Mars Inc - E-Procurement and Its Challenges
Autor: ahmedbilal94 • March 28, 2016 • Case Study • 312 Words (2 Pages) • 801 Views
Background:
Mars Inc. (Mars) began its journey as a Candy factory in 1911, growing its business from $300 Million in 1970 to $30 Billion in 2012. Currently the privately owned business operates in numerous industries including pet care, confectionary and other foods. The company procures materials worth $4 billion annually from all around the globe and intents to achieve cost savings by adopting online procurement method.
Mars is governed and operated based on five core principles of Quality, Responsibility, Mutuality, Efficiency and Freedom. The company advocates its triumph and success on maintaining cordial relationship with strategic suppliers. Mars principle of mutuality is embedded in every decision making whereby ideology of maximizing benefits for the company has been replaced with maximizing shared benefits. Therefore, the company wants to achieve cost saving whilst procuring raw materials but not at the expense of strained relations with suppliers. Thereby adoption of online procurement system has been evaluated as a collective way forward to cost savings in this case analysis.
E-Procurement and its challenges:
The shift from one to one dealing with suppliers to E-Procurement improves efficiency of the purchasing process. This will not only reduce cost but also improve time efficiency and access to large number of supplier. Furthermore, lot size adjustments will also be passed on to the suppliers as they will integrate their resources and cater to the RFQ’s and try to achieve economies of scale. However, one important aspect critical to the success of this method is training suppliers and maintaining strong ties during this change in order to reiterate the trust and value Mars places on these suppliers. Moreover, this method will lead to high initial outlay and subsequent training costs. One more important factor that Mars needs to consider is to maintain transparency and ensure whether the supplier that has under bided its competition would be able to fulfill or meet its offer.
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