You have just been hired as a Purchasingonsultant at Optimum Solution Freight Forwarding and they have 18 branch offices across Canada (at least 1 branch office in each major province, 2 in major cities).

Optimum Solution Freight Forwarding is growing at plus 20% a year based on their superior customer service financial solutions especially when the inevitable goes off-plan.

The Head Office is in Toronto and each branch office has a Branch Manager with total responsibility for their branchs Profit and Loss. Their targets are aggressive and focus on revenue achievement.

All branches have been meeting or exceeding the budget on an annual basis. Costs have also been rising at the same rate which is not a good sign.

As business volumes increase corresponding savings are not being achieved. There is a general sense...If we need it, we just go and buy it...

There is both maverick and rogue buying taking place with a general lack of focus on the Total Cost of Ownership (TCO).

Optimum Solution Freight Forwarding operates a central vendor or supplier management department but the purchasing function is not centralized.

As a Consultant, you have been given a full budget for travel and expenses with a 3 months timeframe to develop the future purchasing plan. The CEO is open to potentially centralizing all 18 Branch purchasing activities into the head office for all purchasing across Canada.

Any future recommendations must also allow the 18 branch offices to not be hampered by a new process, which may distract from their goals in achieving their revenue-profit targets.

Accounting (centralized at Head Office) has advised that 80% of the invoices being paid are all with similar vendors and in many cases, the same products and services are being purchased across all 18 branches.

At least 10 branches have warehouses, albeit of different sizes, with similar material handling equipment (MHE). The remaining 8 have shared warehouses given their close proximity to each in being in large cities.

Accounting advises they have 10 branches that are excellent accounting role models, 3 in the okay class, and 5 disaster branches from an accounting perspective. Accounting advises the balance has assorted clear opportunities to improve.

Accounting is amazed they are all doing well in achieving profit targets and feel this has a lot to do with the solid economy vs. cost control.

You have a full travel budget with per diem expenses and you have 3 months to complete your future state recommendations:

1. Outline your steps to learn about the current state or as is of the Purchasing process across the 18 branches?

2. Who would you meet and consult with to understand the current savings potential and to build a future budget target?

3. The CEO has confirmed you have access to the entire company staff as a resource. If you decide to take a team approach who would make up your team? Explain the value would you expect from various team members?