Product Buying Analysis Course Project – Solved Sample 1

Product Buying Analysis Course Project

The purpose of this Course Project is to apply the various purchasing elements that you encountered in the course. This is an individual project. This is not just limited to lesson and textbook; you may use personal experiences, interview coworkers, and use the DeVry’s online library databases to assemble the information to be contained in this report.

You will serve as a product buying manager or purchasing manager and will select a specific product, component, or commodity from a select company of choice (e.g., semiconductor chips, face masks, vaccines, capital equipment, raw materials for reworking such as wire, aluminum, fabric, etc.) to produce a Product Buying Report. The company can be your existing company or a company that you are interested in. Additionally, you can opt to create a fictitious company or a start-up company.

The selected product will be the subject for all parts of the project and you will be writing the Product Buying Report from the perspective of a Product Buying Manager or Purchasing Manager.

Please note that this is a Product Buying Report and not an RFI, RPQ, or RFP.

Solution

Product Buying Analysis

Executive Summary

This product buying analysis report explores the intended use of the product and the requirements it must fulfill, the available products that meet the requirements, and their characteristics. The report also analyzes the technical product data of the selected product, product’s sources and availability, and discussion of supplier selection criteria, pricing factors, supplier relationship management strategies, legal and ethical considerations, and appropriate recommendations. The product’s intended use is human consumption, and requirements are associated with food safety and quality and customer requirements. The product must be safe and of high quality for human consumption and demonstrate commitment to Food Safety and Quality by having clear objectives aligning with relevant food safety and quality statutory and regulatory requirements, such as implementing the Safe Quality Food (SQF) system.

The available products that meet these requirements include wheat flour, rice, and corn. They have varying uses, but they can be used as each other’s substitutes. The products have a high nutritional value. The selected product is wheat flour, which has multiple uses and is one of the essential food products in Trinidad and Tobago, with the National Flour Mills Limited being the largest producer. Wheat, like other grains, requires high-level maintenance standards to maintain quality. The report provides various technical product data used in determining and specifying the quality and safety of wheat flour. Wheat flour is a product of wheat, which is majorly imported into the country. Suppliers include Turkey, the US, Canada, Jamaica, and India. A supplier selection criterion specifies the selection attributes used to choose dependable wheat and wheat flour suppliers. Procurement of the product requires entry into a contract. The contract selected is the fixed-price contract, which helps maintain low costs. The supplier and the consumer are expected to adhere to the contract terms. Recommendations are to buy the product for its white range of operation or use and ease of availability.

Intended Use and Requirements

The intended use of the product is human consumption. It can be used for various purposes. It is of great nutritional value and among the primary sources of carbohydrates and energy. It can be used as a food substitute when other related foods are unavailable or when the prices increase. The product is made to provide safe, nutritious products for individuals and families. Because the product is purposed for human consumption, it must meet the food safety regulations and standards. The product must be safe and of high quality for human consumption and demonstrate commitment to Food Safety and Quality by having clear objectives aligning with relevant food safety and quality statutory and regulatory requirements, such as implementing the Safe Quality Food (SQF) system. The product should meet and exceed global food safety standards, offer value for money, and fairness and equity in treating customers. The products should be produced to specifications and in conformance with the customers’ specifications. The quality of the raw materials used should fit the intended purpose. Customers’ credit terms should be fair, and customer complaints should be treated promptly and courteously. Some of the considerations for purchasing the product include:

1. The authenticity of the supplier and manufacturer: The suppliers and manufacturers have the authorization to provide the product.
2. The type of raw materials used for making the product
3. The quality of the raw materials from suppliers and manufacturers: raw materials are from fresh, high-quality, and healthy produces.
4. The price of the raw materials: the raw materials are sold at a reasonable rate.
5. The delivery of raw materials: the delivery is timely and perfectly packed.

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Available Products

Products meeting that might meet the requirements includes wheat flour, rice, and corn. There are various categories of wheat flour: all-purpose flour, bakers’ flour, cake flour, whole wheat flour, cracked wheat flour, breading flour, cookie flour, hi-gluten flour, and roti and doubles flour. One product can full multiple purposes. For instance, Ibis all Purpose Premium Grade Flour and the Whole Wheat Self-Rising Flour can be used for various purposes. Ibis wheat flour is appropriate for making bread, cake, roti, quick bread, cookies, pastry, bakes, and noodles. Hibiscus wheat flour is excellent for making pastry, cakes, ice cream cones, and quick bread. Ibis flour is made using wheat flour, calcium carbonate, niacin, fungal alpha-amylase, ascorbic acid, reduced iron, maturing agent, bleaching agent, thiamine mononitrate, riboflavin, and folic acid. Whole Wheat Self-Rising Flour can make scones, pancakes, cupcakes, muffins, and biscuits. Ingredients used to make Whole Wheat Self-Rising Flour include wheat flour, amylose, amylopectin, cellulose, bran, endosperm, and germ. Wheat flour grading has various categories: Weak flour (wheat index is 90-160 and protein content is 9% -10%), medium strength flour (wheat index is 160 – 250 and protein content is 10% – 12.5%), and strong flour (wheat index is above 300 and protein content is above 13%).

Rice is the primary energy source for over half of the people in Trinidad and Tobago. Rice contains fiber, protein, vitamin B, iron, and manganese. There are various categories of rice, including rice clockwise, like the Moruga Hill red, Caroni brown, and Navet white lagoon, Fried Moruga Hill red rice, and Pumpkin Rice. Corn in Trinidad and Tobago is also used primarily for human consumption. It is used differently at different stages of maturity. Green corn can be used as boiled, and semi-matured corn is roasted. Corn is processed into various food products like starch and sweeteners.

Technical Product Data

There are factors used to specify and inspect the quality and suitability of wheat flour. Parameters to determine wheat flour quality include:

1. Physiochemical attributes include protein content, wet gluten content, ash content, extraction rate, moisture level, enzymatic activity, and particle size distribution (Carson & Edwards, 2017: Putseys & Schooneveld‐Bergmans, 2019).
2. Empirical rheological properties include mixing stability, resistance to deformation forces, elasticity, extensibility, and optimum water absorption.
3. Microbiological indicators (Carson & Edwards, 2017).
4. Presence/absence of chemical hazards like heavy metals or mycotoxins.

The factors specifying the quality and suitability of wheat flour are associated with bread-making performance or baking potential of wheat flour. Product volume and crumb grain structure are the expressions for flour quality. High-quality flour for bread making and baking yields the highest specific volumes with standard formulations. The wheat flour purchased should show consistent and predictable baking performance at the production line level.

Table 1: Appropriate compositions for quality wheat flour

Table 2: Technical specifications for bread-making wheat flour

Analysis of the Product’s Sources and Availability

Primary sources of wheat flour include Turkey, the United States, Jamaica, India, and Canada. Turkey is a dependable export of wheat and wheat flour to Trinidad and Tobago, although its grain production levels have recently dwindled from 20 million tonnes to 19.2 million tonnes (Lyddon, 2019). Its proximity to the Black Sea makes it easily accessible and cost-saving. The United States has the fifth-largest production volume of wheat globally, producing about 51.29 million metric tons, making it dependable wheat and wheat flour (US Department of Agriculture, 2022). The US is also close to Trinidad and Tobago, enhancing accessibility and reducing the cost of transportation. Jamaica exports wheat flour in small amounts, and its production is around 0 thousand tonnes, and much of the wheat to produce wheat flour comes from other countries like the United States. Its major export is in the form of wheat flour. Jamaica is not as dependable as Turkey and the US. India produces around 110 million tons of wheat, making it dependable wheat and wheat flour source. Its proximity to the Indian Ocean also enhances accessibility and ease of transportation. Canada is also a reliable wheat and wheat flour source, producing about 30.49 million tons. It is also located in North America, much closer than India and Turkey to Trinidad and Tobago, enhancing transportation efficiency and cost-effectiveness.

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Supplier Selection Criteria

The attributes for selecting wheat and wheat flour suppliers include cost, quality and safety, delivery, risk, and convenience. Cost is the primary factor in the selection process. The supplier has to be providing the product at reasonable rates for cost-effectiveness. The cost of obtaining the product affects other factors, such as selling the product. The supplier has to provide a high-quality and safe product. Wheat flour is majorly intended for human consumption. Therefore, the suppliers must meet quality and safety standards and regulations. Risk is associated with threats to the product in transit. The supplier must ensure the products are shipped safely and with minimal chances of damage (Taherdoost & Brard, 2019). Risk is also linked to the product’s quality and safety. The suppliers should provide a high-quality and safe product fit for human consumption. Convenience is a critical factor in supplier selection, and it is associated with ease of shipping the product. Convenience can be in terms of proximity or ease of availability. The two factors can be used together or as substitutes. A supplier location should be within proximity for ease of transportation. A supplier should also be reliable and have the product available and accessible when needed. If the supplier is not close, product availability should be vital in selecting. The supplier should be dependable at any particular time of the year.

Delivery is a wide factor that includes various elements: method of transport, freight security, and stowage attributes. The form of transportation can be ship, truck, railroad, or plane. Any mode of transportation is appropriate as long as the supplier ensures safety and the product arrives on time. The critical factor in delivery is compartment use. The supplier should ensure that the product is protected from heat sources like base tanks and motor rooms. The product should also be shielded from dampness. Generally, the supplier should take proper care of low and high temperatures to avoid mold and smelly scents. The stowage area should be of optimum temperature and dry.

Pricing Factors

Supply and demand significantly affect the price of wheat flour. The supply of wheat is a critical factor. Low supplies or shortages in wheat production in source countries can lead to an increase in wheat flour prices (Pettinger, 2022). The high demand for wheat in Trinidad and Tobago, where wheat is a fundamental food element, can increase prices, especially when the supply of wheat cannot meet the demand for wheat flour.

Other critical factors affecting the pricing of wheat flour include oil prices, climate factors, geopolitical factors, government intervention, and the substitution effect. Oil prices are linked to wheat prices because oil is a crucial input factor. Higher oil prices increase the cost of wheat production and producing wheat flour, translating to higher retail prices. Although it is usually considered along with other factors, favorable weather conditions are associated with high wheat production and low prices. Extreme weather like excess heat, lack of rain, and flooding affect wheat production and lead to high wheat flour prices. Geopolitical factors include conflicts between other countries, for instance, the current conflict between Ukraine and Russia. Such wars have led to an increase in the price of wheat flour because they have disoriented supply chains. Government intervention like high tariffs can lead to a rise in prices. The demand for wheat can increase if the prices of substitutes like rice, corn, and soy increase. This change can increase the prices of wheat flour.

Supplier Relationship Management

Managing supplier relationships involves evaluating their capability to meet contractual needs, measuring their performance during the contracting period, and working with them to recognize challenges while intending to improve the working relationship. Supplier relationship management intends to ensure a high level of contact, ensuring the relationship remains mutual to get the best from the working relationship (Murphy, 2021). It can help with price reductions, efficient information flow, and improved service levels. Strategies to manage supplier relationships and foster better working relationships include:

1. Purchasing, receiving, and paying for the goods in time
2. Collaborating on all matters that affect both parties
3. Measuring and analyzing if the supplier has the best interest at heart
4. Sustaining a beneficial relationship through regular and effective communication
5. Understanding contractual obligations
6. Behaving ethically and honestly throughout
7. Identifying and monitoring risks together
8. Regularly reviewing deliverables and performance

Legal and Ethical Considerations

Understanding contractual obligation is the first legal and ethical consideration in entering any working relationship with a supplier. A fixed-price contract is a perfect procuring wheat flour because the transaction scope is already established and well-known. The contract helps keep costs low because both parties can predict the scope of the transaction (Murphy, 2020). The contract also ensures that the product receiver pays only for the amount specified for the procurement. In this contract:

1. Both parties should sign the contract, after which the supplier will deliver the product within the stated timeframe, ensuring the transaction is completed in a timely fashion.
2. The pricing does not involve guesswork that can create conflicts leading to legal and ethical implications. This factor makes controlling prices easier.
3. The supplier is responsible for the majority of the risks because of the legal obligations in the transaction specifications.

Recommendation

Consumers can purchase the product given its wide-range applicability and availability. Wheat flour can be used for various purposes, including bread-making and baking. It is a fundamental source of carbohydrates and energy. It is used with other meals like cereals and vegetables, making it a vital component of most meals. Availability is also guaranteed, considering that most suppliers are conveniently located and among the world’s largest wheat producers. Although the supply of the product has been affected by the current geopolitical situation, the supply is still stable.

References

Carson, G. R., & Edwards, N. M. (2017). Criteria of wheat and flour quality. Wheat: chemistry and technology, (Ed. 4), 97-118.

Lyddon, C. (2019). Focus on Turkey. World-Grain.com. https://www.world-grain.com/articles/12995-focus-on-turkey

Murphy, K. (2020). Types of procurement contracts. https://planergy.com/types-of-procurement-contract/

Murphy, K. (2021). Strategies for improving supplier relationship management (SRM). https://planergy.com/improve-supplier-relationship-management/

Pettinger, T. (2022). Factors determining the price of wheat. Economics. https://www.economicshelp.org/168151/economics/factors-determining-the-price-of-wheat/

Putseys, J. A., & Schooneveld‐Bergmans, M. E. (2019). Enzymes used in baking. Industrial enzyme applications, 95-123.

Taherdoost, H., & Brard, A. (2019). Analyzing the process of supplier selection criteria and methods. Procedia Manufacturing, 32, 1024-1034.

US Department of Agriculture. (2022). Wheat sectors at a glance. https://www.ers.usda.gov/topics/crops/wheat/wheat-sector-at-a-glance/