Fauquier Gas Company’s Procurement and Purchasing Case Study

The case study is about the Fauquier Gas Company. The company deals with the supply of gas pipes for construction sites. In this case, the company is converting agricultural land into commercial and residential development. In effect, it has been tasked with the responsibility of supplying the gas pipes in a given timeline. As one of the many companies in the nation, the Fauquier is tasked with ensuring the supply of 3 ½ miles of new pipes that should be ready for deployment by September. The manager for supply and purchasing, Bill Murphy, is concerned with the provision of the required tubes within the given time, although it is possible that the company will not be able to make the purchase in a timely way. Essentially, Murphy has not been able to receive the purchasing requirements and specifications for the design team since the 14^th of April, yet these materials are known for having a longer lead time. Notably, the company’s vice president seems to be in charge of the entire organization’s operations, including the purchasing function handled and managed by Murphy. Other departments that the vice president is in control of include the construction department and the design team. In effect, this case analysis seeks to analyze the procurement and purchasing problems facing the company, the various issues that face Murphy and the solutions that can be applied to handle the situation.

Key Facts

An analysis of the case reveals fundamental facts about the purchase of the gas pipes required for the project. First, gas piping materials take long lead times before they can be delivered and before the project can commence. Second, the project has a completion deadline. The project is only six weeks away before it can commence, meaning that there is a limited time. Third, the company’s purchasing function is dysfunctional. As it is, the company does not have a purchasing function to oversee the purchasing process, as the activity is handled by different people from different departments.

Problems from the Case

There are some problems with how the purchase of the pipes is being handled by the company. The first problem is that there is poor communication. Notably, although Murphy is responsible for handling all the purchasing functions of the enterprise, he is not notified about the impending pipe purchases. Surprisingly, he only knows about the pipes when he hears the vice president’s conversation on the phone regarding the same.

Secondly, Murphy is confronted with the problem of poor communication between the various parties involved when he begins to purchase the pipes. It is imperative that decision making is spread out for all the parties involved to ensure effective decision making (Tarara, 2005). Essentially, some people get involved in the purchase process before the order can be made. These are the vice president and then the design team. Other than the vice president’s poor communication, the design team is also not very sure about the product specifications and does not communicate the required information to Murphy to enable him to make the purchases.

Third, there is little consideration for the project scope. April comes and the company has not commenced any purchases, yet the acquisition and order of pipes may take longer lead time. Further, all the parties involved in the acquisition, besides Murphy, do not seem in a hurry to ensure that the pipes are delivered timely. Mostly, the lead times for this kind of purchase take longer to be completed, but the team seems not to agree on whether the pipes will be wrapped or not. Further, in the case of wrapping, it is imperative that the decision is implemented immediately as the wrapping company is located in Philadelphia and the pry tech wrapping business in Atlanta. Given these logistics and transportation issues, such decisions should be undertaken in time to ensure the completion of all these processes.

There is also a problem with project completion and project team members. It is imperative that every important project is managed and governed by a team leader and team followers (Wysocki & McGary, 2003). However, this particular procurement project does not have any project leader or team members. Preferably, the company ought to integrate the operations of a cross-functional team to enable successful project completion (Bakker, Walker & Harland, 2006). Cross-functional teams include a key member of each department capable of offering expert and with the ability to offer guidance on the right decisions to be undertaken (Love & Roper, 2009).

Further, there is a problem with the assumed specifications. One requirement that the development of the commercial and residential plots requires is that the company provides 3.5 miles of new pipes, which must be installed before or during September. The specifications that have been drafted for this particular order are 24 inches, with a thickness of 3/4 inches and a length of 54 feet. This is not in compliance with the previous specifications that required the pipes to be 3/8 thick; with random double thickness, which is about (40 feet plus or minus 5 feet). These new specifications, as presently ordered, are changing and different from the previous specifications that the company used to acquire. For instance, they were specified at 3/4, instead of a 3/8 thickness.

Possible Solutions

1. Murphy can talk to Law, the person in charge of purchasing approvals, and determine the status of the acquisition.
2. The purchasing manager can engage Wilson to determine the status of the purchase. Such an engagement should allow Murphy to understand why there is a hold in the purchase.
3. Murphy can choose to deal with the vice president as he is the final authority in the purchasing function, other than making inquiries through subordinates. With the vice president, Murphy can be able to emphasize the severity of the purchasing matter and explain why there is a need to ensure that the request is approved within a short time.
4. Another option is Murphy to call Mills, the suppliers he has worked with before, and explain to them the requirements of the pipes. He could further request them to avail of the pipes and place them ready for supply before June. This way, Fauquier could source and distribute the pipes in time (Chima, 2007).
5. Murphy can request a meeting with all the three individuals involved in the purchasing process and chart the way forward, especially in matters regarding improving communication.

Choice and Rationale

I choose the last option of engaging all the parties affecting the purchase of the pipes. Meeting all four individuals concerned with the purchasing of the pipes would ensure that all the four parties can discuss and communicate the way forward. It is also possible for the parties to agree on a way forward collectively, keeping in mind the short time remaining, the long lead times, and product specifications (Bedey et al., 2009).

Implementation

First, Murphy should call a meeting with all the concerned parties. This way, he can explain to the parties that the purchasing function is being handled inappropriately. Among the issues he could raise is that there is no relationship between construction and purchasing. Further, he could explain the change in specifications and poor communication going on. Further, he could be able to communicate with both Charlie and Law about the importance of being incorporated in drawing the specifications. He further needs to explain that such decisions should be communicated to him with the knowledge that he is in charge of the department and responsible for ensuring that the supplies are available to him in time. However, it is imperative that the vice president of operations comes on board for this implementation to be successful.

Conclusion

The major problems in the company are caused by the lack of a purchasing function. The Fauquier Gas Company faces a myriad of problems, as it lacks a standard procurement process due to a poorly developed purchasing unit. In effect, there are bureaucracy issues, with the purchasing manager having to rely on the vice president’s approval on orders before purchases can be implemented. Such a function ought to be conducted by a purchasing unit under the directive of the head of procurement. As a result, there are other issues arising, like poor specification records, lack of standard procedures, and poor collaboration among the functional teams. In response to these problems, it is imperative that procurement and purchasing functions be handled by the purchasing unit, with collaboration from other departments.

References

Bakker, E., Walker, H., & Harland, C. (2006). Organizing for collaborative procurement: An initial conceptual framework. Web.

Bedey, L., Eklund, S., Najafi, N., Wahrén, W., & Westerlund, K. (2009). Purchasing management. Web.

Chima, C. M. (2007). Supply-chain management issues in the oil and gas industry. Journal of Business & Economics Research, 5(6), 27-36.

Love, J. H., & Roper, S. (2009). Organizing innovation: complementarities between cross-functional teams. Technovation, 29(3), 192-203.

Tarara, M. J. (2005). A content analysis of how participatory decision making and teamwork affects employee satisfaction and employee commitment (Unpublished doctoral dissertation) University of Wisconsin-Stout, Menomonie, Wisconsin.

Wysocki, R. K., & McGary, R. (2003). Effective project management: traditional, adaptive, extreme. Hoboken, NJ: John Wiley & Sons.