Delivery administration at CSX took diverse approach after the appointment of Michael O’malley as the vice president. The nature and milieu prevalent in the souk forces the business to seek efficient supply systems. He came up with new strategies in regards to the acquisition and supplies activities. The new system was characterized by the following indicators. First, supplier’s lead-time such as efficient and timely delivery enabled the organization remains competitive amongst rival companies. This meant that the entity was benefited from efficient service provision where customers get timely and quality services. The end results in increased customer base for the firm which deals with transportation of goods and people. The second characteristic is supplier’s development costs and benefits. Having global and local suppliers for materials needed by the firms is critical to the expansion railroad networks, improvement of locomotives and available systems.
The next indictor is about risk identification and reduction through streamlined supply chain that is effective. Business risks are dependent on the scenery of actions carried out. To spend money worth $5 billion in infrastructure only is not a mean achievement for CSX transport firm. This money called for prudent and accountable leadership to see the group rise to the top level in the industry. The next strategy applied by the management includes utilization quality –certified suppliers both in the local market as well as in the global souk. The fifth strategy is supplier’s ecological sustainability. A sustainable supply chain can be relied on even in times of economic down turn. Business continuity is in good hands with an assured and sustainable purchasing system. The last indicator of smooth supply fetter is the overall number of strategic suppliers working with the firm. These indicators demonstrate that the firm is headed at the right direction (Monczka, Trent, and Handfield, 2016).
Before undergoing through the course, it was hard for me to understand the role of efficient supply system. Thus, after going through the course I have gained a lot of knowledge about supply chain and activities hitherto. I am at the present able to comprehend this case from diverse perspective. A number of the lesson that I learnt about the case are given below. First, service deliverance and client contentment depends on the competence of purchasing activities. This means that if individual heading the purchase document buy low quality goods the output will be bad and customers will free the organization. It is therefore essential to streamline this department to make it efficient. Second, suppliers determine the effectiveness of an institution. The reason behind this is that they are major stakeholders in the delivery process. Thus, these issues should be looked at when choosing or structuring a purchasing or supplies department. An example is where Michael O’malley came up with a global strategy to source the best suppliers for materials and purchases.
Measuring and Evaluating Purchasing Performance
Historically, performance measurement was coupled with many limitations that ranged from data used to the procedure followed to acquire and analyze this data. The first limitation was the usage of wrong data that attributed to the making of the wrong decision. It infers that the application and utilization of this information would lead to loss for the institution. The methods followed to obtain data for this endeavor was jeopardized in the sense that information was sourced from a single source that is the accounting books. The entry and recording activities would sometimes be manipulated to suit individual needs of managers and influential figures in the entity. This meant that data reported to the public tends to differ with the actual figure spent or earned by the firm. The second limitation is that too much data available lacked organization and an auditor would take a lot of time selecting and categorizing the information into different groups. This creates a high possibility of occurrence of omission and commission errors.
The end result would be inconsistence data coverage and reporting. In the event, the apprehension takes place the organization credibility will be lowered as the public will lose faith for the entity. At this point, shareholders become very disappointed and may withdraw their shareholding from the entity due to fear of losing their investment. In addition, lack of detail is another limitation that engulfed the evaluation process. In most cases, purchasing information was a derived local purchase order which is a primary document that has numerous errors. Moreover, performance in purchasing activities is realized through returns both in the short term period as well as in the long run. These methods were geared at evaluating the performance in the short run (Melvin & Shand, 2010).
Therefore, the purchasing functions need to change and increase in the sense that the activity involves a lot of activities. Increase in functions would ensure that there is greater scope of information to be applied in decision making hence improves accuracy. Furthermore, critical data will be used in the evaluation procedure. The reason as to why the use of numerous but well-organized data is important is because the variance becomes smaller as data tend to conform to central tendency. These are the reasons that make it critical to increase performance standards. An example includes maximizing the scope by adding supervisory role for purchasing managers to curb malpractice amongst employees.
Melvin, M., & Shand, D. (2010). Active currency investing and performance benchmarks. München: CESifo.
Monczka, R., Trent, R., & Handfield, R. (2016). Purchasing and Supply Chain Management(6th ed.). Cincinnati: South-Western College Pub.