Question

10) Purchasing and Acceptance Activities Regulation

Deficiency: There is no formal contract with a key material supplier. Ordering is done ad hoc.

a) Worst possible consequence: ?

b) Least bad possible consequence: ?

c) Short description of a plan to fix the deficiency: ?

Answer 1

Ans a) Since orderings are ad hoc --It shows that there is no forecasting and it might lead to shortages at critical time of delivery, the key material supplier might be facing stock outs and he might have discontinued the material due to lack of no formal contract, this non availability of material will lead to incapability of the organisation to meet the final demands leading to loss of business.

Ans b) This informal way of purchasing will be caught during process Audits by external agencies and the organisation might loose its certification or may have to pay hefty fine.

Ans c) To have a SOP (Standard operating procedure) for purchasing process that should include contract and non-disclosure agreement that has to signed by both the parties. A approved Supplier list should be maintained and should be reviewed periodically for availabilty for all the necessary requirements that the contract calls for. Forecasting should be a key process and based on that operational excellence can thrive.