Assignment \#2 - Instructions In this Assignment \#2, you will be asked to outline and discuss the characteristics of the current purchasing organization for Goldenbread and evaluate its performance. Questions to be answered First of all, be sure what was covered in the videos os clear. Then, read again very well the text of the Goldenbread case. For this Assignment \#2, the request is to characterize the Goldebread purchasing organization using the dimensions presented in the videos: - The span of control; - The grouping criteria; - The level of centralization And then provide an assessment of the current purchasing organizational structure based on the performance data. la) How could you define the level of centralization for the Goldenbread purchasing organization? (i.e., can the department be classified as centralized, decentralized, or hybrid?). Please remember that this dimension refers to how the spending for the different categories is dispersed throughout the company. This means that, even if you have 4 different purchasing departments, the level of centralization is unique and needs to be commented only once for the company. (b) How could you define the grouping criteria used to organize resources in the different purchasing departments? (i.e., are resources grouped using input, output, or hybrid criteria?). This dimension refers to how resources are grouped in the purchasing department. For this dimension, as Goldenbread has 4 different purchasing departments and resources in each, I expect you to discuss how this decision has been taken for each of them (this doesn't mean the decision must be different for each, but you need to look into each one and describe how resources are grouped in each). lc) How could you define the span of control that characterizes the different Goldenbread purchasing departments (i.e., is the purchasing department responsible for the supply and/or sourcing andior strategic sourcing activities?) This dimension refers to the type of responsibilities and activities the purchasing department is assigned, according to the classification supply/sourcing/strategic sourcing seen in class. Again, as Goldenbread has 4 different purchasing departments, l expect you to tell how this decision has been configured for each of them. A good way to do it is to put together a table like the following: And then provide a justification for each. 2a) Do you think Goldenbread management should be satisfied by the performance data? Have a look at the key performance indicators provided for the purchasing organization. Pay attention that these KPIs are provided for both the central purchasing unit and the units located in the Business Units. As such, you should separate the discussion at these two levels and then provide a general overview. Is the purchasing organization efficient? Why? Is the purchasing organization effective? Why? Be sure to provide a clear and justified assessment. 2b) What are the pros and cons of the current Goldenbread purchasing arganization? By putting everything together, what do you consider the points of strengths and weaknesses of this organization? Why? In deseribing pros and cons, you can include both qualitative considerations and considerations with reference to performance data. Be specific and justify your statements! It is better to provide fewer points but well-argued, rather than many aspects only presented in a general way. What are you required to upload? This assignment will count among the Cases assignments. Please upload your answers on Canvas on the PowerPoint template provided. Assignment \#2 - Goldenbread (part 2) Characteristics of Goldenbread Purchasing organization Goldenbread organization articulates through the three main Business Units (BUs): I) Fresh bread; 2) Snack cakes and pastries; 3) Frozen products. These Business Units report directly to the CEO, each with a dedicated Purchasing department. These offices are managed by a purchasing manager that reports directly to the Head of the BU. The purchasing manager is supported by several buyers dedicated to purchasing all the direct goods to realize the products for the BU. In each BU, buyers are usually specialized by category purchased, even though frequent rotation occurs, due to the low number of resources and the need to gain complementary competencies. Indirect purchases, instead, are managed at the central level. Goldenbread has a central Purchasing department, with a Head of Purchasing reporting directly to the CEO and with the responsibility of managing all the indirect purchasing goods and services. Here, buyers are specialized by category under the supervision of a category manager and are differentiated into Logistics and warehousing. ICT, Maintenance services, Insurance, Other Professional Services, Marketing and Advertising, and Consumables. Given the lack of expertise in this regard, Goldenbread outsources to a third-party provider the acquisition of capital goods such as equipment and machinery (this is classiffed as a professional service, and the third-party provider coordinates directly with the manufacturing office of each BU. and the Head of Internal affairs). Figure I reports the main features of the Goldenbread organizational chart, with a focus on the purchasing organization (number of resources included). Figure 1. Goldenbread organizational chart. Responsibilities of the purchasing organization The responsibilities of the purchasing people over the purchasing process are very variable from office to office. analysis, document management, supplier selection and evaluation, and management of the orderdelivery-payment cycle. The situation is different for the purchasing offices within the BUs. In those cases, the purchasing manager and their buyers offer their technical expertise on specific purchasing aspects (e.g., market analysis, selection approaches, contract clauses, management of documents and workflow, particularly quotations), but the most strategic decisions are taken by the Head of the BU, in consultation with Manufacturing and Quality. Aspects such as the number of suppliers to be activated, geographical location, required standards, and nature of the collaboration to be established are driven by operations need, and purchasing has a marginal influence on the strategy definition. Purchasing performance Goldenbread introduced the central purchasing unit in 2013. Before this, the indirect spending was managed by each BU and each department needing a specific good/service (e.g., ICT purchases were managed by the ICT department; Marketing services by the Marketing and Sales department). Since introducing this central structure, the company has experienced a great rationalization in the number of suppliers, items, and prices paid for indirect purchases categories. Given the benefits, Goldenbread management (the CEO, in particular) would like to evaluate if further categories could be brought under the central purchasing office responsibility. With only II plants, mostly concentrated in the southern part of the USA, the CEO feels that the BUs are not helping keep purchasing costs under control. There are opportunities to improve both the efficiency and the effectiveness of the purchasing decisions. To better understand the situation, Goldenbread management has collected the main data about the performance of the purchasing organization. The performance data is broken down for 9 main KPls as: - Average value for the purchasing departments in the BUs. - Value for the central Purchasing department. - Desired targets for each. Tahle I Purehaeina nroanizationn norformanro SCM6136-Goldenbread case: improving purchasing decisions 2 Questions: I) Characterize Goldenbread purchasing organization: Ia. How could you define the level of centralization for the Goldenbread purchasing organization? Ib. How could you define the grouping criteria used to organize resources in the different purchasing departments? lc. How could you define the span of control that characterize the different Goldenbread purchasing departments? 2) Analyze the performance of the Goldenbread purchasing organization: 2a. Do you think Goldenbread management should be satisfied by the performance data? 2b. What are the pros and cons of the current Goldenbread purchasing organization? Base this answer by considering both the performance data and the characteristics of the organizational model. SCM6136 - Goldenbread case: improving purchasing decisions 3