Procurement Process: Case Study of the Trek Company

Subject: Case Studies
Pages: 2
Words: 577
Reading time:
2 min
Study level: Bachelor

The work of the purchasing department affects the entire activity of Trek. It influences sales, effective use of working capital, customer satisfaction with prices and assortment, the fullness of warehouses, and the efficiency of the internal supply chain. It is connected with the work of employees of almost all departments — from accounting to transport service. In this regard, the Trek company has carefully thought out the organizational aspects of procurement logistics.

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Procurement specialists choose new suppliers to Trek; they search for and analyze commercial purchases, as well as work with applications for participation in investments. In addition, procurement specialists at Trek study the tender documentation and identify and eliminate violations on the part of the suppliers (Kerin, 2014). They submit requests for clarification of the procurement documentation and interact with the providers. Trek employs professionals who carefully monitor the course of the procurement procedure and its result.

There are several main criteria by which suppliers are selected for the Trek company. First of all, such a criterion is the convenience of working with them. Convenience means mandatory delivery by the supplier according to an agreed schedule, advantageous configuration, multiple deliveries per month, and registration with a single invoice. Further, an essential role in choosing a supplier for the Trek company is played by the ratio of price and quality of the goods and materials offered.

The environmental policy adopted by Trek has led to the fact that the manufacturer makes environmentally friendly purchases. This method of procurement implies rational spending of funds, using market opportunities to significantly increase environmental and social benefits at the local and global levels (Kerin, 2014). The introduction of the concept of environmentally friendly public procurement in Trek has become a tool for the company’s economic development without compromising the environment.

An example of a straight rebuy without changes would be a situation in which the Trek company issues a repeated order for a product without making any changes to it. For example, it buys small parts for the production of bicycles in that way (Kerin, 2014). Trek selects a bearing supplier from the available list, depending on how satisfied they were with their previous purchases. Regular suppliers try to maintain the quality level of their products and services. Trek uses automatic repeat orders so that the purchasing specialist does not waste time on their registration.

An example of a modified rebuy would be when Trek wants to make changes regarding the technical characteristics of the goods, prices, and other delivery conditions. A modified rebuy also happens when Trek replaces some of the suppliers when issuing a repeated order. For example, this is how the Trek company can purchase new equipment or components.

The new buyer will be necessary when Trek sets new tasks, for example, additional computerization or the construction of a new office or factory. The higher the costs and the degree of risk, the more involved in deciding and the more information the company needs. Since purchasing new tasks is associated with complex commercial negotiations, Trek will form a so-called target sales team from its bestsellers to conduct them. When making purchases, Trek determines the technical characteristics of the product, price limits, time and terms of delivery, terms of maintenance, terms of payment, and order size. Each decision is influenced by different persons involved in this process, and the sequence of decision-making varies from case to case. Trek prefers to use the complete purchase approach when making new purchases.

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Reference

Kerin, R. (2014). Marketing. In S. Hartley & W. Rudelius (Eds.), Understanding organizations as customers (pp. 173-176). Columbus, OH: McGraw-Hill Education.