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Contents

A Diagramtic of the current SC network of GateMed
Key Strengths Of GateMed SC
Purchasing and Receipt Procedures
Production Equipment Purchase Strategy
Inventory Management
Cost of Goods Sold Sensitivity
GATEMED vs GATEMED - TM&P STRATEGIC COMPARISONS
SHIPPING AND DELIVERY OF SENSITIVE GOODS
EXPOSURE TO FOREX VARIATION
SUPPLIER SELECTION AND COMPLIANCE

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A Diagramtic of the current SC network of GateMed

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Key Strengths Of GateMed SC

Upstream Supply Chain:

High Quality Products
Strong In-bound Supply Contracts
Stable Pricing
Secure Supply Availability of Raw & Refined Ingredient Materials
Timely Payment to Suppliers

Downstream Supply Chain:

Excellent Client Relationships
Reliable Supply
High Quality & Affordable Products
Steady B2G sales to several countries North Africa, Sub-Sharan Africa and South-East Asia

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Purchasing and Receipt Procedures

- Green colour Indicates the key product inspection points

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Production Equipment Purchase Strategy

Production Machinery and Specialist (Sensitive) Equipment Purchase should be centralized:
Enables more efficient inventory control
Lower staffing costs
Decrease in overheads
Provides better control on processes and standardising processes
Prices can be standardised
Develop good supplier relationships as there will be just 1 contact point
Reduces Internal Conflicts on Purchases
Eliminates shifting of responsibility for wrong decisions completely

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Inventory Management

Molybdinum is a low contaminant, inert lubricant used in:
Pharmaceutical Production Machinery
Mainly during the adhoc supply of pre-loaded syringes
Emergency Vaccination Campaigns (meningitis, cholera, etc.) and epidemic outbreak situation
According to SMI System, the reactive nature depends on the type of emergency for Molybdinum in the market

Increased Inventory Cost
Reduced Carrying Cost

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Cost of Goods Sold Sensitivity

TM&P are correct:
PCOGS is higher than industry average
ROS is significantly lower than with current one

Strategic Purchasing:

- Possibly it is time to change the suppliers and choose the best which match our quality standards and also at reasonable market price

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GATEMED vs GATEMED - TM&P STRATEGIC COMPARISONS

Partnership with TM&P

- Doesn’t change current strategic approach radically, but pushes more to bigger economies of scale and with more countries, can be more demand forecasted

Economies of scale

Push

Pull

Push

Demand Uncertainty

Existing Situation

- More Pull model as specific products are driven by demand

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SHIPPING AND DELIVERY OF SENSITIVE GOODS

INCOTERMS to be used for the contract negotiations for delivery at GateMed Quality testing Facility near Nairobi, Kenya:

DDP/DDU will be priority as the requirements of the materials are sensitive calibrated equipment. We should not risk in taking responsibility of shipping such sensitive equipments our own

Suppliers are mainly German and French and equipments are needed in Sub-Saharan Africa. So, they should also look after M/R/O of the equipments.

We pay for every cost of shipping with the booking amount and it should be costs seller and risks seller for shipping till our doorstep.

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EXPOSURE TO FOREX VARIATION

Strategies to avoid Forex Fluctuations:
Traditional Hedging of Currency: Buy KES/GBP/EUR when it is low and keep it for future payments
Establish an agreement: Finalise a common currency KES/EUR/GBP for suppliers to afford the forex charges in n agreement so that they quote their prices accordingly
Dual-Sourcing Partners: We can have one supplier in our new target market and one in our HQ market.

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SUPPLIER SELECTION AND COMPLIANCE

The Supplier Selection and Compliance will be done on 4 key criteria:
Supply Security
Quality
Service Level
Price
The weightage distribution table is as follows:

Supplier with Lowest Total is indicated in “Green” and hence our best choice

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References:

Campbell, rew, Kunisch, S., Müller-Stewens, G., 2011. To centralize or not to centralize? | McKinsey & Company [WWW Document]. URL https://www.mckinsey.com/business-functions/organization/our-insights/to-centralize-or-not-to-centralize (accessed 3.17.18).
Documents [WWW Document], 2018. URL https://www.lucidchart.com/documents#docs?folder_id=home&browser=icon&sort=saved-desc (accessed 3.17.18).
Blank Diagram: Lucidchart [WWW Document], 2018. URL https://www.lucidchart.com/documents/edit/70caa6d9-fe08-40d6-a63d-694b3477ab03/0 (accessed 3.17.18).
Ebel, T., Larsen, E., Shah, K., 2013. Strengthening health care’s supply chain: A five-step plan | McKinsey & Company [WWW Document]. URL https://www.mckinsey.com/industries/healthcare-systems-and-services/our-insights/strengthening-health-cares-supply-chain-a-five-step-plan (accessed 3.17.18).
Rao, S.R., 2009. Advantages and disadvantages of Centralized Purchasing.
Centralized Purchasing – Good Or Bad? [WWW Document], n.d. . https://www.purchasing-procurement-center.com. URL https://www.purchasing-procurement-center.com/centralized-purchasing.html (accessed 3.17.18).
CENTRALIZATION PROCESS IN PROCUREMENT OF MAINTENANCE, REPAIR, AND OPERATIONS (MRO) ITEMS. (2016). 1st ed. [ebook] ARCADA. Available at: https://www.theseus.fi/bitstream/handle/10024/113857/HuongHoang_THESIS%20FINAL.pdf?sequence=1&isAllowed=y [Accessed 17 Mar. 2018].
Bulman, P., March 2015, managing consultant at V., 2015. How can firms reduce the effects of currency fluctuations? [WWW Document]. Strategic Risk Europe. URL https://www.strategic-risk-europe.com/how-can-firms-reduce-the-effects-of-currency-fluctuations/1411969.article (accessed 3.17.18).
CFA, E.P., 2015. How To Avoid Exchange Rate Risk [WWW Document]. Investopedia. URL https://www.investopedia.com/articles/forex/082515/how-avoid-exchange-rate-risk.asp (accessed 3.17.18).
Fenn, S., n.d. 9 ways to manage currency fluctuations to reduce supply chain risks [WWW Document]. URL https://www.investcalgaryregion.ca/blog/9-ways-manage-currency-fluctuations-reduce-supply-chain-risk (accessed 3.17.18).

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