Question

Ms. Izyan Afrina is the managing director of Johor Logistics Sdn Bhd (JLSB), a third-party logistics provider that provides logistics service that includes transportation, warehousing, shipping brokerage, and logistics solution within the southern region of peninsular Malaysia. The company was founded almost 20 years ago by Ms. Izyan's father. Ms.Izya's brother, Mr. Ilman also join her as an HR director to lead the people management & Team culture (PMTC) unit. The huge JLSB warehouse is based at Pasir Gudang still uses a stock management system based largely on manual processes. Component stock levels are managed based on a simple reorder level for each category, monitored by regular inspections in the warehouse. When a stock fall below the reorders level, it will trigger a purchase process. The following actions are then carried out by a JLSB procurement team:

Often this process can take a week or longer if the order is placed with a single supplier. As a result of the long lead times from trigger to delivery, the stock levels have to be correspondingly large to compensate. However, this is not regarded as a significant problem. Components are mainly sourced from a small number of suppliers with which JLSB has been doing business for many years. The usual procurement policy is to buy in bulk to secure maximum discounts, even though some items are only used small quantities. The suppliers prefer to deal with large orders as the transportation methods are simplified and less expensive.

A team of nine procurement staff performs the standard accounting tasks of matching GRNS (Goods Received Notes)with POS (Purchase Orders) and then with supplier invoices. About 80% of their time is spent trying to find out why 20% of the set of three documents do not match. Relations between JLSB and its suppliers were generally cordial,even though invoice payments were often made much later than the commercial terms set out in the contract. As result, many suppliers are not motivated to prioritize the JLSB orders, and deliveries were more often late than on time.Any complaints from JLSB purchasing staff were rebuffed by suppliers accustomed to late payments. a)Based on the case study, determine the roles and responsibilities of the functions involved in the JLSBprocurement process. (b)Discuss TWO (2) implications of role and responsibilities in answer (a) to the procurement function at JLSB.

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