The following describes a purchasing process at Ludlow Winter Sports, Inc., a manufacturer of skis, snowshoes, and other winter recreational gear. The description here is limited to the process for ordering and receiving parts for repairing and maintaining manufacturing equipment. Please read the narrative and answer the questions that follow. A small inventory of parts is located in the plant maintenance office. When that inventory needs to be replenished, the maintenance manager fills out a purchase requisition and brings it to the purchasing department. A similar process is used when parts are not available in inventory and are needed immediately to repair or service a machine. Once received in purchasing, the buyer responsible for plant maintenance purchase requisitions looks up any approved supplier in the corporate book of approved vendors. If an appropriate vendor is not found, the buyer looks in a card file of local suppliers. When a vendor is chosen, the buyer enters the requisition into the purchasing computer system and prints the PO. The purchasing manager at Ludlow must sign all POs, about 75 each day. This is a tedious process. There is no review, just a signature. The PO is a two-part carbon, so each PO must be signed by hand. Several POs to the same vendor may be prepared each day. The purchasing manager gives the POs to a secretary, who mails the original to the vendor and files the copy in a paper file by vendor number. When goods are received from the vendor, a receiving clerk calls up the PO on the computer screen, does a quick visual inspection and count, and labels the shipment “on hold.” The clerk notifies the Quality Control (QC) department of the shipment. QC performs the required quality tests and, if appropriate, changes the “on hold” label to “released.” At that point, the goods are moved to the warehouse, and the receipt is entered into the computer to clear the PO and update the inventory balance.
a. Comment on the efficiency and effectiveness of the purchasing process at Ludlow.
b. Draw a systems flowchart of a revised process that would solve the problems identified in part (a).