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PMM Assignment 1: Case Study on FGH FMCG Company

Ans 1- Ashok should incorporate the following strategies in his overall purchasing strategies to solve
the problem at hand:
i)

ii)

iii)

iv)

v)

Centralization: Since most of the raw materials required for producing different products is
similar, it makes sense to centralize the purchase function amongst different divisions. This
would lead to consolidation of Purchase orders and lead to lower stockout irregularities.
Purchase synchronization: The purchase frequency and quantities should be matched in order to
synchronize it with the production schedule as there is a mismatch in quantities of the different
packaging material.
Supplier consolidation: Instead of having various suppliers for different divisions, consolidating
the suppliers under one department would improve the purchase performance as the supplier
would help to cover up the mismatch in delivery as and when required. It will also lead to lesser
fluctuation in raw material input.
System standardization: Since suppliers had good equipments but not other contemporary
systems it is imperative to build a centralized procurement system. It will constantly inform the
suppliers of the companies requirements so that they can alter their production schedules
accordingly.
Prior information: Better information flow regarding other departments initiatives like combo
packs and offers should be informed to the purchase department so that they can prepare the
purchase schedule accordingly.

Ans 2- Yes, in order to improve the purchase process the purchasing departments need to be
reorganized by bringing them under one roof. This would simplify the purchase process for the
organization and reduce the chances of purchase irregularities. As most of the raw material is similar
it would not hamper the productivity in any way.
It is important to list down the various raw materials required for different products and then sub
divide the centralized purchase department as per the material categories.

Ans 3- Some other benefits of this strategy can be:


i)
ii)
iii)
iv)

Lesser irregularity in availability of raw material and finished products


Better coordination between purchase team and suppliers
Better information flow among departments and various stakeholders in the supply chain
Consolidation of the suppliers may strengthen the supplier base for the whole company

Ans 4- The planning and scheduling can be improved in terms of the timing of the sales plan
meeting. Since the sales pan meeting used to happen after 25th of the month, it gave very less time
to the purchase department to tweak their schedule. If it is preponed a few days it will give enough
time to the purchase department to adjust their schedule according to sales plan.

Ans 5- Yes, the strategy can be used by other departments as well like operations and marketing by
centralizing and consolidating it under one head, it can save money on procurement of materials
and other expenses. For an instance, shifting the entire contract manufacturing processes under one

roof would reduce the product manufacturing, packaging and transport costs substantially. It will also
lead to better monitoring of the processes and hence, irregularities can be dealt with in a faster and
efficient manner.