Developing a Procurement Support Tool for a Laundry Soap Bar Manufacturing Facility in Venezuela
Miguel Marcano, Caracas, Venezuela, defended his thesis, “Developing a Procurement Support Tool for a Laundry Soap Bar Manufacturing Facility in Venezuela,” Thursday, June 5, 2008. Marcano was formerly employed as a Raw Materials Coordinator with Empresas Polar in Caracas, where he supervised the acquisition and logistics of the raw materials for products in Venezuela and Colombia. He graduated from Kansas State University in August with a Master’s in Agribusiness (MAB).
An important beauty and personal care product, laundry bar soap has been produced commercially in Venezuela for more than a century. Although Las Llaves soap accounts for nearly 70 percent of the market share, management is concerned about how to remain competitive in both efficiency/price and in quality in today’s global economic environment. The objective of Marcano’s Master of Agribusiness thesis was to identify and analyze the costs of sourcing the three raw ingredients used to produce Las Llaves laundry bar soap and to provide a model scenario to support the decision making analysis within the purchasing department.
Arlo Biere, Agricultural Economics professor and Marcano’s thesis advisor, said, “The economic climate in Venezuela makes it difficult for private businesses to survive let alone prosper. In that environment it is critical for manufacturers to be very efficient. Miguel developed a model to determine least cost procurement of the three raw materials for the next 12 months based on the forecasted prices. Two other scenarios are also possible: when input prices rise over the 12 months and when input prices fall over the next 12 months. That helps management to understand the impact under different price scenarios. The procurement model is a support tool to help management and buyers to understand better their procurement options and scenarios.”
Because the price of the three raw materials are all highly correlated with the futures price of crude palm oil on Bursa Malaysia (futures exchange), Marcano used the futures price for crude palm oil to forecast the prices of the three raw materials over the next twelve months.
“This procurement support tool will help in the sourcing of three primary raw materials that must be imported: beef tallow, palm stearin and palm kernel. The model is supported in the analysis of inventory management with forecasts of projected prices, management’s target for product availability and safety inventory levels, and data on shipment quantities, storage capacity and other constraints. Using the model finds a suggested procurement strategy that minimizes cost,” Marcano said. “This tool will help buyers, but should not be considered the sole source of information when making purchasing decisions.”
The full publication can be found online at http://hdl.handle.net/2097/895.