Strategic Procurement Management
Question 1 (12.5 marks)
Your task is to select a grocery retail operator in Australia and analyse it using the two
a. Critically analyse how product characteristics influence logistic and supply chain
costs of any two products from this particular organisation.
b. Determine the optimum approaches for managing inventory of each of the two
products you selected. Students are required to apply at least two inventory
management approaches in their analysis.
Question 2 (12.5 marks)
Firms tend to engage in transactional and relationship purchasing for competitive advantage.
Write an argumentative essay discussing at least four reasons for firms doing this. Next, debate
the importance of early supplier involvement in today’s environment and highlight some
potential problems that could arise with this type of collaboration? Your essay should also
reflect/include issues on innovation, quality standards and specifications?
*You must support or defend all your answers with appropriate examples and evidence.
Question 3 : Case Study – Golden Chain does it Again ! (15 marks)
The Golden Chain Hotel Company is extremely lucky to admit that they have won the Malcolm
Baldrige National Quality Award twice (1992 and 1999). The Golden Chain Hotel is renowned
worldwide and manages high-end boutique hotels. All of their establishments have received 4
and 5 star ratings from the Lonely Traveler Guide and platinum ratings from the Stay Happy
Association. The general belief held by personnel in the hotel industry is that quality can be
hard to quantify. Guests do not purchase a product when they stay at the Golden Chain: They
buy an experience. Thus, creating the right combination of elements to make the experience
stand out is the challenge and goal of every employee, from maintenance to management. The
ultimate goal for customer satisfaction is a defect-free experience for guests and 100%
Before applying for the Baldrige Award, company management undertook a rigorous
of its operations in an attempt to measure and quantify quality. Fifteen processes
were studied, including room-service delivery, guest reservation and registration, message
delivery, and breakfast service. This period of self-study included statistical measurement of
process work flows and cycle times for areas ranging from room service delivery times and
reservations to valet parking and housekeeping efficiency. The results were used to develop
performance benchmarks against which future activity could be measured. The hotel employs
this kind of measurement system to chart progress towards elimination of customer problems,
no matter how minor. To meet its goal of total elimination of problems, the Golden Chain has
identified over 500 potential instances for a problem to arise during interactions with guests.
To foster customer loyalty, the hotel has instituted an approach of “Customer Customization”,
which relies on extensive data gathering. Information gathered during various types of
customer contacts, such as responses to service requests by overnight guests or post-event
reviews with meeting planners, are systematically entered into a database, which holds almost
a million files. The database enables hotel staff worldwide to anticipate the needs of returning
guests. The “GC Version 2.0” is the Golden Chain handbook of quality processes and tools, a
nearly constant reference that is distributed to all employees. Any employee can spend up to
$1000 to immediately correct a guest’s problem or handle a complaint. More than 85% of the
company’s 15,000 employees – known as “The Ladies and Gentlemen of the Golden Chain”
are front-line hotel workers. The hotel’s “pride and joy” program gives employees a larger role
in the design of their jobs. Employees are organized into “self-directed” work teams.
Employee teams determine work scheduling, what work needs to be done, and what to do about
quality problems in their own areas. First-year managers and employees receive 250 to 300
hours of training. As a result, the hotel’s employee turnover rate, in an industry in which
employee turnover is a chronic problem, declined annually from 1992 to 1999, and levels of
employee satisfaction are moving upward. The Golden Chain believes that a more educated
and informed employee is in a better position to make decisions in the best interest of the
After reading the hypothetical case study above, answer the following questions in onetwo
paragraphs or depending on the question requirements. Every question will require
some external research.
a) Given the nature of this industry, how would customers typically judge the quality of
a hotel? (3 marks)
b) The Golden Chain has successfully won the MBNQA twice. What measures did it adopt
to achieve success? By applying the lean principles, discuss why might it cost the
Golden Chain less to “do things right” the first time? (6 marks)
c) The Golden Chain was applying the total quality management (TQM) practices, and
was planning to replace it by Six Sigma. Assuming that you are the lead consultant for
this hotel chain, clearly explain three major reasons why you would support this
replacement and initiative for operational excellence and competitiveness. You must
defend your answer with logical examples and support. (6 marks)