Case Study: BP's Procurement and Supply Chain Management

3 pages written response* outlining the results of their analysis of the case questions (50 Points)

Any data (e.g. academic articles, case, industry journals, periodicals, videos, or other sources of relevant information) relevant to the case and/or question response should be included.

Case Study Questions

Do you recommend the consolidation effort of PSCM? Why or Why not? Justify the answer and include a plan of action if you decide to consolidate the pipe inventory. The plan should include the following points:

1. A breakdown of current inventory carrying costs on an annual basis using the information provided in the case study. What information is missing that would be helpful? Include any assumptions you make such as fill rate and inventory holding costs.
2. Develop a strategy for consolidation or standardization that includes which pipe specifications will be kept and which specifications will be excluded and justify your reasoning. The plan should include expected annual cost savings, improvements to inventory management, and a plan to phase out or dispose of obsolete inventory if applicable.

Sample Solution

Objective: To develop a strategy for consolidation or standardization of pipe specifications.

Strategy:
1. Identify the current types of pipes and their associated specifications in use in the company.
2. Evaluate each type based on factors such as cost, durability, availability, and compatibility with other parts/supplies used within the organization.
3. Choose two to three pipe options that are most suitable for long-term use and can be applied across multiple applications throughout the organization (i.e., PVC, Polyethylene).
4. Eliminate remaining types of pipes from inventory and phase out or dispose of obsolete inventory if necessary through responsible recycling methods where applicable.
5. Estimate annual cost savings by completing an analysis of currently used materials, calculating costs associated with those materials, and comparing it to projected savings related to the selected standards going forward (i.e., purchasing price breaks due to larger orders placed at one time).
6. Create a plan for improved inventory management including creating standardized purchasing practices; setting minimum stock levels; tracking usage; rotating stock regularly; monitoring supplier performance; streamlining ordering processes etc).