MGMT614 Supply Chain Management GDB No 01 Fall 2020 Solution / Discussion
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Supply Chain Management
Graded Discussion Board No.1
Total Marks: 5
Due Date: November 27, 2020
To help students understand how the nature of the product affects the purchasing decisions.
“WE the BAKERS” a Belgium-based bakery chain has started its operations in Pakistan. The bakery enjoys international fame for its exquisite taste of confectionary items such as bread, biscuits etc. The bakery chain has established a production setup in Lahore from where it supplies items to three cities namely Lahore, Faisalabad and Islamabad. Because of the great taste and quality of the items, the bakery has gained a lot of appreciation from the local public, and the demand is increasing rapidly. Initially, bakery chain owners in Belgium allowed the production plant in Lahore to purchase raw materials from local markets according to its needs.
But last month, the head office has decided to move to a centralized purchasing setup. It has issued a directive that all the purchasing of raw materials will be done by the head office and distributed/transported to the production plant in Lahore according to its needs.
The higher management believes that by using a centralized purchasing system, they would exploit the economies of scale.
Considering the nature of items being sold i.e., bakery items, which are fast-moving consumer goods, do you think this strategy of Centralized Purchasing will be beneficial for the company OR the previous Decentralized purchasing model was better?
Give three arguments in favor of your stance.