Free Case Study On Purchasing And Manage Costs At Ppl
The purpose of this detailed case study is taking consideration on purchasing and managing cost at PPL Company.
The case study introduces PPL Company on how it has taken aggressive approaches on use of technology, to ensure that PPL will streamline the process and obtain lower value goods and services to the customers. The case study has discussed low dollar purchasing power, advantages and disadvantages of procurement cards, PPL three-phase system and the recommendations.
Competition is one of the issues that have made PPL to be in forefront to make sure electric deregulation is obtained. The aim is to make sure that it will provide better services to the internal customers and still play a role in ensuring that utility kilowatt per hour rate is reduced.
A low dollar purchase system is a method that is used to purchase less than $50,000 for services, and gives an option where one can use less than $30,000 for material purchases. The system involves those items that can be purchased regularly. It also applies to a covered purchase by a corporate contract that involves low dollar purchasing system. Low value services and goods that are provided to the customers may be termed as a low dollar purchase system due to low price set to benefit the consumers. Low dollar purchasing system emanates as a result of subcontracting since materials needed is obtained quickly. One of the systems or tools that support low dollar purchasing system is the use of procurement cards that provided services to the customers at low rates. The second systems or tools that support low dollar purchase is user negotiated and issued services contracts.
One advantage of a procurement card system is that cost is reduced when one is purchasing or carrying the transactions. One transaction is low and range to $150 that include the cost of requisition, place, receive and inspect and the process payment. If one is carrying just one transaction means that the cost is low and about $50. The card is fast when it comes to purchasing and sometimes trial program is provided to the customers (Bowles and Hoff, 2009). The aim of trial program is measure satisfaction level of the customers. The disadvantage of procurement card system is that the supervisors do not allow subordinates to use the cards. The second disadvantage is that travelers do not use the card since they do not earn flier miles like in the case of personal card. The last disadvantage is insufficient data reporting for the tax purpose. The purchasing role of P-Card systems is to reduce the costs and transactions that are incurred during purchase.
The main activities that occurred during PPL’s three –phase system development was to reduce the number of the services orders that did not have control or accountability. In the phase one there were no centralized controls that would initiate service contracts. Poor contracts were issued that did not make sense to PPL and this is the reason the main activity of reducing the orders to create control and accountability had to be implemented in phase-three. In the PPL phase one and two, the systems evolved from no control to control chaos, but PPL phase-three has to respond efficiently and quickly for the benefit of internal and external customers.
The purchasing role during development, implementation, and continuous use of low dollar purchase systems is to satisfy the customer needs. For example, when the use of purchasing systems was being developed the aim was to develop a system that has cost benefit to the customers. It implies that the cost of transactions should be low comparing with other method of transactions (Grant, 2007). When implementing purchasing system the aim was to motivate the customers so that transactions would be carried effectively and in faster manner. The systems have to process the information given and make sure that it reduces the effort and transactions required so that low value goods and services could be obtained.
Some of the unique operating requirements that PPL faces that most companies do not face are motivating the purchase by reducing the effort and transactions fees through implementation of system technology. It is a challenge since when a new technology system is being implemented has to be expensive for both the PPL Company and to the stakeholders (customers). It implies that the approaches needed to obtain lower value goods and services must be implemented in way that will not cost PPL high capital to implement. It is based on the fact that if the approach of implementing the system technology is high then the customers have to pay more when transactions are being carried.
In conclusion, PPL has shown great performance on its daily routines to the customers. Additionally, PPL has shown great improvement in terms of technology advancement due to introduction of aggressive approaches that support and obtain lower value goods and services to the clients. The company management has taken part in ensuring that approaches to reduce transactions that process low value purchases. For example, the use of procurement cards, local purchase orders and user negotiated and issued services contracts.
Bowles, L., & Hoff, B. (2009). Business procurement cards, expanding their use to increase cash rebates to the state. Topeka, Kan.: Kansas Legislative Division of Post Audit.
Grant, T. (2007). International directory of company histories. Chicago: St. James Press.