Degree

Master of Business Administration Executive

Faculty / School

School of Business Studies (SBS)

Year of Award

2024

Advisor/Supervisor

Dr. Shahid R. Mir, Assistant Professor, Department of Management

Project Type

MBA Executive Research Project

Access Type

Restricted Access

Keywords

Supply Chain, Centralization, De-Centralization, Procurement, Culture

Executive Summary

Procurement / supply chain forms an integral part of organizations around the world. Given the recent dynamics, which have effectively changed the business world into one that is becoming increasingly volatile, it becomes extremely pertinent for organizations to ensure that each and every department forming the company is operating to the best of their potentials in terms of efficiency.

In Pakistan, the challenges faced by businesses are compounded owing to the additional layers of complexity added due to the political situation at hand. Furthermore, with the recent macro-economic challenges lending yet more intricacies to the business world, heightened efficiency is definitely not something that can be anything less than the topmost priority.

Lucky Core Industries Limited (“the Company” or “LCI”), formerly, ICI has the privilege of being one of the oldest organizations operating in Pakistan. It has a diversified portfolio encompassing five distinct and autonomous divisions; namely Soda Ash, Polyester, Chemicals & Agri Science, Pharmaceutical and Animal Health. The organization’s respective divisions are independent, and so too are all functions included within, such as Human Resources, Procurement, Finance and others.

Given the time constraints we were unable to explore all departments and thereby opted to focus on the Procurement function. Where there are many benefits to be derived from the current way of working for LCI, i.e. a decentralized system of procurement, whereby all divisions operate in an absolutely independent manner; there are also certain challenges that arise. Through the course of this project, we have explored the benefits and drawbacks that the divisions encounter due to the prevalence of a decentralized procurement system.

Through an analysis of data pertaining to the procurement function, we have endeavored to identify materials or services, which are the largest contributors to the procurement expense, and then compare across divisions in an attempt to identify common materials/services being procured by divisions. This will be compounded by interviews conducted with key personnel for each division such as the Chief Operating Officer, Head of Supply Chain and relevant Suppliers in a bid to deepen understanding regarding the viability of switching over to a centralized procurement system.

Our main finding is that though decentralization overall might not be the solution to LCI’s conundrum, opting for centralized contract negotiation for common materials like coal, furnace oil, titanium Dioxide (TiO2) and Packaging and services like shipping, transport/freight and Security Services may lead to cost-saving, economies of scale, better discounts due to bulk orders and thus contribute positively to the company’s bottom-line.

Pages

x, 141

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