Identify and analyse the major procurement related problems outlined in the case study

I have identified a number of problems in Mercury’s current business operation, that I believe if not addressed will affect both their profit capability and the efficiency of the business.

- Currently all three partners are involved in buying, each using different suppliers for different reasons. This has lead to problems as Suppliers do not give priority to them as they are unsure whether they will get repeat business, if this continues this will have serious implications on business activities. The potential loss of any discount that would be given by the supplier for prompt payment is lost, in turn forging a good relationship with suppliers is essential to any business as it lower costs with increased co-operation.

- Lack of communication between partners has meant that stock is at times ordered twice or at other times not at all, this is simply unacceptable as they are likely to lose custom when stock isn’t available that consumers want and they are wasting money on goods which they already have in stock. Excess stock can be very damaging for the liquidity of the business as too much money is tied up in stock, which otherwise could be used to pay suppliers or invest the business. By ordering excess stock perishable goods will pass their sell by date, unnecessarily increasing costs.

- The mercury has not developed an official procedure for the use of the stock room, and no records are being kept of stock going in or out. This has also lead to a lot of wastage as several food stuff are past there sell best date, there are no written procedures which has lead to drink and food going missing. Stock room being full at times is an unnecessary cost and this money could be invested elsewhere in the business.

- The mercury does not seem to have developed a training programme for members of staff, as new staff are initially trained by one of the three partners before being passed on to another member of staff, this indicates that staff are not fully trained which can lead to potential problems, as poor training can be a major factor in a poor customer service in addition efficiency of the staff is also reduced. Internal training by current staff will lead to bad habits being passed on from one employer to another without being identified.

Owning their own transport vehicle can be an unnecessary expense as it is primarily used to transport supplies, the majority of suppliers are usually willing to transport goods to the buyer at no extra cost. Motor vehicles will depreciate heavily in value and also require regular maintenance adding extra costs.

Poor infrastructure within the business has lead to late payment to suppliers, which has intern resulted in them being banned by one of their suppliers. This can be very damaging for the business as new suppliers may be wary of doing business with them and could impose a ...