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To negotiate or not to negotiate- that is the question: A Case study for appropriate raw material sourcing strategies and Performance Measurement Systems
Linnaeus University, School of Business and Economics, Department of Management Accounting and Logistics.
Linnaeus University, School of Business and Economics, Department of Management Accounting and Logistics.
2016 (English)Independent thesis Advanced level (degree of Master (One Year)), 20 credits / 30 HE creditsStudent thesis
Abstract [en]

Background: Raw materials are traded in dynamic markets that are heavily influenced by shifting macro factors. The case company currently negotiates the raw material plastic on behalf of the mould injection subcontractors, which is a time consuming and sometimes a complex activity that is not necessary for the company's operations. The mission is based on investigating the sourcing strategy for the plastic to determine whether the strategy to not negotiate raw material is more cost effective than the current strategy. To know which areas that are in need of improvement it is important to measure performance, especially when the strategy have been changed. The proposal for the future sourcing strategy will therefore need an evaluation and an update of the current Performance Measurement System in order to create congruence between strategy and Performance Measurement System.

 

Purpose: The purpose of this thesis is to map and evaluate the current sourcing process and to investigate what factors that influences the choice of which future sourcing strategy to use. In addition to this, the authors intend to describe the current measurement on performances, in order to create a Performance Measurement System for how to control the intended sourcing strategy.

 

Method: This thesis is a case study with empirical research that consists of both qualitative- and quantitative data, gathered from daily talks, interviews and internal data from the case company.

 

Results and conclusions: Based on internal and external analysis, the authors concluded that five factors influence the choice of purchasing strategy; volume value, raw material clauses, usage areas for plastics, volatility and supplier base structure. These factors led to a new proposal for future sourcing strategy: to negotiate only the four largest plastics of the current 16, from fewer suppliers than today. One of the four plastics should be negotiated without raw material clause due to the factors volatility and uses of plastic. This has led to proposals of new KPI’s related to the five factors and identified gaps in the current system.

Place, publisher, year, edition, pages
2016. , 117 p.
Keyword [en]
Sourcing strategies, Raw material sourcing, Performance Measurement Systems
National Category
Business Administration
Identifiers
URN: urn:nbn:se:lnu:diva-54098OAI: oai:DiVA.org:lnu-54098DiVA: diva2:940986
Subject / course
Business Administration - Management Accounting
Educational program
Business Administration and Economics Programme, 240 credits
Supervisors
Examiners
Available from: 2016-06-28 Created: 2016-06-21 Last updated: 2016-06-28Bibliographically approved

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CiteExportLink to record
Permanent link

Direct link
Cite
Citation style
  • apa
  • harvard1
  • ieee
  • modern-language-association-8th-edition
  • vancouver
  • Other style
More styles
Language
  • de-DE
  • en-GB
  • en-US
  • fi-FI
  • nn-NO
  • nn-NB
  • sv-SE
  • Other locale
More languages
Output format
  • html
  • text
  • asciidoc
  • rtf