As a computer manufacturer and retailer, Make to Order (MOC) presents its mission as “provide value to customers through supplying quality computer equipment at a competitive price as quickly as possible”. We can see from the mission statement that Quality, Competitive Price and Just in Time (JIT) are three of the major operation goals of MOC. In addition, restricted by its size (25 staff) and the special feature of computer industry (high speed of innovation), MOC is wisely applying Zero Inventory in its supply chain to reduces cost and avoid obsolete item. Thus purchasing process plays an important role in the whole operation process. Failure to manage purchasing may lead to serious results for MOC’s inventory policy and the fulfillment of its mission.
Operational effectiveness and efficiency of the purchasing process
As Gelinas, Sutton and Oram (1999) state, to use JIT systems effectively, organizations must find and retain reliable vendors to make sure the right goods are ordered. MOC has its own vendor master data store containing a list of suppliers as well as the agreed item price. This ensures that all items are purchased from authorized vendor with pre-agreed prices. However, the quantity to be ordered is entered by purchasing officer manually. Data entry errors will expose MOC to the risks of not receiving the right amount of the goods. To make the issue even worse, the purchase order is forwarded to the vendors via phone. No paper document is sent to the vendors. There is nothing to refer to when processing MOC’s order. Also, no further confirmation about the availability of the goods is sent back to MOC. Out of stock items can not be found out timely. This will result in delay of sending the goods and break the JIT policy. Verbal communication may cause misunderstanding and confusion, and it is a relative loose and causal model of expression. On receiving the goods, two documents (PO and delivery document) are compared against the...