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Strategy of ?Sourcing Purchase? at Tetra Pak GTS AB

Svensson, Lina (2004)
Packaging Logistics
Abstract
Tetra Pak Global Technical Support AB (GTS) is a company within the Tetra Pak group which main task is to supply the whole world with spare parts for all kinds of Tetra Pak machines. GTS supplies about half a million different parts, which demands a large purchase organisation. This thesis deals with the so-called Sourcing purchase, which is a term for purchase of non-forecasted parts that have no specified delivery time or price set.

A Sourcing item could be a part that has never been bought before with an un-known origin supplier, or the part could have a known supplier but, since it hasn?t been bought for the last 20 years, this supplier is not suitable anymore. It is char¬acterised by its unpredictable demand and low volume, which... (More)
Tetra Pak Global Technical Support AB (GTS) is a company within the Tetra Pak group which main task is to supply the whole world with spare parts for all kinds of Tetra Pak machines. GTS supplies about half a million different parts, which demands a large purchase organisation. This thesis deals with the so-called Sourcing purchase, which is a term for purchase of non-forecasted parts that have no specified delivery time or price set.

A Sourcing item could be a part that has never been bought before with an un-known origin supplier, or the part could have a known supplier but, since it hasn?t been bought for the last 20 years, this supplier is not suitable anymore. It is char¬acterised by its unpredictable demand and low volume, which also means that there are no large profits for the supplier to make. At the same time, GTS requires fast deliveries, since there is always a customer order behind every Sourcing purchase order.

Sourcing purchase represents as little as 2 % of the total purchase value at GTS, but the work finding suppliers for these parts demands the time of almost one fourth of all operative purchasers. The objective in this thesis has been to identify aspects that enable improvements of the Sourcing purchase process. First, the existing pur¬chasing strategy at GTS was examined with the aim to find ways to include Sourcing in the overall procedures. The second task was to identify the character¬istics of a suitable Sourcing supplier. It was also discussed if the idea of having pre-determined suppliers for Sourcing is a good way of solving some of today's problems.

To reach a valid result in the thesis, a broad range of persons, within and outside GTS, was interviewed. The aim was to reflect as many viewpoints as possible, mainly to prevent an outcome only based on management's thoughts. Furthermore, some literature and statistics were studied to strengthen the results.

Since the company does not expect to make any large earnings, time-consuming activities should be avoided when improving the Sourcing process. Instead, GTS should focus on bringing in Sourcing purchase as a natural part of the general strategy. When discussing how to include Sourcing purchasing in the overall purchasing strategy at GTS, the recommendations are, for instance, to include the Sourcing needs in the ongoing supplier-structuring project. Furthermore, the Supplier portal (a web-based tool) and the Assessment system should be developed to better support Sourcing.

When analysing the characteristics of a suitable Sourcing supplier, the strategy based on theoretical studies was to strengthen the negotiation position against the supplier. Using suppliers that already have a high Tetra Pak dependency could solve this problem. Moreover, a flexible organisation and production process is essential when producing small volumes to an acceptable price.

The interviews resulted in many Sourcing supplier requirements. The importance of the criteria differed to some extent between the respondents, but everyone agreed more or less on that high quality, high delivery precision, short lead-times and quick responding times on inquiries were especially important qualities. The answers conflicted, however, in the discussion about how important a low price is for these items.

The next step for GTS to make in the Sourcing case is to decide how to carry out the concept of pre-determined suppliers; should they wait until the overall struc-turing project is implemented, or should Sourcing start its own structuring work with the aim to make a short-term solution? (Less)
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author
Svensson, Lina
supervisor
organization
year
type
H2 - Master's Degree (Two Years)
subject
keywords
Sourcing purchase, Supplier, Sourcing item, Technological sciences, Teknik
language
English
id
1318576
date added to LUP
2008-06-03
date last changed
2011-08-01 11:42:32
@misc{1318576,
  abstract     = {Tetra Pak Global Technical Support AB (GTS) is a company within the Tetra Pak group which main task is to supply the whole world with spare parts for all kinds of Tetra Pak machines. GTS supplies about half a million different parts, which demands a large purchase organisation. This thesis deals with the so-called Sourcing purchase, which is a term for purchase of non-forecasted parts that have no specified delivery time or price set.

A Sourcing item could be a part that has never been bought before with an un-known origin supplier, or the part could have a known supplier but, since it hasn?t been bought for the last 20 years, this supplier is not suitable anymore. It is char¬acterised by its unpredictable demand and low volume, which also means that there are no large profits for the supplier to make. At the same time, GTS requires fast deliveries, since there is always a customer order behind every Sourcing purchase order.

Sourcing purchase represents as little as 2 % of the total purchase value at GTS, but the work finding suppliers for these parts demands the time of almost one fourth of all operative purchasers. The objective in this thesis has been to identify aspects that enable improvements of the Sourcing purchase process. First, the existing pur¬chasing strategy at GTS was examined with the aim to find ways to include Sourcing in the overall procedures. The second task was to identify the character¬istics of a suitable Sourcing supplier. It was also discussed if the idea of having pre-determined suppliers for Sourcing is a good way of solving some of today's problems.

To reach a valid result in the thesis, a broad range of persons, within and outside GTS, was interviewed. The aim was to reflect as many viewpoints as possible, mainly to prevent an outcome only based on management's thoughts. Furthermore, some literature and statistics were studied to strengthen the results.

Since the company does not expect to make any large earnings, time-consuming activities should be avoided when improving the Sourcing process. Instead, GTS should focus on bringing in Sourcing purchase as a natural part of the general strategy. When discussing how to include Sourcing purchasing in the overall purchasing strategy at GTS, the recommendations are, for instance, to include the Sourcing needs in the ongoing supplier-structuring project. Furthermore, the Supplier portal (a web-based tool) and the Assessment system should be developed to better support Sourcing.

When analysing the characteristics of a suitable Sourcing supplier, the strategy based on theoretical studies was to strengthen the negotiation position against the supplier. Using suppliers that already have a high Tetra Pak dependency could solve this problem. Moreover, a flexible organisation and production process is essential when producing small volumes to an acceptable price.

The interviews resulted in many Sourcing supplier requirements. The importance of the criteria differed to some extent between the respondents, but everyone agreed more or less on that high quality, high delivery precision, short lead-times and quick responding times on inquiries were especially important qualities. The answers conflicted, however, in the discussion about how important a low price is for these items.

The next step for GTS to make in the Sourcing case is to decide how to carry out the concept of pre-determined suppliers; should they wait until the overall struc-turing project is implemented, or should Sourcing start its own structuring work with the aim to make a short-term solution?},
  author       = {Svensson, Lina},
  keyword      = {Sourcing purchase,Supplier,Sourcing item,Technological sciences,Teknik},
  language     = {eng},
  note         = {Student Paper},
  title        = {Strategy of ?Sourcing Purchase? at Tetra Pak GTS AB},
  year         = {2004},
}