Procurement Policy Case Study Example | Topics and Well Written Essays - 750 words

Procurement Policy - Case Study Examplerights to a startup comp whatsoevers new drugs which was afterward turned into a new corporation worth $500 million a year. The end allow of this engagement was that Merck sold 50 percent of its sh ars in the new corporation to Astra (Ghauri, 2001, p. 40). In so doing, consumers are able to acquire life-saving and life-altering pharmaceuticals in a timely manner. At the heart of this alliance is the notion that in order to effectively and efficiently manage a business such as Merck, there is a need for strategic confer management. In recent years Merck has embodied a strong sideslip from a predominantly domestic supply management strategy to one which has entailed global management strategies. This strategy operates under the assumption that procurement policy is central to the success of the company. This strategy can be characterized by two main elementsArnold (1989) illustrated one of the most concise conceptualizations of the global s upply management strategies utilized by Merck by delineating four very distinct procurement policy development stages. These stages are as follows1. The tralatitious Procurement Policy. In this phase, the scope of the procurement policy is narrowly define and limited to domestic sources. ... one and only(a) important characteristic of this phase is the understanding that there is no attempt to link the procurement strategy with the other components of the business process. Essentially, the traditional procurement process is somewhat haphazard and does not represent any long-term business strategy (Rai & Eisenberg, 2003).2.International Purchasing. The second phase of the procurement policy is one which expands the supply sources to non-domestic sources. The underlying intent of this phase is to reduce the production cost by acquiring the necessary materials at a lower cost. During this phase, there is a systematic exploration of foreign sources with the aim of realizing a wrong a dvantage over its competitors by purchasing the raw materials at a lower cost without adversely affecting the quality of goods, the level of service provided to consumers and the delivery as well as the availability of goods. An exercising of this can be seen in the very presence of Merck in Japan. This can be both irrefutable and negative with the positive implications very evident and a negative implication whereby there is limited American investment within the Japanese economy. Essentially, Mercks presence in Japan is solely for the purposes of acquiring materials at a low cost and exporting those materials for economic gain within the United States (Chen & Drysdale, 1995, pp. 141-142). 3.Strategic Procurement Policy. During this phase, the procurement policy of the organization becomes an integral part of its overall business strategy. It is utilized as a heart of gaining a significant advantage over its competitors. One important component can be seen in the fact that globa l sourcing is exploited in such a manner as to improve the