Procurement Policy Case Study Example | Topics and Well Written Essays - 750 words

Procurement Policy - Case Study Examplerights to a startup companys new drugs which was later turned into a new corporation worth $500 million a year. The end result of this engagement was that Merck change 50 percent of its shares in the new corporation to Astra (Ghauri, 2001, p. 40). In so doing, consumers are able to acquire life-saving and life-altering pharmaceuticals in a timely trend. At the kindling of this alliance is the notion that in order to effectively and efficiently manage a business such as Merck, there is a need for strategical supply management. In recent years Merck has embodied a strong shift from a predominantly domestic supply management strategy to i which has entailed global management strategies. This strategy operates under the assumption that procurement policy is central to the success of the company. This strategy give the axe be characterized by two important elementsArnold (1989) illustrated one of the most concise conceptualizations of the glob al supply management strategies utilized by Merck by delineating four very distinct procurement policy teaching stages. These stages are as follows1. The Traditional Procurement Policy. In this phase, the scope of the procurement policy is narrowly define and limited to domestic sources. ... One important lineament of this phase is the understanding that there is no attempt to link the procurement strategy with the other components of the business process. Essentially, the traditional procurement process is somewhat haphazard and does not represent any long-term business strategy (Rai & Eisenberg, 2003).2.International Purchasing. The second phase of the procurement policy is one which expands the supply sources to non-domestic sources. The underlying imprisoned of this phase is to reduce the production cost by acquiring the necessary materials at a lower cost. During this phase, there is a systematic exploration of outside(prenominal) sources with the aim of realizing a price a dvantage over its competitors by purchasing the raw materials at a lower cost without adversely affecting the lumber of goods, the level of service provided to consumers and the delivery as well as the availability of goods. An example of this can be seen in the very presence of Merck in Japan. This can be both positive and negative with the positive implications very evident and a negative implication whereby there is limited American investment deep down the Japanese economy. Essentially, Mercks presence in Japan is solely for the purposes of acquiring materials at a low cost and exporting those materials for economic gain within the unify States (Chen & Drysdale, 1995, pp. 141-142). 3.Strategic Procurement Policy. During this phase, the procurement policy of the organization becomes an integral part of its overall business strategy. It is utilized as a means of gaining a large advantage over its competitors. One important component can be seen in the fact that global sourcing is exploited in such a manner as to improve the