Airport (DIA) Baggage System project in the 1990’s failed at applying basic organizational practices towards managing the triple constraint of scope, time, and cost goals. The combination of inherent risks, uncertainties, and dysfunctional decision making geared the project towards disappointment while simultaneously designating it as a text book example of what not do when taking on a complex project. By looking at the key strengths, weaknesses, opportunities, and threats we can pull together a basic plan of action that would have set the DIA’s baggage handling system as a marvel model of rapid automation.
It is clear that all requisitions need to be channeled through the materials procurement department. By centralizing the purchase decisions, Novartis can obtain larger discounts from suppliers saving about $5 to $6 million.
The Consumer and Industrial Products, Inc a company where their headquarters is based in the United States , also doing business internationally with facilities in Europe, Asia and South America. They are a manufacturing company what produced well known products to individuals and industries. This company is experiencing a great deal of trouble with their internal Payable Audit System (PAS) and how it would purchase goods; receive goods and pays for them. They are challenged with the redundancy and the lack of productivity to their system. They were finding ways to lower costs and eliminating steps in how these processes are getting accomplished. They decided that they needed to change their system and the way they did things at their business. There are some people, their roles and departments that will be closely involved with the process of this project. Some of these important roles will come from Ted Anderson director of disbursements, Peter Shaw the user project manager and Linda Watkins project director for the Payable Audit System (PAS). In addition, the Steering Group and the IS management department will have some important roles to the project too. Finally, there will be several major problems with the development of the project and how the one person would deal with these issues.
Management tools such as 3-point estimation, critical path analysis, work breakdown structure and earned value analysis are used.
DAPs are mechanisms that are (usually) employed at the commencement of a contract to resolve conflicts on-site before they develop into a dispute. These are procedures established to put into effect the long quoted advice of prevention being better than cure. These procedures avoid or at the very least manage to their best, problems occurring in the course of project being undertaken before they develop into a bigger issue, resulting in a problem that eventually would lead to Dispute Resolution Methods and/or Litigation.
The implementation and application of RM within the subject organisation has provided many opportunities for increased performance. Limitations and inequities have been recognised in the system employed, mainly due to the lack of assessment and changes to the system in order to align it with organisational objectives.
This chapter details the information regarding sourcing process. The detailed information about sourcing process, different types of souring methods and the factors affecting sourcing also discussed. Along with this information, the vendor management and evaluation methods also described for the better understanding of the sourcing process.
line item expense, in terms of procurement, for the downstream Steel Industry. Freddie Swart, Group Transformation Manager
GM uses this system by containment, disposition, separation, and classification. Such a system guarantees that any outcome that does not comply with specified requirements is restricted from unintended use, restrained, and dispositioned by the administrators. Accompanied by this quality control is the verifying position where first-time quality and process capacity is advanced (Drew, 2011). Every team member is informed about any modifications in the production process and who and when to summon for assistance in the event of any quandary. Every team is also included in the problem solving to reach any improvement in goals.
According toMusau (2015), procurement performance entails how well organizational procurement objectives have been attained. The extent to which procurement function is able toobtain best value for spent organizational money to purchase products and services is the best indicator of procurement performance. Procurement performance entails two major aspects that is;efficiencyandeffectiveness. Effectiveness in procurementis essentially the extent to which previously stated firm purchasing goals and objectives have been met, on the other hand, procurement efficiency is the associationthat exists between planned and actual required resources needed to realize formulated goals and objectives as well as their related activities.Effectiveness in procurement
In general, there are different types of procurement type for various situations due to no one method can be suitable under the all different construction project. In this case, there are four procurement paths, which are traditional, design and build, management and design and manage, will be advised to use. However, each method has different aspects of advantages and disadvantages.
Among the issues of concern to the procurement officer which are being addressed in this study are; the level of accountability, the adherence to professionalism and ethics and the adoption and use of ICT technologies in the organization. There is a direct influence on the profits because procurement stands for such a large part of the company’s costs. There is also an indirect influence on the performance due to the large part of the internal costs affecting what happens in the interface between the company and its suppliers (Gadde and Hakansson,
We are going to talk about Procurement cycle, its elements; we are going to talk about each element in a specific way and its significance to the purchasing manager. Procurement cycle has 10 elements (stages) each one of them tell us about the importance of this cycle for the entire purchasing system in every company as there is no company do not need to deal with many types of purchasing systems (ways) in our advanced business world.