Adopting to control its purchasing activities

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Reference no: EM132272221

ABC was a medium-sized Hong Kong-based company with two manufacturing plants in China, one in Dongguan and the other in Shanghai with employees of 3,000. The company was manufacturing micro-were ovens in three different product lines including oven-P, oven-Q & oven-R series.While P & Q models were for its domestic customers, R models were designed for its overseas clients. The three product lines were targeting at difference market segments. 40% of their components were nevertheless shared among the three product series and 60% of the components were common to P & Q models.Basically,the components were divided into several categories including the casing,the heater,the glass front door, the electronic control, the magnetron, and the small mechanical and plastic parts. The following was the generic purchasing procedure that ABC was adopting to control its purchasing activities.

-User department (e.g, Production of Oven-Q) issued a Purchase Request (PR) to Purchasing Department for a component W(e.g., light bulb).

-Purchasing Department negotiated with the supplier about the price of manufacture of W.

-ABC issued a Purchase Order (PO) to detailing the specification of W and the required receiving date.

-Upon the receipt of order,Receiving Department checked the material against PO and issue Receiving Report (RR) to Incoming Quality Control(IQC)Department

-IQC check in accordance with the testing TEST-W101~108-MILSTD and issued a Testing Report (TR) to Purchasing Department to close the order.

-Accounting Department issued a cheque to the supplier upon received an invoice from it.

Given the following.problems/issues, what are your suggestions to the Purchasing Department?

The lead time for IQC to check W was rather long, it usually took three days to complete a full lot testing. As a result, IQC had to release some urgently needed W’s to production for use without testing. Furthermore, the testing equipment was found not able to test the precision as required by W’s specification.

Reference no: EM132272221

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