LOG317: Power Drone Tech (PDT) is a Medium-Sized Enterprise Specializing in Industrial Drone Engineering: Procurement Strategy and Policy Assignment, SUSS, Singapore

1. Demonstrate understanding of the importance of the procurement
function within an organization
2. Appraise how procurement can bring about the economic contribution
and value creation to the company
3. Developing procurement strategy that is aligned to the business
goals
4. Indicate what are the major organizational decision and key
processes that drive the procurement function
5. Examine effective procurement strategy, policies, and governance
framework.

Question 1
Power Drone Tech (PDT) is a medium-sized enterprise specializing in industrial drone engineering and manufacturing. Automated Drones has application in various industries, i.e. agriculture farming, land survey and mapping, building maintenance, pipeline inspection, security, and event display. PDT’s products are well-thought-of in the industry – advanced engineering, good quality finishing, and reliable machine. The company is facing stiff competition from low-cost manufacturers. Competitors have improved their product offering
and quality tremendously over the last two years. Customer feedback that the gap (product finishing, ease of use, and operational reliability) between PDT and its competitors are narrowing.

Since its inception, PDT has hit the market running recording double-digit growth year-on-year. Engineering was its forte and given the explosive growth; the company focused on production and logistics optimization to meet rising demands and to build a creditable presence in the marketplace. Sourcing and supply management were relegated to the second spot. It is clear to the management now that there is an urgent need to review the cost structure.

(a) Base on the company background and an appreciation of drone application, discuss the type of innovation process PDT offers to the market.

(b) 75% of the total product development occurs at the product design stage. Show how the procurement department can assist in the management of risk using the 3-dimension approach.

(c) The procurement VP envisages a need to address the Make-or-Buy decision once the department addresses the component-cost structure. Construct a questionnaire to help assess if a component should be manufactured in-house (make) or pursue the ‘buy’ option of outsourcing or subcontracting.

(d) Propose an alternative framework that PDT can explore to optimize cost.