We have studied there are four stages in procurement evolution: basic beginning, moderate development, limited integration and fully integrated supply chain. Some procurement professionals believe category management is a strategy for the second stage of the evolution. Some other procurement professionals believe category management is a strategy for the third stage.

(a) Provide your own description of category management in your own words.

(b) In your opinion, appraise which stage in the procurement evolution that category management should belong to. Give reasons to support your answer.

Question 2 (a) The following three phrases are identical in Total Quality Management (TQM): The quality at the source Emphasising prevention rather than the detection of defects Focusing on process rather than outputs Do you agree or disagree with the statement? Give reasons to support your answer.

(b) Examine how Six Sigma differs from TQM. Give examples to aid in your discussion.

Better Battery Co. is a manufacturer of batteries. Nickel is an essential component of a battery. In recent years, price of nickel has escalated, causing nickel cathodes prices to rise. To mitigate ever-rising nickel (and cathode) costs, the Cross-Functional Team (CFT) at Better Battery has developed a new battery type which requires a lower nickel content in the cathode. The development and investment costs needed to produce this new battery is estimated at $3,500,000. Total costs of each battery is calculated at $50 based on current nickel prices. The CFT expects each battery to sell for $120 per piece, based on available market research.

(a) You have been tasked to show the commercial feasibility of this new battery to the management. What is the breakeven point of this new battery, before it can be a profitable venture?

(b) The senior management has reviewed the presentation of this new battery proposal. Since it is a multi-year project, you are tasked to analyse the underlying costing and pricing assumptions that may challenge its commercial success. Please state any assumptions made earlier on the breakeven analysis for this new battery which may pose commercial risks.

Continuing from Question 3 on Better Battery Co. The management of Better Battery has decided to outsource the production of the entire new battery. The rationale was Better Batterys strength lies in its product design, development, proprietary technology, and global sales and distribution channels. Better Batterys manufacturing cost structure and quality capability had fallen behind the industry best practices. This is Better Batterys first outsourcing project. Nick, the metals category manager of Better Battery, has been tasked to strategically source globally for a supplier to manufacture this new battery.

(a) Identify the techniques for worldwide sourcing for this critical project. Show how you would use them to help Better Battery deliver higher overall value for its customers.

(b) Propose strategies to manage supply chain risks for this outsourcing project to fulfill Better Batterys global sales and distribution requirement.