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Supervisor

Prof. Dr. Mark Ebers
Chair for Management Economics

With the emphasis management and organization
Responsible person: Dipl. Kfm. Sven Winterhalder, dipl. Kff. Ilka Bokowsky

Graduand

Enrico Poli
Register Number 640183

Prof. – Messerschmitt – Str. 2
86159 Augsburg – Tel. 0821-5895848

PROCUREMENT OUTSOURCING BY THE EXAMPLE OF UNITEC GERMANY GMBH

Summary

1.0. Introduction

1.1 Problem definition

In the last years the employment figures developed indirectly proportionally to each other different industrial enterprise ranges: While the number of workers sank, the number of employees is increased.¹ “(…) behind this tendency puts a problem, which most enterprises recognized, but not to against-steer can.
The administration structure was modernized in the comparison to production too little.
Both use resources however contrary to the production, which creates an increase in value for the enterprise, reduce the administration the increase in value. Each reduction of the increase in value is a net yield loss, which can be avoided by rationalization of the administrative processes. Today we have the means to arrange the administrative activities efficient and to reduce their costs at the same time. These means are information automation in the office activities, and the outsourcing of the processes and in particular the procurement, the predominant portion of the administrative structure represented.”²
The necessity for enterprises to save administrative costs without their purchase power, their know-how and the speed of their expirations thereby are impaired, leads to the question whether the procurement activities could not be organized externally by a specialized Services Company better and more efficiently.
Thus the problem of a Make or Buy decision faces many managers also in the procurement area.
So far above all production was affected by such decision problems, today makes itself companies also about the organization of their procurement structure thought. If e.g. the coworkers are not working at full capacity, one thinks immediately of personnel reduction.
In point times however one would adjust gladly further coworkers, who must to be trained however and time needed, until they become productive. Therefore a flexible structure is desirable also in the procurement.
Whether an outsourcing of the achievements and products belonging to the procurement is possible the ideal solution, is to be examined in this work.
This analysis is thus for the understanding of the possible effects of the paging of the procurement on the business cost structure and important for the identification of the pro and cons of such a outsourcing decision.

¹ Vgl. Federal Institution for work (2003), statistics in: http://www.pub.arbeitsamt.de/hst/services/statistik/detail/b.html
² Marino V.: Interview, P. xx

1.2 Objective

Principal purpose of the work is the analysis of the existing procurement activities and their organization possibility alternative by the outsourcing as well as the consistent formulation from recommendations for action to the organization of an efficient procurement process. For this purpose the following points must be considered:

The understanding of the distinction between the terms “purchase” and “procurement”.
The theoretical explanation outsourcing of the procurement from transaction-cost-theoretical view;
The application of the Activity Based Costing (starting from c) beginning to the comparison between internal and paged out procurement;
A short evaluation of the entire work;
The analysis and the explanation outsourcing of the procurement, from which one can derive meaningful recommendations for action for an efficient organization of the procurement process.

1.3 Proceeding

Starting point of this work is the traditional structure of the procurement process.
First chapter 2 enters with the definition and demarcation of the terms “purchase” and “procurement”. After the participants and their role in the purchase and during the procurement process were presented, the traditional procurement activities are regarded. Here a customer of the Unitec Germany GmbH is considered – a service supplying company with seat in Gersthofen (Augsburg) as reference model, to which many industrial enterprises entrust the Supply chain management and the completion of the procurement process.
Chapter 3 enters on the theoretical beginnings (transaction cost theory and Activity Based Costing – beginning), with basis of them the evaluation of the procurement organization forms and the formulation from improvement suggestions effected.
After the explanation of the transaction cost theory, their central terms and acceptance as well as their indipendent and dependent variables, the ABC beginning is introduced. One regards its historical development, its definitions and motives, as well as the comparison with the traditional Costing procedure. Before a short summary, which locks chapter 3, the transition of the concepts of production and transaction costs to the total cost concept one illustrates.
Chapter 4 corresponds to the application of the theory to practice, whereby customer of the Unitec Germany GmbH applies in chapter 2 for the introduced as reference example of the conversion outsourcing of the procurement.
In a first step the representation of the procurement takes place as transaction, afterwards the possible procurement forms are compared with the different institutional arrangements, so that the outsourcing of the procurement from transaction-cost-theoretical view is explained. From the cost comparison between traditional and paged out procurement result recommendations for action for enterprises, which want to arrange their procurement structure more efficient.
A critical appreciation over the entire work takes place in chapter 5.
Chapter 6 throws finally a view of the future development of the procurement organization.

2.0. The traditional procurement

In the following one the author examines the traditional industrial procurement and the connected, different, participants and activities, with it, from enterprise-internal view.
Since also the procurement structure of an enterprise can be very different, this analysis refers to an actual example, i.e. to an enterprise active in the chemical industry, which decided in the year 2001 for the outsourcing of the procurement and for a partnership with Unitec Germany GmbH.
This reference example applies to the entire procurement analysis of this work, including chapters 4. Its company may not be called and therefore uses one the designation customer GmbH, since indicated in this work the information and data, which concern it, from the unit hitting a corner and documents come and to the private documentation of the Unitec belong.
On the basis this material in chapters 2,2 and 2,3 the participants and the activities of the traditional procurement process are described in each case. Before it in chapter 2.1 the definition and demarcation of the terms “purchase” and “procurement” as well as the explanation of their role are described within an enterprise.

2.1 Definition and demarcation of the terms “purchase” and “procurement”

A condition for the understanding of the operational procurement process is the definition of the term “procurement” and the distinction with another associated term – the “purchase”.
“under procurement one understands the acquisition and supply of the goods necessary for the production and utilization of the products of an enterprise.
These goods are raw -, auxiliary -, and fuels, parts, commodities which can be inserted as well as material assets ³(…).”
The procurement represents thus an operational process, which serves for the fact that the necessary goods in the desired quality, at the desired place, at the desired time and at competitive prices are made available.
How this process runs off is determined, by the purchase. The purchase area must make the decisions over all procurement conditions and takes therefore a large responsibility and a strategic meaning. Its functions cover 4 :

  • Active Supply chain management with selling and technology – with consideration of the enterprise strategy.
  • Representation and analysis of the volume of purchase and price history.
  • Analysis of the supplier and procurement markets.
  • Determination of the cost structure and driver in the groups of procurements.
  • Definition of the suppliers portfolio and the skeleton agreements.
    Optimized requirement planning following a tumbling marketing.
    Definition and management of material class and supplier keys.
  • Strategic decisions over the organization of the procurement (e.g. outsourcing, use of e-Procurement-solutions, etc.).

These are the tasks of the purchase department, which is specialized in it and had the necessary know-how, to find “(…) around the suitable suppliers in order to negotiate the prices and determine around the terms of payment and supply as well as the kind of relationship with the individual suppliers. The procurement concerns itself however with the operational activities for the completion of the order process.” 5 the individual participants as well as their functions and/or activities is more near described in the next sections.

³ Marino V.: Interview, P. xvi.
4 Vgl. Mayer S. (2003): IHK magazine economics No. 01/2003.
5 Marino V.: Interview, P. xvi.

2.2 The participants of the procurement process

During the investigation of the traditional procurement process is a first necessary step to designate the participants involved.
On the offer side the suppliers , those stand the material necessary for a regulated business procedure of the enterprise make available “(…) of their product program can the enterprise be also completely dependent, since the quality of the products and services of the supplier can affect the business procedure of the entire enterprise strongly. 6 ”
On the demand side the enterprise appears. The structure of an enterprise can be naturally very different and therefore falls back one here to the Unitec customer example (the customer GmbH), in order to mark the enterprise-internal participants.
However this example possesses an almost general validity.
To the enterprise-internal participants belong the production department, the purchase department, the camp, the bookkeeping and the administration. These enterprise departments and/or ranges are involved in different phases of the procurement process.
The individual tasks of department are explained in the next section of this work. Here only the connection between the participants of the traditional procurement process is to be illustrated (see: Illustration 1).

abb1

Fig. 1: The participants of the traditional procurement process.
6 Marino V.: Interview, P. xvii.

2.3 The activities of the procurement process

To understand the enterprise-internal procurement structure the individual procurement activities are described here, whereby also the most frequent process disturbances and possibly arising problems are mentioned.
With respect to the procurement process the customer GmbH one can differentiate six activities: material requirement, selection of suppliers, order and/or order, incoming goods, audit and conclude payment operations.

abb2

Fig. 2: The main activities of the traditional procurement process.

In detail the activities mentioned consist of different activities:

  • material requirement: The first step of the procurement process is the statement and message of materials requirements of a certain customer department and/or person. Usually becomes a materials requirements plan in connection with production and/or. Maintenance plan in advance provides, so that the customer department is to only examine the due in each case need.
    Naturally there can be unplanned material need also due to unexpected damage, losses, etc.. Independently of it, whether materials requirements are planned or unexpected, the Requester must fill out and from the department and/or range leader signed have an appropriate form – the material requirement light -.
    With the fact it is important that all necessary data are indicated, so that the inquired property can be identified and be ordered with the correct supplier. Thus a material requirement light must contain as exact a data as possible over the necessary property – like manufacturers, article number, quantity, other special characteristics (e.g. the size of a seal or the achievement of an engine) and if necessary the design -. Also the inquiring department and/or person (if necessary with telephone number) is to be indicated, so that it can reach the purchase department for possible further inquiries. The material requirement light must be approved by the range leader, sent to the purchase department and put down thereafter. In individual cases the production department must remind the purchase department, in order to get the commodity in time, in particular if it is urgently used.
  • Selection of suppliers: The purchase department of the enterprise receives the material requirement light and looks for the suitable supplier for the procurement of the necessary commodity.
    “(…) the search effected on the basis in which all who are applicable suppliers for each materials type are contained of business DATA cousin, since the enterprise has usually a Suppliers portfolio resulting from the past orders. For well-known and/or the past the selection is usually limited ordered products to this Portfolio, whereby for “unimportant” products in normal catalogs (yellow sides, etc..) to be searched can.
    For important products this phase takes over a strategic meaning. The selected supplier must have the suitable technology, in order to offer the inquired product with good quality, in the necessary quantity and at low price. Further relevant conditions are the reliability, the after Sales service and the location.
    After the examination of these criteria takes place the decision for one or more suppliers. An individual supplier can being selected due to special characteristics such as patents, technical conditions, available raw materials, location, etc. and because of a strategic project, e.g. in the case of a planned long-term relationship. Different suppliers are applicable however, if none of the characteristics mentioned are present, whereby the competition can ensure lower prices and better services. Possibly a negotiation takes place concerning the prices, delivery times and terms of payment for specific orders.
    As the final conditions result, depends on negotiation power and the behavior of both parties. For standard products, with which the selection of suppliers is high, the prices are fixed in the supplier catalogs and can be negotiated only in the case of large purchase volumes. 7 “the final decision of the buyer one meets on basis by an offer comparison. It sends an inquiry to the suppliers, in order to get and concerning price and delivery time to compare among themselves be able offers. As soon as the offers of the suppliers arrive, the buyer selects the best offer and accordingly the optimal supplier. Strategic decisions are not made in the further process cycle.
    In the analysis of the actual procurement process the selection of suppliers precipitates, since the optimal in each case supplier from preceding orders already identified and in business DATA cousin is stored. How already describes, the procurement process in the actual sense represents an operational procedure, which does not need a strategic decision.
    In the place of the selection of suppliers the search for the suitable supplier remains in the enterprise software, which is implied however in the phase “order and/or order”. Therefore there is actually five procurement activities.
  • Order and/or order: With this activity the actual procurement process begins, since only operational activities are necessary for its further completion. Nevertheless the purchase department is occupied usually also to provide the order and/or the order to examine and send to the supplier. “the difference between order and order lies in the fact that the order refers to products of the supplier catalog, while the order concerns a commodity specific to the customer need. 8 “order and order is the contractual expression of the material requirement of a customer department and is therefore all necessary data for the identification of the article, as well as the terms of payment and supply contain. Of it a copy is sent to the bookkeeping and to the camp.
    Usually the purchase department requires a confirmation of order of the supplier, in which the contractual agreement – with price (if necessary also discount), quantity and delivery time – is confirmed.
    In addition the supply is to be pursued, so that the commodity arrives to the desired time and place. In addition the determination of possible delays and the reminder of the suppliers belong by fax or telephone.
  • Incoming goods: As soon as the commodity is supplied, the goods received in the camp of the enterprise take place. With the inspection of incoming goods on the basis the delivery note and the order it is examined whether the correct commodity was supplied in the correct quantity. Further the examination of the quality and the possible lack and/or damage is to take place.
    If any problems arise, it requires still additional tunings with the supplier and/or with the Requester. Afterwards the delivery note is signed and put down.
  • Audit: In this phase the purchase invoice in the bookkeeping takes place. The calculation is to agree both with the order, and with the delivery note concerning the type of goods and the quantity. The price and possible discounts should be alike in the order and in the calculation.
    If the data do not agree, the bookkeeping must eliminate these discrepancies and take up contact both with the supplier and with the purchase department for problem solution.
    The calculation is to be approved, booked thereafter and passed on to the administration.
  • conclude payment operations: Before a calculation is paid, it is examined by the administration.
    Further the administration is an authorization to pay to provide, approve let and to the bank send. For problems it worries also about the clarifying with the bank. The paid calculations are then registered and put down.
    The procurement process is thus final.

In summary table 1 illustrates the activities of the traditional procurement process.

abb3

Tab. 1: The procurement activities during the traditional process.

7 Marino V.: Interview, P. xvii.
8 Marino V.: Interview, P. xviii.

3.0. Theoretical model for the analysis outsourcing of the procurement

This chapter enters with the theoretical concepts, which are then applied in chapter 4 to practice, in order to explain the existence and role outsourcing of the procurement as well as to formulate recommendations for action for the organization of an efficient procurement process.
The first represented concept is the transaction cost theory, which represents the main beginning of the theoretical view of this work and in chapter 3.1 is described. Chapter 3.2 presents Activity based the Costing beginning, which is suitable for a cost analysis of the enterprise-internal procurement process in particular.
After the transition from the transaction cost theory to the ABC beginning in chapter 3.3 one describes, chapter 3.4 finally combines the concepts mentioned, in order to come into a uniform theoretical analysis model.

3.1 Transaction cost theory

The transaction cost theory belongs to the “new Institutional Economics” paradigm and regards accordingly the enterprise as organization form 9 .
This opinion decreases/goes back to the thesis of Coase, those the market and the company as institutional arrangements describes 10 .
The transaction cost theory is to contribute to the decision of the most suitable organization form decision, whereby the best alternative is identified mainly on basis of the cost comparison 11 .
This implies an analysis of different forms of economical organization regarding the transactions and their dimensions, which can be completed and organized in them. Before one enters more in greater detail however with the straight connections mentioned, an explanation of the central terms and acceptance is necessary.

Vgl. Rindfleisch/Haide (1997), P. 31.
Vgl. Coase (1937).
Vgl. Williamson (1991), P. 269.

3.1.1 Center of terms and acceptance

The investigation core is the transaction, which is to be understood as exchange of a property or a service between transaction partners. There each transaction a contractual agreement – market, hierarchical or hybrid – subordinated, the transaction partners are simultaneous contracting party 13 .
The transaction costs represent the costs of the completion and organization of the economic exchange between transaction partners and them imply both ex ante and ex post office-transaction-cost 14 . “ex ante transaction costs cover the costs of the achievements, which lead to the conclusion of a contractual agreement, in particular thus information -, costs of the contract and negotiation.
Ex post office-transaction-cost contain the costs, which develop for the security, penetration and possible adjustment of the contractual agreements.
” 15 belongs beyond that to the transaction costs also the opportunity costs, those from inefficient organization decisions originates in to 16 .
The transaction costs, i.e. costs, which develop for the contracting parties for the completion and organization of the transaction, but also production costs, i.e. costs, which develop for the contracting parties for the production of the exchanged goods or achievements, are not only yardstick of the advantage of an institutional arrangement.
With the comparison of the efficiency more alternatively institutional arrangements accordingly the sum of production costs and the transaction costs resulting in each case are taken as a basis 17 .
In addition it is not easy to quantify and cause-fairly add those for the production of a property which can be exchanged or an achievement as well as for the preparation and completion of a transaction resulting costs.
The transaction cost theory is interested however not in the exact absolute height of these costs, but wants to only determine, in which institutional arrangement for a certain transaction higher and into which lower costs to result.
After Simon often impudent and simple arguments are sufficient to determine around a difference between two sizes 19 . For the understanding of the transaction cost theory an explanation not only their concepts, but also its acceptance is important. Three behavior acceptance are the basis this theory:

Limited rationality: The participants tend to act rationally in the result succeed to them however only imperfectly this. This both due to the limited information is caused, which they have, and due to their limited data processing and communication capacity.
Opportunismus: The transaction partners pursue their own interest with the organization of the exchange relationship. It is counted on the possibility that it here also cunning, deception, restraint of information etc. to begin.
Risk neutrality: Neutral risk inclination of the participants.

These acceptance are the bases, on which the connection develops itself between indipendent variable, transaction with their dimensions, and dependent variable, organization form.
In the following one these concepts as well as their characteristics are more near regarded.

12 Vgl. Ebers/Gotsch (1995).
13 Vgl. Ebers/Gotsch (1995).
14 Vgl. Williamson (1985), P. 20 FF.
15 Vgl. Ebers/Gotsch (1995), S 209.
16 Vgl. Beef/heath (1997), P. 31.
17 Vgl. Ebers/Gotsch (1995).
18 Vgl. Ebers/Gotsch (1995), P. 211.
19 Vgl. Simon (1978), P. 6 FF.
20 Vgl. Simon (1961), P. 24.
21 Vgl. Simon (1957).
22 Vgl. Williamson (1999), P. 1089.
23 Vgl. Ebers/Gotsch (1995), P. 210.
24 Vgl. Williamson (1975).
25 Vgl. Shelanski/Klein (1995), P. 338.

3.1.2 Argument: The transaction and its dimensions

Since the definition was described already above by transaction, this section enters now with its characteristics, those after Williamson the height for the completion and organization of an exchange relationship developing costs affects. 26
These are the following three dimensions:

Transaction specific investments : This dimension refers to the investments, those not without productive depreciation for alternative purposes to be used can. 27
Thus transaction specific investments represent the extent, in which the transaction partners fall back for the production of a property which can be exchanged or a service to specialized input factors. “Williamson (1991) differentiates six forms of transaction specific investments without requirement on completeness: (1) location-specific investments (e.g. the building of a supplier work in direct proximity of a customer work to save around transportation and storage costs); (2) system dependent investments (e.g. machines to the production of press forms, which can be used only for the production of a specific product); (3) investments into specific human resources (e.g. learning little standardized, firm specific planning procedures); (4) customer-specific investments (capacity extensions, which are made only for the operation of the orders of a customer); (5) investments into the Reputation (e.g. structure of a label name); and (6) date-specific investments in temporally only limits removable or profitable goods and achievements (e.g. season commodity or goods and achievements for the Just in time production).” 28
With such investments production costs savings can be usually realized due to specialization advantages. On the other side transaction specific investments lead to a special dependence between the transaction partners as well as to additional contractual dangers and cause thereby higher transaction costs in all organization forms 29 .
The transaction partner can be changed only under acceptance of worse conditions. This increases the Opportunitaetskosten of the dissolution of the relationship, since the input factors are cut to the production of completely certain goods or services, in other uses against it a very much smaller value possesses. Therefore the transaction partners have a higher interest in a durable exchange relationship. 30
Other negative aspect can be shown. The competition pressure is lower, while the danger of the opportunistischen behavior is higher. The possibility for the transaction partners of changing the exchange conditions on one side to its favour leads to additional Feil around conditions as per contract or too with the interpretation and fulfilment of the contractual agreements arising conflicts, which post office-transaction-cost ex cause.
“the agreement and application of institutional regulations, which are to prevent or limit opportunistic behavior, cause also transaction costs. These rise therefore c.p. with increasing extent of transaction specific investments.
With employment of nonspecific input factors however these transaction costs resulting from opportunistischem behavior and its accomplishment do not originate 31 .”

Uncertainty : Also the uncertainty connected with a transaction affects the costs.
Since with increasing uncertainty by the transaction partners of more circumstances and eventualities of the exchange relationship must be considered, the ex ante information -, negotiation – rise, and costs of the contract.
Exactly the same take the ex post office-transaction-cost with increasing uncertainty c.p. too, since the exchange relationship at the basis lying contracts are incomplete due to the limited rationality of the transaction partners.
“if not all circumstances, which could change the respective cost-benefit ratio of the transaction partners, ante ex completely be considered can, then it becomes with increasing uncertainty ever more probably that one the transaction partner or both in the process of the exchange relationship are interested to adapt the contract conditions changed conditions.
For the accomplishment of these adjustments then ex post office information -, negotiation -, costs of the contract and conflict develop.” 32
These effects are the stronger, the more co-ordination are necessary for the adjustments, i.e. the more transaction specific investments were transacted 33 .
During small transaction specific investments however the transaction partners draw no special advantages from a durable exchange relationship and can the transaction without larger proceeds losses also with another transaction partner complete.
“Opportunisti behavior is effectively limited by the competition.” 34
Therefore the effect is due by uncertainty to the transaction specific investments and bilateral dependence following from it.
On the height of production costs an increase of the uncertainty does not exert direct influence.

Frequency : The transaction partners can complete identical transactions several times with one another.
With rising frequency of the transaction can be realized c.p. both scale and synergies, and specialization advantages. Per transaction production and transaction costs with increasing frequency of the transaction therefore sink.

The following overview summarizes the cost effects of the three transaction dimensions.

tab2

Tab. 2: Cost effects of the three transaction dimensions 36 .
26 Vgl. Williamson (1985), P. 52 FF.
27 Vgl. Williamson (1991), P. 281.
28 Ebers/Gotsch (1995), P. 211-212.
29 Vgl. Williamson (1991), P. 282.
30 Vgl. Ebers/Gotsch (1995), P. 212.
31 Ebers/Gotsch (1995), P. 212.
32 Ebers/Gotsch (1995), P. 213.
33 Vgl. Williamson (1991), P. 291.
34 Ebers/Gotsch (1995), P. 213.
35 Vgl. Ebers/Gotsch (1995), P. 213.
36 Vgl. Ebers/Gotsch (1995), P. 214.

3.1.3 Dependent variable: The organization form and its characteristics

“the transaction cost theory defines and differentiates alternative institutional arrangements on contract-theoretical basis.” 37
Williamson differentiates three forms from contractual relations – classical, neoclassical and relational – those the completion of transactions in each case over the market, over long-term contracts and with respect to organizations corresponds 38 .
Their characteristics are four important measured variables on the efficiency of the completion and organization of transactions: The incentive intensity, the control mechanisms, the adaptability as well as the costs of the establishment and use of the institutional arrangement. 39
Classical contractual relations are characterised by short duration, by the clear definition of the agreed upon achievements and returns and the transaction conditions, as well as by itself a personal interaction of the contracting parties limiting to the discrete act of the transaction. 40
Possible conflicts, which develop regarding the exchange relationship and their consequences, usually develop to a case for the courts. Classical contractual relations mark the institutional form of the completion of transactions by the market exchange between autonomous transaction partners. 41
“achievements and returns are directly and closely coupled, as well as in a high measure monetary assessably. Since each increase of the net use of the transaction flows to the transaction partners directly, each transaction partner possesses a strong interest to use its resources as efficiently as possible.
This strong interest is still increased by the competition, which the transaction partners Transaction (partner) alternative with classical contractual relations due to the small specificity of the goods or achievements and due to the relatively simple comparability of the advantage more differently are often suspended. 42 ”
The control mechanisms are very economical thereby also, because due to the convincing threat with legal sanctions or the withdrawal of orders for exclusion often a strong incentive exists to fulfill the contracts. 43
Beyond that the classical contract offers a high and economical adaptability to changed conditions, like the change of the demand, the offer or the factor price relations.
It makes autonomous adaptability possible, i.e. each transaction partner knows its allocation decision at short notice and independently, without having to co-ordinate it with others, to which changed conditions adapt. 44
Thus cause both the agreement and the monitoring and penetration of the fulfillment of a contract – by the precise determination of the subject of a classical contract – a small expenditure.
Relational contractual relations are characterized by the establishment of a very long-term exchange relationship between the transaction partners and by openness in the ex ante definition of achievements and returns. Conflicts are decided internally on the hierarchy and solved without engagement of the courts. 45
On relational contracts the institutional form of the completion of transactions in organizations is based. 46
Compared with classical exchange relations the internally working incentives are here pronounced to efficient resources employment more weakly, since achievements and returns are often due to measuring and addition problems not direct and closely coupled.
Also the missing direct competition prevents that the input factors are remunerated in accordance with their border productivity . Can – by internal sliding average price systems and other bureaucratic control and incentive systems – which incentive effects of the market internally simulated and which are compensated existing incentive deficits, but the effectiveness of these measures impaired by the measuring problem. Beyond that costs of the establishment and use result. 47
“a further implication of the problems of the power measurement consists of the fact that the persons employed can try to carry a smaller out than the agreed upon (and remunerated) contribution or to exploit other input factors over fee for the own advantage. In order to limit this possibility of opportunistic behavior, in organizations (in addition, in some hybrid institutional arrangements) specific bureaucratic control and control systems are institutionalized, those likewise to an increase of the cost level contribute.” 48
However the organization-internal achievement production possesses advantages, e.g. in view to the so-called bilateral adaptability. 49
With ease factor combinations can be co-ordinated earmarked for special use with the respective requirements and adapted to changed conditions.
“a further advantage exists in the better information about the combination ability and achievement of different input factors.
Because over internal resources better information exists as over external and because information can be procured internally besides more simply and more economically (Cheung 1983), is it possible to combine resources organization-internally in more productive way than with marktlich obtained processes. Beyond that the better information makes a more efficient protection possible from opportunistischem behavior.” 50
For these advantages however bureaucratic costs arise and general costs of the establishment and use of the contractual relation. 51
Neoclassical contractual relations are the basis such transactions, which are carried out in hybrid institutional forms between transaction partners, whereby they defined measured variables regarding all four of Williamson on the efficiency of the completion and organization of transactions a central position between market and organization take. 51
Thus here, in contrast to classical contracts, not all conditions, which affect the costs and use of the transaction, of the transaction partners are completely anticipated and precisely fixed.
“neoclassical contractual relations are therefore often by adjustment and safeguards as well as institutionalizing conflict regulation mechanisms under private law characterized (…) the transaction partners try, at least first, to solve conflicts over arbitral tribunals instead of them to the courts to refer (one-hurry 1978; Williamson 1991).” 53
In summary the following table results in view to the transaction characteristics of the three fundamental alternative institutional arrangements.

tab3

Tab. 3: Transaction characteristics of the three institutional arrangements. 54

37 Ebers/Gotsch (1995), P. 214.
38 Vgl. Williamson (1985).
39 Vgl. Williamson (1991), P. 277 FF.
40 Vgl. One-hurry (1987), P. 275.
41 Vgl. Williamson (1985), P. 69.
42 Ebers/Gotsch (1995), P. 216.
43 Vgl. Ebers/Gotsch (1995), P. 216.
44 Vgl. Williamson (1991), P. 278.
45 Vgl. One-hurry (1974), (1978); Williamson (1991).
46 Vgl. Williamson (1985), P. 75 FF.
47 Vgl. Ebers/Gotsch (1995), P. 217.
48 Ebers/Gotsch (1995), P. 217.
49 Vgl. Williamson (1991), P. 278 FF.
50 Ebers/Gotsch (1995), P. 217.
51 Vgl. Williamson (1991), P. 279.
52 Vgl. Williamson (1991), P. 280 FF.
53 Ebers/Gotsch (1995), P. 215.
54 Vgl. Williamson (1991), P. 281; Ebers/Gotsch (1995), P. 218.

3.1.4 Basic model and main statements

After the basic model of the transaction cost theory a given transaction under the behavior acceptance mentioned can be organized and completed the more efficiently, the correspond themselves better the characteristics of the institutional arrangement the requirements resulting in from the dimensions of the transaction which can be completed. 55
Illustration 3 illustrates that the transaction cost theory underlying basic model.

abb4

Fig. 3: Basic model of the transaction cost theory 56

From the connection between independent and dependent variables the main statement of the transaction cost theory results: The market represents the most favourable organization form due to its strong incentives and the effectiveness of the competition mechanism, which opportunistic behavior makes limited and economical autonomous adjustment processes possible, if transactions are not connected with special uncertainty or transaction specific investments. 57
With increasing transaction specific investments and increasing uncertainty first long-term, contingents of contracts with safeguards become favourable.
With very high extent of transaction specific investments the organization-internal achievement production is preferred.
“heavy and more expensively it per will to consider all circumstances of the exchange relationship in neoclassical contracts and the more largely the potential profits are the more attractive, which could obtain the transaction partners due to uncertainty and transaction specific investments from opportunistischem behavior, will it to provide the property or the achievement organization-internally.
In particular with large uncertainty and high transaction specific investments the organization-internal achievement production represents the relatively most favorable institutional arrangement.” 58
The following illustration illustrates the cost process of the three institutional arrangements as a function of the extent of transaction specific investments under uncertainty.59

abb4b

Fig. 4: Cost process of the different institutional arrangements as a function of Measured transaction specific investments under uncertainty. 60

55 Vgl. Ebers/Gotsch (1995), P. 218.
56 ajar on: Ebers/Gotsch (1995), P. 219.
57 Vgl. Shelanski/Klein (1995), P. 337.
58 Ebers/Gotsch (1995), P. 222 FF.
59 Vgl. Williamson (1991), P. 284.
60 Vgl. Williamson (1991), P. 284.

3.1.5 Empirical probation degree

Numerous studies of the transaction cost theory show the multiple ranges of application, in which their empirical probation degree can be examined.
In principle the transaction cost theory for each problem, which can be formulated direct or indirect as contract situation, can be considered. 61
Oldest and most frequent application within the economical range refers to the Make or Buy decision and to the vertical integration. 62

One differentiates between backward integration – which corresponds to the internal admission of products or services from pre-aged production stages – and forward integration, by which one understands the admission of products or services from stored sales levels (e.g. distribution). 63
In the following one important associated studies are listed, whereby no requirement insists on completeness.
Monteverde and Teece supply a core study over the backward integration with the application of the transaction cost theory to the Make or Buy decision for assembly components of two enterprises in the American automobile industry. 64
Their determination refers to 133 components and results in a positive relationship between specific investments and enterprise-internal production. 65
Also masts, Meehan and Snyder as well as Walker and webers analyze the acquisition of the components for the automobile industry of the United States. With the 118 examined components first show that only the human specific investments possess a positive relationship to the percentage of the internally produced parts. 66
Second determine the Make or Buy decision in a large car manufacturer. According to its result it is affected by the strength of the competition pressure and the uncertainty. 67
Further concern themselves Levy, Lieberman, masts and masts, Meehan and Snyder with the Make or Buy decision for production inputs. Levy examines 69 factories from 37 industrial ranges.
After its determination the companies with higher extent at specific investments under uncertainty are vertically more integrated. 68
Lieberman regards 203 American manufacturers of chemistry products. They look for the vertical integration, in order to avoid the out specific investments the following dependence, whereby the probability of integration increases with higher input costs. 69
1887 component of a space travel system analyze masts. The parts, which require high specific investments under uncertainty, are produced internally with higher probability. 70
1989 examines masts, Meehan and Snyder of 74 parts for the production of a ship.
Their result reads that specific investments and uncertainty stand in positive relation to the self-production of these parts, although this effect comes mainly due to the reduction of the internal organization costs. 71
These examples give an overview of application to the transaction cost theory in the production department. In the logistics range, which is more applicable in the context of this work, Matz accomplished two interesting studies.
In first 138 carriers are taken under the magnifying glass, in order to answer the question whether specific investments, uncertainty and transaction frequency the transportation functions to affect. The conclusion is that only human specific investments have a positive relationship to the use of own carriers. 72
In the case of the 147 examined factories of its second study results a negative relationship between specific investments and probability outsourcing of camp functions, while the transaction frequency stands in positive relation to it. 73
From this list the reader can determine the empirical probation degree of the transaction cost theory. The author refers afterwards to the words of Williamson: “to be over safe, the transaction cost theory becomes, as everything else, from more and better empirical work to profit. However I do not hesitate to state that the transaction cost theory is an empirically successful theory.” 74

61 Vgl. Williamson (1985), P. ix.
62 Vgl. Beef/heath (1997), P. 32.
63 Vgl. Steinmann/Schreyoegg (1993), P. 31.
64 Vgl. Beef/heath (1997), P. 32.
65 Vgl. Monteverde/Teece (1982).
66 Vgl. Masten/Meehan/Snyder (1989).
67 Vgl. Milling he/weber (1984) and milling he/weber (1987).
68 Vgl. Levy (1985).
69 Vgl. Lieberman (1991).
70 Vgl. Masts (1984).
71 Vgl. Masten/Meehan/Snyder (1991).
72 Vgl. Maltz (1993).
73 Vgl. Maltz (1994).
74 Williamson (1999), P. 1092.

3.2 Activity Based Costing

Although the basic elements and mechanisms of the Activity Based Costing (ABC) exist for decades, this concept developed in such a way only in the last years that it represents today one of the most important cost calculation beginnings. 75

75 Vgl. Hicks (1992).

3.2.1 Historical development of the ABC

Already 1908 noticed Hamilton Church the increase of the indirect costs and referred to the necessity to add the general expenses to the individual products. 76
Into the 20’s and 30’s would use many enterprises the principles of the ABC due to the risen expenditures for advertisement, graduation and selling. After the Second World War the American economy and the costs of distribution stabilized played a subordinated role. High product volumes and low product variety led the ABC to the application of the traditional cost calculation systems and up to the 60’s were ignored. 77
Only in the 60’s led the General Electric (GE) accountants the word “Activity” in, in order to describe expenses causing processing steps. Since GE had thousand products, to which few direct costs and many overhead costs were added, invented it a system which is based on activities for cost identification. 78
However it took still 15 years, until the ABC was developed into the current form. In and the 80’s 70’s the industral superiority of the United States decreased. New challenges led beginning of the 80’s to the necessity to use more suitable procedures for the computation of the cost information. In addition the contributions of many academy members, practical men and organizations served. Among them count Robert Kaplan, ruby Cooper, Thomas Johnson and Peter Turney, as well as the “Consortium OF Advanced Manufacturers international” (Cam i), “institutes the OF management Accountants” (IMA) and the “Society OF management Accountants ton of Canada” (SMCA). 79
Robert Kaplan stated that the cost calculation and inspection procedure at that time did not present production costs distorted and the crucial not-financial data, which were necessary for efficient and effective enterprises in a new competition environment. 80
Today ABC is in the western world 81
an important decision-support beginning become. 82

76 Vgl. Harrison/Sullivan (1996).
77 Vgl. Harrison/Sullivan (1996).
78 Vgl. Harrison/Sullivan (1996).
79 Vgl. Hicks (1999).
80 Vgl. Kaplan (1984), P. 95.
81 in contrast e.g. to Japan: See Harrison (1998), P. 7.
82 Vgl. Cooper/Kaplan (1991), P. 131.

3,2,2 definitions and reasons for ABC

In particular two definitions help with the understanding of the ABC beginning: Liggett, Trevino and Lavelle. maintain the following: “certain activities are implemented for the product production.
These activities use enterprise resources and cause therefore costs. Production uses activities.
By determination of the resources quantity used for an activity (and the costs resulting from it) and a direct addition of production costs is possible for the amount of activity used for the production of a product to the products.” 83
Cam i defines ABC as method for the identification of the causal connection between cost drivers and cost activities by measurement of the costs of the process-referred activities and the cost objects. 84
From these definitions one can derive the reason, why the ABC is necessary. Production costs consist directly of material and personnel expenditure. In the today’s environment however the personnel expenditure amounts to only 5% to 15% and material costs 45% to 55% of the entire costs. The indirect costs amount to thus 30% to 50%. 85
In this context, in which the indirect costs represent a large part of entire production costs and the cost drivers not only to production volumes but rather different factors, the ABC makes the direct allocation possible of most costs to the products compared with the traditional cost calculation concepts. Therefore the ABC beginning is more precise than the traditional beginnings.

abb5

Fig. 5: The increase of the expenses in the past years 87

83 Ligget/Trevino/Lavelle (1992).
84 Vgl. Cross-beams (1995).
85 Vgl. Raffish (1991).
86 Vgl. Kennedy (1996).
87 ajar on: Raffish (1991).

3.2.3 Traditional cost accounting procedure vs. ABC procedures

Before one on the ABC procedure dies more exactly is necessary the understanding of the traditional cost calculation procedure.
The procedure of the traditional cost calculation implies the allocation of the indirect costs to the products in two different steps: In the first step the indirect costs of the individual production departments are identified, while in second the indirect costs of the different production departments cumulated are assigned to the individual products after in advance certain accounting rules. 88
Illustration 6 is considered as example.

abb6

Fig. 6: The two-stage Allokationssystem of the traditional cost calculation. 89

All traditional procedures for the computation of the indirect costs are based on the production volume, that again a direct function of the direct personnel working hours, which is direct wage and salary costs and the machine working hours. If the indirect costs would depend directly on the production volume, they were assigned with the traditional procedures accurately to the products. If however the indirect costs are determined rather of other factors than by the output, the traditional cost calculation leads to distortions. 90
Also the ABC basic concept corresponds to a two-stage procedure. In the first stage all resources costs are called, assigned to production and business processes, also activity centers.
Examples of production processes are the pressure, the assembly, etc.; Business processes represent however the selling, marketing, etc.. In contrast to the first stage, which does not differ much from the traditional procedure, the second stage is a special characteristic of the ABC.
Here the costs to the products or customers on basis, added to the activity centers, are assigned their activity consumption. 91
Illustration 7 illustrates these circumstances on the basis an example.

abb7

Fig. 7: ABC Allokationssystem. 92

88 Vgl. Atkinson/Banker/Kaplan/Young (1997), P. 278-279.
89 ajar on: Atkinson/Banker/Kaplan/Young (1997), P. 279.
90 Vgl. Kennedy (1996).
91 Vgl. O’Guin (1991), P. 41-42.
92 ajar on: O’Guin (1991), P. 42; Cooper/Kaplan (1998), P. 116.

3.3 From production and transaction costs to total costs

In chapter 3.1 the terms “production costs” and “transaction costs” were already defined.
While production costs are the costs, which develop for the contracting parties for the production of the goods or achievements which can be exchanged, the transaction costs represent the costs, which result for the completion and organization of the exchange. Since the procurement is seen as transaction, production costs result from the sum of the costs of the production of the procurement activities, while the transaction costs from the organization and the management of the whole of these activities develop.
In the case production costs correspond to the enterprise-internal procurement to the costs of the pure procurement achievement and the transaction-cost the costs of the organization of this achievement. During the paged out procurement however places the price, that the enterprise to the external service supplying company (here: Unitec) pays, production costs. While the costs of the management of the contractual relation with the service supplying company the transaction costs correspond.
Since the quantification of these costs is however difficult, the transaction dimensions defined in the transaction cost theory should facilitate the cost calculation.
The following illustration summarizes this interpretation:

abb8

Fig. 8: The cost registration in the procurement according to the transaction cost theory

In practice it is not easy to consider the separation between production and transaction costs as the contribution of the-set 93 shows, that however the terms of the transaction cost theory differently used. The distinction between production and transaction costs remains, but under transaction costs it understands the costs of the organization of the resources exchange only regarding the market situation. The costs of the exchange organization within an enterprise are defined however as management costs.
The-set criticizes the past transaction-cost-theory-referred studies, which examine the organization form decision on basis of the simple comparison between transaction costs and management costs.
That the hierarchical organization form is to replace the market, if the transaction costs are higher than the management costs, is an inaccurate statement.
The separation between “Make or Buy” is not clear and leads therefore to unidentified problems. 94
The own position of a product requires the purchase of inputs on the market, so that transaction costs play their role also in the Make decision.
Exactly the same management costs in the Buy decision emerge, since the paid product price contains not only production costs but also the management costs of the manufacturer.
Therefore both transaction costs and management costs in both organization forms are to be regarded and one make the correct decision, if that organization form is selected, those the lowest sum of transaction -, management and production costs possesses.
Enterprises buy products, if this is more economical, as their internal production. This does not mean that the market solution is more economical, if the transaction costs are lower than the management costs.
That would be a wrong conclusion of the existing studies, which do not consider the important role of production costs. 94
Assumed the transaction costs amount to zero and the management costs are positive, then the own position can be nevertheless more favorable, if e.g. production costs and thus the product price of the other manufacturer are too high. On the other side the purchase can be more favourable in the market also with management costs of zero, if e.g. production costs of the other manufacturer are low enough.
The fact that these circumstances remain often unconsidered lies in the implicit acceptance that information is perfect and free. The transaction cost theory recognizes the information costs regarding the transaction and management activities, but not regarding production activities.
Thus it is accepted that each enterprise can manufacture a product directly well and efficiently, so that the production costs differences may not play a role in the Make or Buy decision. 96
Each enterprise is however a complex bundle of technology, personnel and methods within a firm specific information bowl. This bundle cannot be changed or imitated mostly fast or simply. 97
In the final result the force of expression of the transaction cost theory is in our ability to make it applicable mathematically calculable and on concrete problems. This is difficult to reach.
It is complicated, the relevance of the transactions – to discuss the management and production costs without a clear distinction between them since no clear distinction is given. 98
Therefore in this work the enterprise-internal is compared with the paged out procurement on the basis the sum of the entire costs. The total costs of the procurement contain both production and management and transaction costs and result from the sum of the cost factors commodity price, transport costs, process costs and stock costs, which are to be regarded also with outsourcing.
Even the process costs, which are determined by means of ABC, are a component of the total costs in the paged out procurement, there some process activities (complete or partial) remain internally preserved.
In the case outsourcing must pay the enterprise additionally a price of the Unitec for the procurement service.
This price contains again productions -, the management and the transaction costs, now however those from Unitec.
The model for the comparison of the two possible organization forms, i.e. internal and paged out procurement, looks thus as follows:

abb9

Fig. 9: Model to the cost comparison between the enterprise-internal and the paged out procurement.

All these aspects of cost are thus relevant for an outsourcing decision.
“(…) most enterprises are limited however with one another to compare the sums of commodity price and transport costs in order to judge the pro and cons outsourcing of the procurement. The organizational cost factors, i.e. process costs, stock costs and if necessary.
For supplying service border RPR ice, remain however in many investigations unconsidered, also, because they are to be determined many more with difficulty and more time-consuming.” 99
Therefore the work concentrates on the determination of the organizational cost factors. Nevertheless the effects outsourcing at the other cost expense in chapter 4.2.2 are mentioned, in order to ensure as perfect an analysis of procurement costs as possible.

93 Vgl. The-set (1993).
94 Vgl. The-set (1993), P. 162.
95 Vgl. The-set (1993), P. 163.
96 Riordan/Williamson (1985) agree with the fact that both production and the transaction costs of the organization form decision are applicable. Nevertheless they that the qualitative prognoses of the transaction cost theory remain unchanged in nearly all cases, show indipendent whether production costs are constant or are introduced production costs differences.
97 Vgl. The-set (1993), P. 163.
98 Vgl. The-set (1993), P. 163.
99 Marino V.: Interview, P. xxi xxii.

3.4. summary

From the concepts described in this chapter results a theoretical model, which regards the transactions and their characteristics as starting point for an optimal organization form decision.
The preparation on intended factors and conditions as well as for unexpected circumstances is crucial for the success of all enterprises.
To that extent the transaction cost theory makes possible a qualitative investigation also for the decision of the most efficient procurement organization form and can the existence and role outsourcing of the procurement explain. For a quantitative analysis also the ABC beginning is necessary, since it is a suitable instrument for the determination of the process costs. Thus one can accomplish a decision-support cost comparison, which can be helpful for each enterprise for the reaching of the principal purpose cost minimizing.

4.0. Analysis outsourcing of the procurement

This chapter concerns itself with the application of the concepts presented in chapter 3 to the organization form decision in the procurement area.
First chapter 4.1 regards the procurement and its organization possibilities from transaction-cost-theoretical view, whereby the existence outsourcing and the external service supplying company is explained and justified.
In chapter 4.2 a deepened investigation of procurement costs takes place on the basis the comparison between internal and paged out procurement on basis of the example customer GmbH from it in chapter 4.3 recommendations for action for as efficient an organization of the procurement process as possible is finally derived.

4.1. The procurement from transaction-cost-theoretical view

The author wants to begin the application of the theory with by explaining, why the procurement can be seen as transaction and such a view brings which consequences with itself.

4.1.1 The procurement process as transaction

The description of the procurement process in chapter 2.3 points on the fact that it is in the final result an exchange relationship between enterprises and suppliers. This corresponds to the definition of transaction of chapter 3.1, i.e. the exchange of a property or a service between transaction partners.
For this reason one can define the procurement process as transaction and examine him regarding the transaction dimensions:

Procure-specific investments : Thus the extent is meant, in which the contracting parties fall back for the organization and completion of the procurement process to specialized input factors.
“this happens rather on the side of the suppliers as on that of the customers, since generally each enterprise orients itself at its customer market. (1) location-specific investments, e.g., are mostly transacted by the suppliers, itself after the size, which and the prestige of their customers arrange strength. At the customers such investments are usually small. (2) system dependent investments can occur for example with the organization of the camp, if e.g. the supplied products require special conditions for the storekeeping (refrigerators, etc.).
Also the use of a specific software can cause relatively high investments. (3) investments into specific human resources refer e.g. to the necessity, in the camp with special and/or to deal dangerous materials or in the office with firm specific work procedures. But one must train the own coworkers or specialized coworkers to adjust. One finds this kind of specific investments in the procurement most frequently. (4) customer-specific investments concern the customers, but the suppliers by definition not. There can be however the case that the customer due to a large order with one its customer more commodity the suppliers necessarily and the camp must extend. In this case a relatively high investment must be transacted. (5) investments in the Reputation serve for the more successful sales and not purchase.
Therefore they are transacted in the procurement only by the suppliers (see e.g. ISO certifying). (6) date-specific investments in temporally only limits for removable or profitable goods and achievements are transacted, if e.g.. the customers of the procurement customer season goods or just in time produce. This can affect also the relationship with the own suppliers, and high investments cause.” 100
“although specific investments in the procurement area are transacted rather of the suppliers as of the customers, are them potentially relatively highly. Most specific investments are transacted however for the strategic need and the so-called A-parts. For B and C-parts, which do not exhibit a strategic meaning, however the specific investments are generally small.” 101
Stock management classifies the products on basis of its proportional value on the entire volume of purchase in A -, B and C-parts. The A-parts are goods with high original cost, their proportional value amount to 80% of the volume of purchase. B and C-parts possess however low purchase prices and have at the entire volume of purchase only 20% portion. 102
The relationship is however turned around regarding the portion of the entire number of suppliers.
Compared with the A-suppliers, who represent approximately 20% of the entire suppliers, B and C-supplier are 80% of the number of suppliers. 103
“therefore it B and C-products bind substantial capacities and this despite low unit price lead to a high process/overhead surcharge.” 104
Whereupon however in chapter 4.2 is received more exactly.
Procurement uncertainty :”uncertainty belongs to the everyday life of the transaction” procurement “, independently of whether it concerns A or B or C-parts.
An enterprise can be uncertain e.g. over the quantity of the products which can be ordered, so that the agreement with the suppliers becomes more complicated. Also regarding prices, possible discounts, delivery times and quality of the commodity there can be uncertainty. Thus a procurement contract can become costly, there it not all circumstances and eventualities consider can.”105
Procurement frequency :”the procurement process usually very often repets itself. This applies in particular to B and C-parts, those on the average for 80% of allorder procedures constitutes.” 106

For the illustration of the three transaction dimensions regarding the procurement the following table serves.

tab4

Tab. 4: The three transaction dimensions regarding the procurement.

100 Marino V.: Interview, P. xviii.
101 Marino V.: Interview, P. xix.
102 Vgl. Siemens Procurement and Logistics services (2003), P. 2.
103 Vgl. Siemens Procurement and Logistics services (2003), P. 2.
104 Marino V.: Interview, P. xxi.
105 Marino V.: Interview, P. xix.
106 Marino V.: Interview, P. xix.

4.1.2 The procurement form as institutional arrangement

Also in practice to finding organization forms of the procurement process can be examined from transaction-cost-theoretical view.
In this context two possible organization forms come into question: “outsourced” and the enterprise-internal procurement.
“outsourcing, a word creation out” outside “and” resourcing “, generally designates the external supply of services.” 107
In this work one regards the outsourcing and/or paging of the procurement service, whereby one locks with one or more selected service company(s) a contract and to it/them the tasks of procurement hands over, which are not to be settled any longer internally. From the possible contractual relations result two main organization forms outsourcing of the procurement .
“(…) no firm partnership between enterprises and service supplying company can be determined, i.e. the enterprise selects and/or the most economical service supplying company most suitable in each case for each procurement transaction.” 108
The contractual relationship is thus short term and is limited to the exchange of the achievement “procurement” with the return “money”, the determination of the contractual item and the contract conditions is very exact and the possible conflicts on the course of law is solved.
Here it concerns a classical contract (market situation), in which very efficient incentive -, control and (autonomous) adjustment mechanisms exist.
If a certain partnership with a service supplying company is specified, the planned relations duration is usually medium-term, the definition of the contractually agreed upon achievement and return is less clear, so that enterprises and supplier count on contractual adjustment need.
Due to the open regulation need the completion of the transaction is required still limited not on the discrete act of the procurement, but also after contract conclusion a certain measure of decision, tuning and co-operation of the contracting parties.
“(…) E.G. itself the service supplying company can also around additional service, like transport and logistics cares.” 109
This corresponds to the neoclassical contract form. Compared with the market mechanisms outsourcing after the classical contract are more weakly pronounced the characteristics outsourcing after the neoclassical contractual relation: Beyond the contractual additional incentive and control mechanisms are necessary.
In addition this kind of Outsuorcing offers a not completely autonomous adaptability.
During the enterprise-internal procurement the own purchase department implements the tasks, which takes over with the outsourcing of the Supplying service company, so that the contractual relation comes within the enterprise.
With this relational contract the contracting parties plan a very long-term relationship by openness in the determination of the contractual article. The solution method of possibly arising conflicts is certain in the context of the contract.
Regarding the incentive and control mechanisms the internal procurement for the reasons mentioned in chapter 3.1.2 is a costly institutional arrangement. It shows however advantages in view to the efficient (bilateral) adaptability and the faster and more economical information exchange, which make possible also a better protection from opportunistic behavior.
The following table compares the paged out with the internal procurement regarding the organization form characteristics from the transaction cost theory.

tab5

Tab. 5: Comparison between paged out and enterprise-internal procurement regarding the organization form characteristics from the transaction cost theory.

107 O.V. (2003), in: http://www.uniware.de.
108 Marino V.: Interview, P. xix.
109 Marino V.: Interview, P. xix.

4.1.3 the procurement form decision after the basic model of the transaction cost theory

From main statement transaction cost theory follows that the procurement can be organized and completed the more efficiently, the better the characteristics of the organization form the requirements resulting from the procurement dimensions corresponds.
Thus the basic model of the transaction cost theory applied to the procurement looks as follows:

abb10

Fig. 10: The basic model of the transaction cost theory applied to the procurement.

As already seen, the procurement process for B and C-parts is not connected with special specific investments.
For these products therefore the market situation (outsourcing) represents the most favourable procurement form due to its strong incentives and the effectiveness of the competition mechanism, which opportunistic behavior makes limited and economical autonomous adjustment processes possible. Also with increasing procure-specific investments the Ousourcing (with B and C-parts) in form of a neoclassical contractual relation can ensure the optimal solution.
The outsourcing of the procurement for the A-parts (with those high specific investments to be transacted) would mean the foreign assignment of a enterprise-strategic function, which direct control and co-ordination require.
Therefore here the outsourcing of the procurement of the A-goods is not applicable. The connection illustrated in the following illustration applies thus only to B and C-parts.

abb11

Fig. 11: Cost process of the different procurement organization forms as a function of the extent of procure-specific investments under uncertainty.

Thus the transaction cost theory justifies not only the existence outsourcing of the procurement and the external Supplying service company, but designation rather for B and C-parts the outsourcing as the cost-most efficient organization form of this process.
The next section tries however to quantify the advantage outsourcing in relation to the internal procurement on the basis a cost calculation.

4.2 Cost comparison between internal and paged out procurement

This chapter concerns itself with the determination of the costs both the enterprise-internal and the paged out procurement.
The analysis begins with the computation of the process costs (sections 4.2.1 and 4.2.2) and regards then the other relevant aspects of cost in section 4.2.3.
Be based on that, in chapter 3.2, ABC principles described the model used here. It makes the computation possible of the costs of the procurement process of an enterprise, as all associated activities are monetary evaluated.
This analysis refers to real data the customer GmbH, which applies to the whole work as reference example, but she can be inserted use each company, whose admits bookkeeping values are.
Two acceptance are the basis the model:

  • Repeatability of the process for each order and each anniversary.
  • Resources consumption for B and C-parts amounts to 80% of entire resources consumption.

4.2.1 the process costs of the internal procurement

Before with the actual process cost calculation one enters, the description the customer GmbH and their substantial characteristics is necessary.
The entire volume of purchase of materials amounts to at the customer GmbH 30.000.000€ per year, of it 6.000.000€ in B and C-parts (20% of the entire volume of purchase). It can an average materials value at a value of 3.500€ are computed, i.e.. a need of approximately 8570 materials per year.
For approximately 260 working days in the year this means on the average 33 materials on the day.
The departments concerned by the procurement process employ the following person’s number: The production department has 60 coworkers, who work in three layers (20 coworkers for each layer) of in each case eight hours.
In the purchase department eight persons are busy eight hours on the day. In the camp seven persons work eight hours on the day, while in the bookkeeping and the administration in each case five and six persons are busy on the day eight hours.
In the first step of the ABC beginning the costs of resources used for the procurement are computed.
Four cost categories are applicable: Personnel expenditure, structure and machinery costs (notes with writings-off evaluated), energy and materials consumption, and other expenditures, e.g. training -, journey -, finery costs etc.. All these costs are seized for each department in the following table.

tab6

Tab. 6: Cost structure the customer GmbH.

Naturally these costs result not only for the procurement activities, but also for other activities. In order to determine the share of the cost for the procurement, the proportional load must be computed, the individual procurement activities in relation to the entire work time of each department caused.
In addition the times needed for the respective procurement activity are necessary. 110
The proportional portion becomes as relationship between the time used for the activity, and the entire available work time in the department computes. The formula for computation this proportional one reads thus:

script1

Here all values for simplification reasons are rounded on two right-of-comma positions.
For example the percentage for the examination of materials requirements in the production department the following value amounts to:

script2

In contrast to it the disturbance times in the counter are multiplied by the average disturbance frequency.
The telephone reminder of the purchase department takes on the average five minutes and takes place twice on the day.
From it the following quotient results:

script3

Thus the following table for the procurement activities of the production department results.

tab7

Tab. 7: Times and load percentages of the activities of the material requirement in the internal procurement

Differently it behaves with the computations for the purchase department. The receipt of the material requirement light takes altogether 35 minutes and consists of activities, which take place only once on the day.
Its evaluation takes place therefore according to the following formula:

script4

The production of the order and/or the order is computed with the following formula:

script5

The reason for this lies in the fact that the purchase department of production 33 articles inquired consolidated and therefore provides and sends away only 22 orders. The same procedure applies to the other activities of the purchase department with exception of the so-called process disturbances. The reminder of the suppliers by fax takes three minutes and takes place once on the day, while it takes by telephone four minutes and twice on the day takes place. Thus:

script6

tab8

Tab. 8: Times and load percentages of the activities of the order and/or the order in the internal procurement.

Differently it looks with the two activities of the camp. The goods received take place for example 20-20-mal, so that from it the following calculation results:

script7

The merchandise control finds however 33-mal, since it must concern each ordered article. Thus:

script8

In contrast to it possible clarifying with suppliers take on the average twelve minutes. They take place once on the day, whereby those are accomplished with the material requester five minutes to last and once on the day:

tab9

Tab. 9: Times and load percentages of the activities of the incoming goods in the internal procurement.

In the bookkeeping circumstances are somewhat more complicated. The receipt of the calculations takes altogether 25 minutes. Of it 20 minutes are necessary for the distribution of the received letters and faxes, which is made only once on the day. Therefore the calculation reads here:

script9

The clarifying over calculation discrepancies need to find however eight minutes and three times on the day:

tab10

Tab. 10: Times and load percentages of the activities of the audit in the internal procurement.

For the two procurement activities of the administration only one formula is used. To the payment of the calculations applies e.g.:

script10

The clarifying expenditure with the bank amounts to 10 minutes twice on the day, i.e.:

script11

tab11

Tab. 11: Times and load percentages of the activities of the conclude payment operations in the internal procurement.

Now the individual cost categories are to be assigned on the basis the determined proportional ones to the procurement activities.
The first cost category is called personnel expenditure and amounts to for the production department 1,000,000 €, for the purchase department 250,000 €, for the camp 200,000 €, for the bookkeeping 150,000 € and for the department 200,000 €. These values are multiplied by the proportional load of each procurement activity of the individual department, in order to assign the personnel expenditure to each activity.
The following table illustrates this addition .

Personnel expenditureProportional loadActivity costsActivities
Production department:1.000.000 €0,57%5.700,- €Materials requirements examine
0,46%4.600,- €Material requirement lights provide
0,23%2.300,- €Material requirement lights to the range leader send
0,23%2.300,- €Signature/permission of the range leader
1,03%10.300,- €Authorized material requirement lights to the purchase department send
0,03%300,- €Telephone reminders of the purchase department
2,55%25.500,- €Sum for the activity: material requirement
Purchase department:250.000 €0,91%2.275,- €Material requirement lights receive
6,88%17.200,- €Orders and/or orders provide
2,86%7.150,- €Confirmation of orders inquire and receive
1,72%4.300,- €Order copies distribute
2,29%5.725,- €Orders placings
0,29%725,- €Reminders of the supplier
14,95%37.375,- €Sum for the activity: Order and/or order
Camp:200.000 €7,14%14.280,- €Commodity acceptance
3,93%7.860,- €Merchandise controls
0,51%1.020,- €Clarifying with suppliers and/or Requesters
11,58%23.160,- €Sum for the activity: Incoming goods
Bookkeeping:150.000 €5,42%8.130,- €Calculations receive
2,75%4.125,- €Calculations to approve leave
1,00%1.500,- €Clarifying over calculation discrepancies
9,17%13.755,- €Sum for the activity: Audit
Administration:200.000 €19,86%39.720,- €Calculations pay
3,82%7.640,- €Calculations placings
1,04%2.080,- €Clarifying with the bank
24,72%49.440,- €Sum for the activity: conclude payment operations

Tab. 12: Allocation of the personnel expenditure in the internal procurement.

4.2.1. The process costs of the internal procurement

After the personnel expenditure the structure and the machinery costs are to be added to the individual activities.
For this the same percentages and the same method as with are used the personnel expenditure.
Thus the addition of the structure and the machinery costs takes place according to the following method :

Structure and machinery costsProportional loadActivity costsActivities
Production department:1.400.000 €0,57%7.980,- €Materials requirements examine
0,46%6.440,- €Material requirement lights provide
0,23%3.220,- €Material requirement lights to the range leader send
0,23%3.220,- €Signature/permission of the range leader
1,03%14.420,- €Authorized material requirement lights to the purchase department send
0,03%420,- €Telephone reminders of the purchase department
2,55%35.700,- €Sum for the activity: material requirement
Purchase department:25.000 €0,91%227,50 €Material requirement lights receive
6,88%1.720,- €Orders and/or orders provide
2,86%715,- €Confirmation of orders inquire and receive
1,72%430,- €Order copies distribute
2,29%572,50 €Orders placings
0,29%72,50 €Reminders of the supplier
14,95%3.737,50 €Sum for the activity: Order and/or order
Camp:100.000 €7,14%7.140,- €Commodity acceptance
3,93%3.930,- €Merchandise controls
0,51%510,- €Clarifying with suppliers and/or Requesters
11,58%11.580,- €Sum for the activity: Incoming goods
Bookkeeping:25.000 €5,42%1.355,- €Calculations receive
2,75%687,50 €Calculations to approve leave
1,00%250,- €Clarifying over calculation discrepancies
9,17%2.292,50 €Sum for the activity: Audit
Administration:25.000 €19,86%4.965,- €Calculations pay
3,82%955,- €Calculations placings
1,04%260,- €Clarifying with the bank
24,72%6.180,- €Sum for the activity: conclude payment operations

Tab. 13: Allocation of the structure and the machinery costs in the internal procurement.

A further aspect of cost is the energy and materials consumption . Also its costs are computed – depending upon participation-proportional the individual activity – on the entire activity.

Energy and materials consumptionProportional loadActivity costsActivities
Production department:250.000 €0,57%1.425,- €Materials requirements examine
0,46%1.150,- €Material requirement lights provide
0,23%575,- €Material requirement lights to the range leader send
0,23%575,- €Signature/permission of the range leader
1,03%2.575,- €Authorized material requirement lights to the purchase department send
0,03%75,- €Telephone reminders of the purchase department
2,55%6.375,- €Sum for the activity: material requirement
Purchase department:5.000 €0,91%45,50 €Material requirement lights receive
6,88%344,- €Orders and/or orders provide
2,86%143,- €Confirmation of orders inquire and receive
1,72%86,- €Order copies distribute
2,29%114,50 €Orders placings
0,29%14,50 €Reminders of the supplier
14,95%747,50 €Sum for the activity: Order and/or order
Camp:15.000 €7,14%1.071,- €Commodity acceptance
3,93%589,50 €Merchandise controls
0,51%76,50 €Clarifying with suppliers and/or Requesters
11,58%1.737,- €Sum for the activity: Incoming goods
Bookkeeping:25.000 €5,42%1.355,- €Calculations receive
2,75%687,50 €Calculations to approve leave
1,00%250,- €Clarifying over calculation discrepancies
9,17%2.292,50 €Sum for the activity: Audit
Administration:25.000 €19,86%4.965,- €Calculations pay
3,82%955,- €Calculations placings
1,04%260,- €Clarifying with the bank
24,72%6.180,- €Sum for the activity: conclude payment operations

Tab. 14: Allocation of the costs of energy materials consumption in the internal procurement.

The other costs become last (training -, journey -, finery costs, etc..) to the individual activities added .

Other expendituresProportional loadActivity costsActivities
Production department:

155.000 €

0,57%883,50 €Materials requirements examine
0,46%713,- €Material requirement lights provide
0,23%356,50 €Material requirement lights to the range leader send
0,23%356,50 €Signature/permission of the range leader
1,03%1.596,50 €Authorized material requirement lights to the purchase department send
0,03%46,50 €Telephone reminders of the purchase department
2,55%3.952,50 €Sum for the activity: material requirement
Purchase department:140.000 €0,91%1.274,- €Material requirement lights receive
6,88%9.632,- €Orders and/or orders provide
2,86%4.004,- €Confirmation of orders inquire and receive
1,72%2.408,- €Order copies distribute
2,29%3.206,- €Orders placings
0,29%406,- €Reminders of the supplier
14,95%20.930,- €Sum for the activity: Order and/or order
Camp:130.000 €7,14%9.282,- €Commodity acceptance
3,93%5.109,- €Merchandise controls
0,51%663,- €Clarifying with suppliers and/or Requesters
11,58%15.054,- €Sum for the activity: Incoming goods
Bookkeeping:55.000 €5,42%2.981,- €Calculations receive
2,75%1.512,50 €Calculations to approve leave
1,00%550,- €Clarifying over calculation discrepancies
9,17%5.043,50 €Sum for the activity: Audit
Administration:55.000 €19,86%10.923,- €Calculations pay
3,82%2.101,- €Calculations placings
1,04%572,- €Clarifying with the bank
24,72%13.596,- €Sum for the activity: conclude payment operations

Tab. 15: Allocation of the costs of the other expenditures in the internal procurement.

Now the total costs for each procurement activity are to be determined by the sum of the different cost categories. For the individual activities the following table results :

Process costsPersonalStructure and machinesEnergy and materials consumptionOther expendituresActivity costs
Materials requirements examine5.700,- €7.980,- €1.425,- €883,50 €15.988,50 €
Material requirement lights provide4.600,- €6.440,- €1.150,- €713,- €12.903,- €
Material requirement lights to the range leader send2.300,- €3.220,- €575,- €356,50 €6.451,50 €
Signature/permission of the range leader2.300,- €3.220,- €575,- €356,50 €6.451,50 €
Authorized material requirement lights to the purchase department send10.300,- €14.420,- €2.575,- €1.596,50 €28.891,50 €
Telephone reminders of the purchase department300,- €420,- €75,- €46,50 €841,50 €
Sum for the activity: material requirement25.500,- €35.700,- €6.375,- €3.952,50 €71.527,50 €
Material requirement lights receive2.275,- €227,50 €45,50 €1.274,- €3.822,- €
Orders and/or orders provide17.200,- €1.720,- €344,- €9.632,- €28.896,- €
Confirmation of orders inquire and receive7.150,- €715,- €143,- €4.004,- €12.012,- €
Order copies distribute4.300,- €430,- €86,- €2.408,- €7.224,- €
Orders placings5.725,- €572,50 €114,50 €3.206,- €9.618,- €
Reminders of the supplier725,- €72,50 €14,50 €406,- €1.218,- €
Sum for the activity: Order and/or order37.375,- €3.737,50 €747,50 €20.930,- €62.790,- €
Commodity acceptance14.280,- €7.140,- €1.071,- €9.282,- €31.773,- €
Merchandise controls7.860,- €3.930,- €589,50 €5.109,- €17.488,50 €
Clarifying with suppliers and/or Requesters1.020,- €510,- €76,50 €663,- €2.269,50 €
Sum for the activity: Incoming goods23.160,- €11.580,- €1.737,- €15.054,- €51.531,- €
Calculations receive8.130,- €1.355,- €1.355,- €2.981,- €13.821,- €
Calculations to approve leave4.125,- €687,50 €687,50 €1.512,50 €7.012,50 €
Clarifying over calculation discrepancies1.500,- €250,- €250,- €550,- €2.550,- €
Sum for the activity: Audit13.755,- €2.292,50 €2.292,50 €5.043,50 €23.383,50 €
Calculations pay39.720,- €4.965,- €4.965,- €10.923,- €60.573,- €
Calculations placings7.640,- €955,- €955,- €2.101,- €11.651,- €
Clarifying with the bank2.080,- €260,- €260,- €572,- €3.172,- €
Sum for the activity: conclude payment operations49.440,- €6.180,- €6.180,- €13.596,- €75.396,- €
Sum total149.230,- €59.490,- €17.332,- €58.576,- €284.628,- €

Tab. 16: The process costs of the internal procurement.

Thus annual costs at a value of 284.628€ result for the internal procurement. After model acceptance 80% of resources for the procurement of B and C-parts are used. Table 17 gives an overview of the process costs of the procurement to B and C-parts :

ActivitiesTotal costsCosts of the procurement of A-parts (20%)Costs of di Beschaffung von B- and C-C-Teilen (80%)
Materials requirements examine15.988,50 €3.197,70 €12.790,80 €
Material requirement lights provide12.903,- €2.580,60 €10.322,40 €
Material requirement lights to the range leader send6.451,50 €1.290,30 €5.161,20 €
Signature/permission of the range leader6.451,50 €1.290,30 €5.161,20 €
Authorized material requirement lights to the purchase department send28.891,50 €5.778,30 €23.113,20 €
Telephone reminders of the purchase department841,50 €168,30 €673,20 €
Sum for the activity: material requirement71.527,50 €14.305,50 €57.222,- €
Material requirement lights receive3.822,- €764,40 €3.057,60 €
Orders and/or orders provide28.896,- €5.779,20 €23.116,80 €
Confirmation of orders inquire and receive12.012,- €2.402,40 €9.609,60 €
Order copies distribute7.224,- €1.444,80 €5.779,20 €
Orders placings9.618,- €1.923,60 €7.694,60
Reminders of the supplier1.218,- €243,60 €974,40 €
Sum for the activity: Order and/or order62.790,- €12.558,- €50.232,- €
Commodity acceptance31.773,- €6.354,60 €25.418,40 €
Merchandise controls17.488,50 €3.497,70 €13.990,80 €
Clarifying with suppliers and/or Requesters2.269,50 €453,90 €1.815,60 €
Sum for the activity: Incoming goods51.531,- €10.306,20 €41.224,80 €
Calculations receive13.821,- €2.764,20 €11.056,80 €
Calculations to approve leave7.012,50 €1.402,50 €5.610,- €
Clarifying over calculation discrepancies2.550,- €510,- €2.040,- €
Sum for the activity: Audit23.383,50 €4.676,70 €18.706,80 €
Calculations pay60.573,- €12.114,60 €48.458,40 €
Calculations placings11.651,- €2.330,20 €9.320,80 €
Clarifying with the bank3.172,- €634,40 €2.537,60 €
Sum for the activity: conclude payment operations75.396,- €15.079,2060.316,80 €
Sum total284.628,- €56.925,60 €227.702,40 €

Tab. 17: The process costs of B and C-parts in the internal procurement.

The process costs of the internal procurement of B and C-parts amount to thus 227,702.40€. In order to make a comparison possible with the outsourcing option, in the next section the process costs of the paged out procurement are determined.

4.2.2. The process costs of the paged out procurement

Also the determination of the process costs of the paged out procurement is based on the ABC beginning.
In the context of the reference example of this work first the effects of the relationship with Unitec must on the individual activity times and/or haeufigkeiten during the procurement process the customer GmbH to be measured.
They are to be likewise found in the private customer documents from Unitec to and refer on the first two years, in which the customer GmbH converted the outsourcing of the procurement and took up for this the partnership with Unitec, i.e. the years 2001 and 2002.
“the implementation of this decision came at the customer GmbH gradually, so that the procurement process ran from B and C-parts – despite reduced load of the purchase department – in the year 2001 still over it. Only starting from 2002 one could complete the process for B and C-parts without engagement of the purchase department.” 111
Both steps are taken in the following one under the magnifying glass, whereby the cost structure of the yearly 2000 starting point for the computation of the process costs, represented in table 6, remains, in order to make a more exact comparison possible.
The effects, which result with outsourcing, are then compared with the cost situation without paging.

111 Marino V.: Interview, P. xx.

4.2.2.1 process costs of the paged out procurement with participation of the purchase department

This section analyzes the intermediate step for the actual outsourcing of the procurement, i.e. if the purchase department remains involved in the procurement of B and C-parts. The individual activity times and the proportional loads are determined also here.
The phase of the materialanforderung remains unchanged in this configuration.
Accordingly the following table applies to the procurement activities of production.

tab18

Tab. 18: Times and load percentages of the activities of the materialanforderung in the paged out procurement with participation of the purchase department.

In contrast to it changes for the activities of the order show up. From the 22 orders when internal procurement now on the average 5.4 orders are accomplished on the day for A -, B and C-materials. The order for all B and C-parts lasts longer, however only once at Unitec is sent away.
Thus arises e.g. for the production of the order:

script12

The percentage of the reminder of the A-suppliers and the Unitec results out:

tab19

Tab. 19: Times and load percentages of the activities of the order and/or the order in the paged out procurement with participation of the purchase department.

Also in the camp the situation changes due to the integrated supply. Several supplies are summarized. The multiplicity of incoming goods and the appropriate examinations and camp activities are reduced.
“this permits also an improvement in the river to logistics. The entrances can be organized in such a way that the acceptance of the goods takes place irregularly reglementiert and no longer. The expirations of camp can be concentrated and accelerated.
The idle running times are eliminated thereby and increased at the same time the efficiency of the existing structures.” 112
From the 20 supplies 4.2 supplies per day become, since only a supply of B and C-parts per week takes place. The merchandise control is accomplished now 7,6-mal on the day. B and C-supplies consist now of many different materials and require therefore more time for the goods received and control, i.e.

script13

With the assumption of the administration of suppliers their number is reduced. Unitec identifies and administers the often arising process disturbances with the different work procedures.
The clarifying last longer, but they become more rarely:

script14

From this the following overview results:

tab20

Tab. 20: Times and load percentages of the activities of the incoming goods in the paged out procurement with participation of the purchase department.

The ordered positions and the respective cost center are specified on a collective invoice. Instead of a multiplicity of calculations Unitec places on the average only approx. a calculation per month.
Thus different currencies, modes of payment and conditions are summarized.
The number of calculations is reduced from 22 to 4,45 on the day therefore computes one the load percentage for the receipt of the calculations also

script15

tab21

Tab. 21: Times and load percentages of the activities of the audit in the paged out procurement with participation of the purchase department.

The extensive document administration and archiving are taken over by Unitec.
Accordingly also the frequency of the procurement activities in the zahlungsabwicklung of 22 to 4,45 per day sinks. To the calculation payment applies e.g.:

script16

The clarifying expenditure remains however unchanged.

tab22

Tab. 22: Times and load percentages of the activities of the zahlungsabwicklung in the paged out procurement with participation of the purchase department.

On basis of this proportional ones now the costs are added to the individual activities.
With it is to be begun again with the personnel expenditure.

Personnel expenditureProportional loadActivity costsActivities
Production department:1.000.000 €0,57%5.700,- €Materials requirements examine
0,46%4.600,- €Material requirement lights provide
0,23%2.300,- €Material requirement lights to the range leader send
0,23%2.300,- €Signature/permission of the range leader
1,03%10.300,- €Authorized material requirement lights to the purchase department send
0,03%300,- €Telephone reminders of the purchase department
2,55%25.500,- €Sum for the activity: Materialanforderung
Purchase department:250.000 €0,91%2.275,- €Material requirement lights receive
2,81%7.025,- €Orders and/or orders provide
0,84%2.100,- €Confirmation of orders inquire and receive
0,42%1.050,- €Order copies distribute
0,56%1.400,- €Orders placings
0,14%350,- €Reminders of the supplier
5,68%14.200,- €Sum for the activity: Order and/or order
Camp:200.000 €5,00%10.000,- €Commodity acceptance
2,71%5.420,- €Merchandise controls
0,26%520,- €Clarifying with suppliers and/or Requesters
7,97%15.940,- €Sum for the activity: Incoming goods
Bookkeeping:150.000 €1,55%2.325,- €Calculations receive
0,56%840,- €Calculations to approve leave
0,42%630,- €Clarifying over calculation discrepancies
2,53%3.795,- €Sum for the activity: Audit
Administration:200.000 €4,02%8.040,- €Calculations pay
0,77%1.540,- €Calculations placings
1,04%2.080,- €Clarifying with the bank
5,83%11.660,- €Sum for the activity: Zahlungsabwicklung

Tab. 23: Allocation of the personnel expenditure in the paged out procurement with participation of the purchase department.

Related to the structure and the machinery costs the following table results :

Structure and machinery costsProportional loadActivity costsActivities
Production department:1.400.000 €0,57%7.980,- €Materials requirements examine
0,46%6.440,- €Material requirement lights provide
0,23%3.220,- €Material requirement lights to the range leader send
0,23%3.220,- €Signature/permission of the range leader
1,03%14.420,- €Authorized material requirement lights to the purchase department send
0,03%420,- €Telephone reminders of the purchase department
2,55%35.700,- €Sum for the activity: Materialanforderung
Purchase department:25.000 €0,91%227,50 €Material requirement lights receive
2,81%702,50 €Orders and/or orders provide
0,84%210,- €Confirmation of orders inquire and receive
0,42%105,- €Order copies distribute
0,56%140,- €Orders placings
0,14%35,- €Reminders of the supplier
5,68%1.420,- €Sum for the activity: Order and/or order
Camp:100.000 €5,00%5.000,- €Commodity acceptance
2,71%2.710,- €Merchandise controls
0,26%260,- €Clarifying with suppliers and/or Requesters
7,97%7.970,- €Sum for the activity: Incoming goods
Bookkeeping:25.000 €1,55%387,50 €Calculations receive
0,56%140,- €Calculations to approve leave
0,42%105,- €Clarifying over calculation discrepancies
2,53%632,50 €Sum for the activity: Audit
Administration:25.000 €4,02%1.005,- €Calculations pay
0,77%192,50 €Calculations placings
1,04%260,- €Clarifying with the bank
5,83%1.457,50Sum for the activity: Zahlungsabwicklung

Tab. 24: Allocation of the structure and the machinery costs in the paged out procurement with participation of the purchase department.

To the energy and materials consumption applies :

Energy and materials consumptionProportional loadActivity costsActivities
Production department:250.000 €0,57%1.425,- €Materials requirements examine
0,46%1.150,- €Material requirement lights provide
0,23%575,- €Material requirement lights to the range leader send
0,23%575,- €Signature/permission of the range leader
1,03%2.575,- €Authorized material requirement lights to the purchase department send
0,03%75,- €Telephone reminders of the purchase department
2,55%6.375,- €Sum for the activity: Materialanforderung
Purchase department:5.000 €0,91%45,50 €Material requirement lights receive
2,81%140,50 €Orders and/or orders provide
0,84%42,- €Confirmation of orders inquire and receive
0,42%21,- €Order copies distribute
0,56%28,- €Orders placings
0,14%7,- €Reminders of the supplier
5,68%284,- €Sum for the activity: Order and/or order
Camp:15.000 €5,00%750,- €Commodity acceptance
2,71%406,50 €Merchandise controls
0,26%39,- €Clarifying with suppliers and/or Requesters
7,97%1.195,50 €Sum for the activity: Incoming goods
Bookkeeping:25.000 €1,55%387,50 €Calculations receive
0,56%140,- €Calculations to approve leave
0,42%105,- €Clarifying over calculation discrepancies
2,53%632,50 €Sum for the activity: Audit
Administration:25.000 €4,02%1.005,- €Calculations pay
0,77%192,50 €Calculations placings
1,04%260,- €Clarifying with the bank
5,83%1.457,50 €Sum for the activity: Zahlungsabwicklung

Tab. 25: Allocation of the costs of energy and materials consumption in the paged out procurement with participation of the purchase department.

Last the other expenditures are to be added to the procurement activities.

Other expendituresProportional loadActivity costsActivities
Production department:155.000 €0,57%883,50 €Materials requirements examine
0,46%713,- €Material requirement lights provide
0,23%356,50 €Material requirement lights to the range leader send
0,23%356,50 €Signature/permission of the range leader
1,03%1.596,50 €Authorized material requirement lights to the purchase department send
0,03%46,50 €Telephone reminders of the purchase department
2,55%3.952,50 €Sum for the activity: Materialanforderung
Purchase department:140.000 €0,91%1.274,- €Material requirement lights receive
2,81%3.934,- €Orders and/or orders provide
0,84%1.176,- €Confirmation of orders inquire and receive
0,42%588,- €Order copies distribute
0,56%784,- €Orders placings
0,14%196,- €Reminders of the supplier
5,68%7.952,- €Sum for the activity: Order and/or order
Camp:130.000 €5,00%6.500,- €Commodity acceptance
2,71%3.523,- €Merchandise controls
0,26%338,- €Clarifying with suppliers and/or Requesters
7,97%10.361,- €Sum for the activity: Incoming goods
Bookkeeping:55.000 €1,55%852,50 €Calculations receive
0,56%308,- €Calculations to approve leave
0,42%231,- €Clarifying over calculation discrepancies
2,53%1.391,50 €Sum for the activity: Audit
Administration:55.000 €4,02%2.211,- €Calculations pay
0,77%423,50 €Calculations placings
1,04%572,- €Clarifying with the bank
5,83%3.206,50 €Sum for the activity: Zahlungsabwicklung

Tab. 26: Allocation of the costs of energy and materials consumption in the paged out procurement with participation of the purchase department.

4.2.2.1 Process costs of the paged out procurement with participation of the purchase department

Now on the basis the sum of the different cost categories the total costs of the procurement activities as well as the procurement process in this first outsourcing configuration are computed.

Process costsPersonalStructure and machinesEnergy and materials consumptionOther expendituresActivity costs
Materials requirements examine5.700,- €7.980,- €1.425,- €883,50 €15.988,50 €
Material requirement lights provide4.600,- €6.440,- €1.150,- €713,- €12.903,50 €
Material requirement lights to the range leader send2.300,- €3.220,- €575,- €356,50 €6.451,50 €
Signature/permission of the range leader2.300,- €3.220,- €575,- €356,50 €6.451,50 €
Authorized material requirement lights to the purchase department send10.300,- €14.420,- €2.575,- €1.596,50 €28.891,50 €
Telephone reminders of the purchase department300,- €420,- €75,- €46,50 €841,50 €
Sum for the activity: Materialanforderung25.500,- €35.700,- €6.375,- €3.952,50 €71.527,50 €
Material requirement lights receive2.275,- €227,50 €45,50 €1.274,- €3.822,- €
Orders and/or orders provide7.025,- €702,50 €140,50 €3.934,- €11.802,- €
Confirmation of orders inquire and receive2.100,- €210,- €42,- €1.176,- €3.528,- €
Order copies distribute1.050,- €105,- €21,- €588,- €1.764,- €
Orders placings1.400,- €140,- €28,- €784,- €2.352,- €
Reminders of the supplier350,- €35,- €7,- €196,- €588,- €
Sum for the activity: Order and/or order14.200,- €1.420,- €284,- €7.952,- €23.856,- €
Commodity acceptance10.000,- €5.000,- €750,- €6500,- €22.250,- €
Merchandise controls5.420,- €2.710,- €406,50 €3.523,- €12.059,50 €
Clarifying with suppliers and/or Requesters520,- €260,- €39,- €338,- €1.157,- €
Sum for the activity: Incoming goods15.940,- €7.970,- €1.195,50 €10.361,- €35.466,50 €
Calculations receive2.325,- €387,50 €387,50 €852,50 €3.952,50 €
Calculations to approve leave840,- €140,- €140,- €308,- €1.428,- €
Clarifying over calculation discrepancies630,- €105,- €105,- €231,- €1.071,- €
Sum for the activity: Audit3.795,- €632,50 €632,50 €1.391,50 €6.451,50 €
Calculations pay8.040,- €1.005,- €1005,- €2.211,- €12.261,- €
Calculations placings1.540,- €192,50 €192,50 €423,50 €2.348,50 €
Clarifying with the bank2.080,- €260,- €260,- €572,- €3.172,- €
Sum for the activity: Zahlungsabwicklung11.660,- €1.457,501.457,50 €3.206,50 €17.781,50 €
Sum total71.095,- €47.180,- €9.944,50 €26.863,50 €155.083,- €

Tab. 27: The process costs of the paged out procurement with participation of the purchase department.

Annual procurement costs amount to now 155,083€. In order to understand the effects of the relationship with Unitec, the process costs of the procurement of B and C-parts must be computed as difference between the total costs and alike the costs of the procurement of the A-parts, remained, here.

ActivitiesTotal costsCosts of the procurement of A-partsCosts of di Beschaffung von B- and C-C-Teilen
Materials requirements examine15.988,50 €3.197,70 €12.790,80 €
Material requirement lights provide12.903,50 €2.580,60 €10.322,40 €
Material requirement lights to the range leader send6.451,50 €1.290,30 €5.161,20 €
Signature/permission of the range leader6.451,50 €1.290,30 €5.161,20 €
Authorized material requirement lights to the purchase department send28.891,50 €5.778,30 €23.113,20 €
Telephone reminders of the purchase department841,50 €168,30 €673,20 €
Sum for the activity: Materialanforderung71.527,50 €14.305,50 €57.222,- €
Material requirement lights receive3.822,- €764,40 €3.057,60 €
Orders and/or orders provide11.802,- €5.779,20 €6.022,80 €
Confirmation of orders inquire and receive3.528,- €2.402,40 €1.125,60 €
Order copies distribute1.764,- €1.444,80 €319,20 €
Orders placings2.352,- €1.923,60 €428,40 €
Reminders of the supplier588,- €243,60 €344,40 €
Sum for the activity: Order and/or order23.856,- €12.558,- €11.298,- €
Commodity acceptance22.250,- €6.354,60 €15.895,40 €
Merchandise controls12.059,50 €3.497,70 €8.561,80 €
Clarifying with suppliers and/or Requesters1.157,- €453,90 €703,10 €
Sum for the activity: Incoming goods35.466,50 €10.306,20 €25.160,30 €
Calculations receive3.952,50 €2.764,20 €1.188,30 €
Calculations to approve leave1.428,- €1.402,50 €25,50 €
Clarifying over calculation discrepancies1.071,- €510,- €561,- €
Sum for the activity: Audit6.451,50 €4.676,70 €1.774,80 €
Calculations pay12.261,- €12.114,60 €146,40 €
Calculations placings2.348,50 €2.330,20 €18,30 €
Clarifying with the bank3.172,- €634,40 €2.537,60 €
Sum for the activity: Zahlungsabwicklung17.781,50 €15.079,202.702,30 €
Sum total155.083,- €56.925,60 €98.157,40 €

Tab. 28: The process costs of B and C-parts in the paged out procurement with participation of the purchase department.

Thus costs of the procurement of B and C-parts at a value of 98.157,40€ result. They are to be compared now with the costs of the internal procurement regarding B and C-parts, in order to be able to measure the effects of the relationship with Unitec.

ActivitiesInternal procurementOutsourcing of the procurement (1)Difference
Materials requirements examine12.790,80 €12.790,80 €
Material requirement lights provide10.322,40 €10.322,40 €
Material requirement lights to the range leader send5.161,20 €5.161,20 €
Signature/permission of the range leader5.161,20 €5.161,20 €
Authorized material requirement lights to the purchase department send23.113,20 €23.113,20 €
Telephone reminders of the purchase department673,20 €673,20 €
Sum for the activity: Materialanforderung57.222,- €57.222,- €
Material requirement lights receive3.057,60 €3.057,60 €
Orders and/or orders provide23.116,80 €6.022,80 €17.094,- €
Confirmation of orders inquire and receive9.609,60 €1.125,60 €8.484,- €
Order copies distribute5.779,20 €319,20 €5.460,- €
Orders placings7.694,60428,40 €7.266,- €
Reminders of the supplier974,40 €344,40 €630,- €
Sum for the activity: Order and/or order50.232,- €11.298,- €38.934,- €
Commodity acceptance25.418,40 €15.895,40 €9.523,- €
Merchandise controls13.990,80 €8.561,80 €5.429,- €
Clarifying with suppliers and/or Requesters1.815,60 €703,10 €1.112,50 €
Sum for the activity: Incoming goods41.224,80 €25.160,30 €16.064,50 €
Calculations receive11.056,80 €1.188,30 €9.868,50 €
Calculations to approve leave5.610,- €25,50 €5.584,50 €
Clarifying over calculation discrepancies2.040,- €561,- €1.479,- €
Sum for the activity: Audit18.706,80 €1.774,80 €16.932,- €
Calculations pay48.458,40 €146,40 €48.312,- €
Calculations placings9.320,80 €18,30 €9.302,50 €
Clarifying with the bank2.537,60 €2.537,60 €0,- €
Sum for the activity: Zahlungsabwicklung60.316,80 €2.702,30 €57.614,50 €
Sum total227.702,40 €98.157,40 €129.545,- €

Tab. 29: Process cost comparison for the procurement of B and C-parts.

The result shows a process cost saving of 129.545€, the 57% of the process costs corresponds to the internal procurement. At the other relevant cost expense in an outsourcing decision, like the Unitec price and the stock costs, is received later.

112 Marino V.: Interview, P. xxi.

4.2.2.2 Process costs of the paged out procurement without participation of the purchase department

Starting from 2002 those could arrange customer GmbH their procurement process in such a manner that the purchase department no more did not have to concern itself with the procurement of B and C-parts.
Here this situation is analyzed, which can be called actual outsourcing of the procurement. In the phase of the materialanforderung the first activities remain unchanged.
Only after the permission of the material requirement light one differentiates whether the inquired product represents an A-article or a B and/or an C-article. In the first case the outsourcing is not meaningful, because specific investments are necessary (see chapters. 4.1). Therefore the procurement process of the A-parts does not change.
In the following table the activity times are alike, but sink the frequency of sending authorized the material requirement light away and the telephone reminder of the purchase department on in each case 6,6 and 0,4-mal on the day, since they concern only the A-parts.
Accordingly also their proportional load sinks.

tab30

Tab. 30: Times and load percentages of the activities of the materialanforderung in the paged out procurement without participation of the purchase department.

For B and C-parts however the procurement does not require engagement of the purchase department, because the production department takes over their task and stands now in direct relationship with only B and C-supplier, i.e. Unitec.
The direct ordering type by the users, whereby temporal delays are avoided, is an additional use for the customer GmbH. Production must provide and to Unitec send the orders, which receive confirmation of orders from Unitec, which distribute order copies, which remind orders placings and if necessary Unitec.
These activities are accomplished on the average twice on the day, so that the calculation looks as follows e.g. for the production of the order and/or the order:

script17

tab31

Tab. 31: Times and load percentages of the activities of the order and/or the order for B and C-parts in the paged out procurement without participation of the purchase department.

In the further process of the analysis only the total line is regarded by this table, which is called from now on activity “outsourcing order”. In addition it is inserted into the table of the materialanforderung, since it represents an additional activity of the production department.
The procurement activities of the purchase department concern the A-parts in this configuration only and possess accordingly a lower frequency. Receiving the material requirement light takes place once every five days, thus:

script18

The other activities take place 4,4-mal on the day. To the production applies for the order and/or the order for example:

script19

The suppliers are reminded by telephone on the average once every five days by fax and twice every five days:

tab32

Tab. 32: Times and load percentages of the activities of the order and/or the order for the A-parts in the paged out procurement without participation of the purchase department.

With in the camp, in the bookkeeping and in the administration accomplished activities nothing changes in the comparison to the outsourcing with inclusion purchase department.
Therefore to the incoming goods, for audit and for zahlungsabwicklung belonging tables are not repeated here. In addition is referred to chapter 4.2.2.1.
Thus the addition of the costs can take place immediately. As usual, first the personnel expenditure is assigned to the procurement activities.

Personnel expenditureProportional loadActivity costsActivities
Production department:

1.000.000 €

0,57%5.700,- €Materials requirements examine
0,46%4.600,- €Material requirement lights provide
0,23%2.300,- €Material requirement lights to the range leader send
0,23%2.300,- €Signature/permission of the range leader
0,21%2.100,- €Authorized material requirement lights to the purchase department send
0,01%100,- €Telephone reminders of the purchase department
0,19%1.900,- €Outsourcing order
1,90%19.000,- €Sum for the activity: Materialanforderung
Purchase department:250.000 €0,18%450,- €Material requirement lights receive
1,38%3.450,- €Orders and/or orders provide
0,57%1.425,- €Confirmation of orders inquire and receive
0,34%850,- €Order copies distribute
0,46%1.150,- €Orders placings
0,06%150,- €Reminders of the supplier
2,99%7.475,- €Sum for the activity: Order and/or order (only A-parts)
Camp:200.000 €5,00%10.000,- €Commodity acceptance
2,71%5.420,- €Merchandise controls
0,26%520,- €Clarifying with suppliers and/or Requesters
7,97%15.940,- €Sum for the activity: Incoming goods
Bookkeeping:150.000 €1,55%2.325,- €Calculations receive
0,56%840,- €Calculations to approve leave
0,42%630,- €Clarifying over calculation discrepancies
2,53%3.795,- €Sum for the activity: Audit
Administration:200.000 €4,02%8.040,- €Calculations pay
0,77%1.540,- €Calculations placings
1,04%2.080,- €Clarifying with the bank
5,83%11.660,- €Sum for the activity: Zahlungsabwicklung

Tab. 33: Allocation of the personnel expenditure in the paged out procurement without participation of the purchase department.

Now the structure and the machinery costs are to be added.

Structure and machinery costsProportional loadActivity costsActivities
Production department:

1.400.000 €

0,57%7.980,- €Materials requirements examine
0,46%6.440,- €Material requirement lights provide
0,23%3.220,- €Material requirement lights to the range leader send
0,23%3.220,- €Signature/permission of the range leader
0,21%2.940,- €Authorized material requirement lights to the purchase department send
0,01%140,- €Telephone reminders of the purchase department
0,19%2.660,- €Outsourcing order
1,90%26.600,- €Sum for the activity: Materialanforderung
Purchase department:25.000 €0,18%45,- €Material requirement lights receive
1,38%345,- €Orders and/or orders provide
0,57%142,50 €Confirmation of orders inquire and receive
0,34%85,- €Order copies distribute
0,46%115,- €Orders placings
0,06%15,- €Reminders of the supplier
2,99%747,50 €Sum for the activity: Order and/or order (only A-parts)
Camp:100.000 €5,00%5.000,- €Commodity acceptance
2,71%2.710,- €Merchandise controls
0,26%260,- €Clarifying with suppliers and/or Requesters
7,97%7.970,- €Sum for the activity: Incoming goods
Bookkeeping:25.000 €1,55%387,50 €Calculations receive
0,56%140,- €Calculations to approve leave
0,42%105,- €Clarifying over calculation discrepancies
2,53%632,50 €Sum for the activity: Audit
Administration:25.000 €4,02%1.005,- €Calculations pay
0,77%192,50 €Calculations placings
1,04%260,- €Clarifying with the bank
5,83%1.457,50Sum for the activity: Zahlungsabwicklung

Tab. 34: Allocation of the structure and the machinery costs in the paged out procurement without participation of the purchase department.

The costs of the energy and materials consumption are seized in the following table :

Energy and materials consumptionProportional loadActivity costsActivities
Production department:250.000 €0,57%1.425,- €Materials requirements examine
0,46%1.150,- €Material requirement lights provide
0,23%575,- €Material requirement lights to the range leader send
0,23%575,- €Signature/permission of the range leader
0,21%525,- €Authorized material requirement lights to the purchase department send
0,01%25,- €Telephone reminders of the purchase department
0,19%475,- €Outsourcing order
1,90%4.750,- €Sum for the activity: Materialanforderung
Purchase department:5.000 €0,18%9,- €Material requirement lights receive
1,38%69,- €Orders and/or orders provide
0,57%28,50 €Confirmation of orders inquire and receive
0,34%17,- €Order copies distribute
0,46%23,- €Orders placings
0,06%3,- €Reminders of the supplier
2,99%149,50 €Sum for the activity: Order and/or order (only A-parts)
Camp:15.000 €5,00%750,- €Commodity acceptance
2,71%406,50 €Merchandise controls
0,26%39,- €Clarifying with suppliers and/or Requesters
7,97%1.195,50 €Sum for the activity: Incoming goods
Bookkeeping:25.000 €1,55%387,50 €Calculations receive
0,56%140,- €Calculations to approve leave
0,42%105,- €Clarifying over calculation discrepancies
2,53%632,50 €Sum for the activity: Audit
Administration:25.000 €4,02%1.005,- €Calculations pay
0,77%192,50 €Calculations placings
1,04%260,- €Clarifying with the bank
5,83%1.457,50 €Sum for the activity: Zahlungsabwicklung

Tab. 35: Allocation of the costs of energy and materials consumption in the paged out procurement without participation of the purchase department.

The other expenditures are added last:

Other expendituresProportional loadActivity costsActivities
Production department:155.000 €0,57%883,50 €Materials requirements examine
0,46%713,- €Material requirement lights provide
0,23%356,50 €Material requirement lights to the range leader send
0,23%356,50 €Signature/permission of the range leader
0,21%325,50 €Authorized material requirement lights to the purchase department send
0,01%15,50 €Telephone reminders of the purchase department
0,19%294,50 €Outsourcing order
1,90%2.945,- €Sum for the activity: Materialanforderung
Purchase department:140.000 €0,18%252,- €Material requirement lights receive
1,38%1.932,- €Orders and/or orders provide
0,57%798,- €Confirmation of orders inquire and receive
0,34%476,- €Order copies distribute
0,46%644,- €Orders placings
0,06%84,- €Reminders of the supplier
2,99%4.186,- €Sum for the activity: Order and/or order (only A-parts)
Camp:130.000 €5,00%6.500,- €Commodity acceptance
2,71%3.523,- €Merchandise controls
0,26%338,- €Clarifying with suppliers and/or Requesters
7,97%10.361,- €Sum for the activity: Incoming goods
Bookkeeping:55.000 €1,55%852,50 €Calculations receive
0,56%308,- €Calculations to approve leave
0,42%231,- €Clarifying over calculation discrepancies
2,53%1.391,50 €Sum for the activity: Audit
Administration:55.000 €4,02%2.211,- €Calculations pay
0,77%423,50 €Calculations placings
1,04%572,- €Clarifying with the bank
5,83%3.206,50 €Sum for the activity: Zahlungsabwicklung

Tab. 36: Allocation of the costs of the other expenditures in the paged out procurement without participation of the purchase department.

Now on the basis the sum of the different cost categories the total costs of the procurement activities as well as the procurement process in this second outsourcing configuration are computed :

Process costsPersonalStructure and machinesEnergy and materials consumptionOther expendituresActivity costs
Materials requirements examine5.700,- €7.980,- €1.425,- €883,50 €15.988,50 €
Material requirement lights provide4.600,- €6.440,- €1.150,- €713,- €12.903,50 €
Material requirement lights to the range leader send2.300,- €3.220,- €575,- €356,50 €6.451,50 €
Signature/permission of the range leader2.300,- €3.220,- €575,- €356,50 €6.451,50 €
Authorized material requirement lights to the purchase department send2.100,- €2.940,- €525,- €325,50 €5.890,50 €
Telephone reminders of the purchase department100,- €140,- €25,- €15,50 €280,50 €
Outsourcing order1.900,- €2.660,- €475,- €294,50 €5.329,50 €
Sum for the activity: Materialanforderung19.000,- €26.600,- €4.750,- €2.945,- €53.295,- €
Material requirement lights receive450,- €45,- €9,- €252,- €756,- €
Orders and/or orders provide3.450,- €345,- €69,- €1.932,- €5.796,- €
Confirmation of orders inquire and receive1.425,- €142,50 €28,50 €798,- €2.394,- €
Order copies distribute850,- €85,- €17,- €476,- €1.428,- €
Orders placings1.150,- €115,- €23,- €644,- €1.932,- €
Reminders of the supplier150,- €15,- €3,- €84,- €252,- €
Sum for the activity: Order and/or order (only A-parts)7.475,- €747,50 €149,50 €4.186,- €12.558,- €
Commodity acceptance10.000,- €5.000,- €750,- €6.500,- €22.250,- €
Merchandise controls5.420,- €2.710,- €406,50 €3.523,- €12.059,50 €
Clarifying with suppliers and/or Requesters520,- €260,- €39,- €338,- €1.157,- €
Sum for the activity: Incoming goods15.940,- €7.970,- €1.195,50 €10.361,- €35.466,50 €
Calculations receive2.325,- €387,50 €387,50 €852,50 €3.952,50 €
Calculations to approve leave840,- €140,- €140,- €308,- €1.428,- €
Clarifying over calculation discrepancies630,- €105,- €105,- €231,- €1.071,- €
Sum for the activity: Audit3.795,- €632,50 €632,50 €1.391,50 €6.451,50 €
Calculations pay8.040,- €1.005,- €1.005,- €2.211,- €12.261,- €
Calculations placings1.540,- €192,50 €192,50 €423,50 €2.348,50 €
Clarifying with the bank2.080,- €260,- €260,- €572,- €3.172,- €
Sum for the activity: Zahlungsabwicklung11.660,- €1.457,501.457,50 €3.206,50 €17.781,50 €
Sum total57.870,- €37.407,50 €8.185,- €22.090,- €125.552,50 €

Tab. 37: The process costs of the paged out procurement without participation of the purchase department.

Annual procurement costs amount to now 125,552.50€. In the following one the process costs of the procurement of B and C-parts are computed as difference between the total costs and alike the costs of the procurement of the A-parts, remained.

ActivitiesTotal costsCosts of the procurement of A-partsCosts of di Beschaffung von B- and C-C-Teilen
Materials requirements examine15.988,50 €3.197,70 €12.790,80 €
Material requirement lights provide12.903,50 €2.580,60 €10.322,40 €
Material requirement lights to the range leader send6.451,50 €1.290,30 €5.161,20 €
Signature/permission of the range leader6.451,50 €1.290,30 €5.161,20 €
Authorized material requirement lights to the purchase department send5.890,50 €5.778,30 €112,20 €
Telephone reminders of the purchase department280,50 €168,30 €112,20 €
Outsourcing order5.329,50 €5.329,50
Sum for the activity: Materialanforderung53.295,- €14.305,50 €38.989,50 €
Material requirement lights receive756,- €764,40 €-8,40 €
Orders and/or orders provide5.796,- €5.779,20 €16,80 €
Confirmation of orders inquire and receive2.394,- €2.402,40 €-8,40 €
Order copies distribute1.428,- €1.444,80 €-16,80 €
Orders placings1.932,- €1.923,60 €8,40 €
Reminders of the supplier252,- €243,60 €8,40 €
Sum for the activity: Order and/or order (only A-parts)12.558,- €12.558,- €
Commodity acceptance22.250,- €6.354,60 €15.895,40 €
Merchandise controls12.059,50 €3.497,70 €8.561,80 €
Clarifying with suppliers and/or Requesters1.157,- €453,90 €703,10 €
Sum for the activity: Incoming goods35.466,50 €10.306,20 €25.160,30 €
Calculations receive3.952,50 €2.764,20 €1.188,30 €
Calculations to approve leave1.428,- €1.402,50 €25,50 €
Clarifying over calculation discrepancies1.071,- €510,- €561,- €
Sum for the activity: Audit6.451,50 €4.676,70 €1.774,80 €
Calculations pay12.261,- €12.114,60 €146,40 €
Calculations placings2.348,50 €2.330,20 €18,30 €
Clarifying with the bank3.172,- €634,40 €2.537,60 €
Sum for the activity: Zahlungsabwicklung17.781,50 €15.079,202.702,30 €
Sum total125.552,50 €56.925,60 €68.626,90

Tab. 38: The process costs of B and C-parts in the paged out procurement without participation of the purchase department.

Thus costs of the procurement of B and C-parts at a value of 68.626,90 €. They are to be compared now with the costs of the internal procurement regarding B and C-parts, in order to examine the Vorteilhaftigkeit of the relationship with Unitec .

ActivitiesInternal procurementOutsourcing of the procurement (2)Difference
Materials requirements examine12.790,80 €12.790,80 €
Material requirement lights provide10.322,40 €10.322,40 €
Material requirement lights to the range leader send5.161,20 €5.161,20 €
Signature/permission of the range leader5.161,20 €5.161,20 €
Authorized material requirement lights to the purchase department send23.113,20 €112,20 €23.001,- €
Telephone reminders of the purchase department673,20 €112,20 €561,- €
Outsourcing order5.329,50 €-5.329,50 €
Sum for the activity: Materialanforderung57.222,- €38.989,50 €18.232,50 €
Material requirement lights receive3.057,60 €-8,40 €3.066,- €
Orders and/or orders provide23.116,80 €16,80 €23.100,- €
Confirmation of orders inquire and receive9.609,60 €-8,40 €9.618,- €
Order copies distribute5.779,20 €-16,80 €5.796,- €
Orders placings7.694,608,40 €7.686,- €
Reminders of the supplier974,40 €8,40 €966,- €
Sum for the activity: Order and/or order50.232,- €0,- €50.232,- €
Commodity acceptance25.418,40 €15.895,40 €9.523,- €
Merchandise controls13.990,80 €8.561,80 €5.429,- €
Clarifying with suppliers and/or Requesters1.815,60 €703,10 €1.112,50 €
Sum for the activity: Incoming goods41.224,80 €25.160,30 €16.064,50 €
Calculations receive11.056,80 €1.188,30 €9.868,50 €
Calculations to approve leave5.610,- €25,50 €5.584,50 €
Clarifying over calculation discrepancies2.040,- €561,- €1.479,- €
Sum for the activity: Audit18.706,80 €1.774,80 €16.932,- €
Calculations pay48.458,40 €146,40 €48.312,- €
Calculations placings9.320,80 €18,30 €9.302,50 €
Clarifying with the bank2.537,60 €2.537,60 €0,- €
Sum for the activity: Zahlungsabwicklung60.316,80 €2.702,30 €57.614,50 €
Sum total227.702,40 €68.626,90 €159.075,50 €

Tab. 39: Process cost comparison for the procurement of B and C-parts

The result shows a process cost saving of 159.075,50€, the 70% of the process costs corresponds to the internal procurement. Thus it can be maintained that those met customer GmbH cost-lowering measures in the procurement area in the last years.
The outsourcing of the procurement of B and C-parts and the partnership with Unitec, formed in addition, make a clear reduction possible of the process costs.
How ever also different relevant aspects of cost must be considered, in order to complete this analysis. Where upon in the next section is received more in greater detail.

4.2.3 An other ones relevant aspects of cost for the comparison between internal and paged out procurement

The process costs but also other aspects are not only relevant in the investigation outsourcing of the procurement.
First the stock costs play an important role 113 . They become by the being (monthly interest rate: to procure 4%) of a hypothetical credit determined, which the customer GmbH takes up, in order B and C-parts.
In the case of internal procurement B and C-parts of on the average four months are in the camp. There annually B and C of parts in the value of 6.000.000€ are ordered, corresponds this to a situation, in that the stock three times in the year 2.000.000€ amounts to. Therefore three four-month credit at a value of in each case 2.000.000€ become with four amortization payments of 500.000€ equal regarded.
This do the annual being amount to altogether 600.000€ and as stock costs with the internal procurement are seized. These circumstances are illustrated in the following table.

tab40

Tab. 40: Stock costs of the internal procurement.

During the paged out procurement, independently of whether the purchase department is involved or can not, those customer GmbH their stock costs reduce, since the expirations of camp are concentrated and accelerated.
Still do B and C become parts in the value of 6.000.000€ annually ordered, but they lie on the average only one month in the camp.
The stock amounts to thus only 500.000€ per month. Therefore twelve credits at a value of in each case 500.000€ become considered.
Thus the entire being amount to and/or with outsourcing of the procurement.
Stock costs 240.000€ in the year.

tab41

Tab. 41: Stock costs of the paged out procurement.

In addition one must refer also the price for the Unitec service into the cost comparison. This price amounts to 4% of the ordered value (6,000,000€) this 240.000€ per year.
For approximately 6864 annual B and C-order items the customer GmbH is called this approx. 35€ per position.
The cost comparison between internal and paged out procurement can be represented thereby in the following table.

tab42

Tab. 42: Total cost comparison between enterprise-internal and paged out procurement.

The partnership with Unitec means thus for the customer GmbH a reduction of the organizational costs of the procurement by 34 per cent.
Regarding the commodity price and the transport costs no cost calculation is necessary at the customer GmbH, since the cost saving is clear here.
The commodity price sinks by the international purchase and by the realizable scale effects. “with the outsourcing the enterprise does not have no more on the domestic market to be limited and can to buy, where the price is most favorable. This is made possible also by the multilingual personnel of the Unitec, which overcome the language barriers and the necessity for the translation.
In addition a reduction of the commodity prices results from the economy of the purchase volume (scale effects), which on the fields of technology and being concentrates, those in the case of the different users equal procurement services are.” 114
The transport costs are lowered by a new organization of logistics. “the delivery costs can sink drastically, since it becomes actually no longer necessary to move small quantities high costs. With the Unitec agreed upon administrative model of logistics, which makes the consolidation possible of the goods of the different suppliers in only one supply, has to the consequence that those can induce customer GmbH large quantities to low costs. This effect is naturally the higher, the ordered quantity is the larger.” 115
Other advantages were recognized by the managers the customer GmbH and are mentioned briefly here.

  • Variabilization of the costs: By the outsourcing of the procurement the federation of C-parts the whole procurement structure becomes slimmer and more flexible. The fixed costs in the procurement area are not only reduced, but converted into variable costs, since those takes customer GmbH the services up of Unitec only if she needs her. The customer GmbH is relieved thereby and can dedicate itself efficient and unconcerned their core Business.
  • One works with the most modern technologies, so that fast communication happens briefly and essentially with each inquiry, also by InterNet. The support of future-oriented EDP technologies secures the constant monitoring of the procurement processes.
  • Also the specialization advantages play an important role. Unitec can ensure low internal procurement costs, which reflect themselves in their service price due to the specialization (e.g. by a specific application of software) and the automation of its processes.
  • Over Unitec those can complete customer GmbH also a mark suppliers. Thus it saves the whole procedure of a new installation of a supplier.

Thus different cost factors a role in the comparison between enterprise-internal and paged out procurement play.
“are nevertheless the process cost and the stock program costs reduction a stable and structure-referred saving and remain decisive therefore for the comparison between procurement organization forms.” 116

113 notes: The stock costs were determined in the same way and with the same result directly by the customer GmbH and Unitec admit given.
114 Marino V.: Interview, P. xxi.
115 Marino V.: Interview, P. xxi.
116 Marino V.: Interview, P. xxii.

4.3. Recommendations for action over the organization of the procurement process

From the analysis in the previous chapters the recommendation can be derived to consider the outsourcing as organization possibility also for the own procurement process.
Co-operation with a Full service service supplying company offers the possibility of mastering the high requirements before those the procurement and the stock management of most enterprises nowadays, how suppliers manager, to supply and quality secures, costs lowers.
“for each partial product and/or each service on the way to the final product suppliers must be coordinated and controlled. Many enterprises judge the number of their suppliers in the meantime as too high and thus unclear.” 117
By outsourcing to the procurement of B and C-articles to a specialized service supplying company such as Unitec, the customer can the products of many manufacturers and suppliers access, must however only with a contracting party communicate.
“(…) in addition the price of B and C-products stands in no economic relation to the internal process costs, because these are often higher than the commodity value. Partially procurement costs exceed even the actual purchase price of the ordered goods.” 118
The outsourcing offers thus a solution to different business procurement problems and/or weaken. In addition no large dependence or control problems belongs, since it concerns only the non-strategic need.
Nevertheless can occur in as much to problems as at the same time an entire Business Process Reengineering is usually desirable. This refers to the fact that the personnel is relieved by paging of the procurement and other activities dedicate itself can. This one should also think over it, which tasks new after persons their abilities and authority to accomplish to be supposed.
In the context of an outsourcing decision further conditions must be fulfilled, i.e. that the contracting party efficiently and reliably. Also the costs connected with the contract must be considered.
Relationship with service supplying company represents also connection, whose costs are the lower, the are stronger and longer the partnership. On the other side the contract can be also a restriction of some management decisions over future affairs.
Of this reason the possibility must exist, the conditions as per contract after some years on basis of the examination of possibly changed prices of updating quality and kind of the materials and/or the services in the contract.
Control of the prices, quality and kind of the materials and services which can be procured insisting on the market is in any case, particularly in the first partnership years, recommendable.
The selection of the correct service supplying company’s and the education of an efficient co-operation under a suitable contract are crucial in the final result for a successful outsourcing of the procurement.

117 Ohl J. (2002), in: http://www.infraserv.com
118 Marino V.: Interview, P. xx-xxi.

5.0. Critical appreciation over the work

5.0. Critical appreciation over the work

The transaction cost theory and its practical applications were already criticized by many authors. An example of it is the-sets, whose opinion was already described in chapter 3.3.
One finds other criticisms of the transaction cost theory e.g. in Conner/Prahalad (1996) and Langlois (1992). One refers also to the contributions of Smith (1994) and Kennedy (1996), which the weaknesses of the ABC beginning identified and explained.
A critical view is to be thrown finally on the procurement analysis by chapter 4. The statements of chapter 4,1 were occupied by the author by the opinions of the Unitec of managing director Vincenzo Marino.
They come from an expert in the procurement area, can however probably receive from other points of view contradiction. It is e.g. difficult to state and/or prove whether the procurement process requires high or low specific investments, since this on the different industrial ranges as well as the individual enterprises is dependent and thus be very different can.
In chapter 4.2 mainly three factors led to possible distortions and errors:

  • The procurement activities were assigned to the responsible in each case departments and divided for simplification reasons without overlaps between the enterprise departments the customer GmbH. This could be considered only by appropriate increase of the individual activity times and corrected partially.
  • The roundness of the numbers on two right-of-comma positions leads to imprecise results of the process cost calculation.
  • The load percentages led to an inaccurate cost allocation. For the correct addition e.g. the personnel expenditure one should only examine the individual wages and salaries for the procurement activities responsible coworkers. By determination of the different coworker-specific paying wages to sets per minute and the individual activity times one would come to a more precise allocation of the personnel expenditure to the procurement activities. In this work the total costs of each department and thus costs of personnel, machines, materials, etc., were thus considered which do not concern the procurement process directly. This takes place due to the acceptance that the organization of the procurement process affects the consumption of all enterprise resources. A possible procurement saving permits e.g. the coworkers in production to concentrate on the own specific activities so that the production process are improved at the same time more efficiently will and control as well as the quality.

The reason for these distortions and errors lies in the available data over the customer GmbH, which the author experienced only indirectly over the customer documents of the Unitec.
Since no requirement insists on completeness, the results of the procurement costs analysis are nevertheless meaningful.
This work identified and developed a method to the comparison between enterprise-internal and paged out procurement process, from which important conclusions and recommendations for action can be derived.
For this purpose, and not to the exact evaluation of procurement costs of an enterprise, the cost calculation of chapter 4.2 serves.

6.0. view: The future development in the organization of the procurement

6 view: The future development in the organization of the procurement

Procurement and logistics represent a range, which exhibits strong development potentials. New solutions were already invented, in order to make further reductions possible of procurement costs. An example of it is the virtual camp. It consists of the stocks of the enterprises, which cooperate to “(…) in this project with Unitec by one of Unitec specifically developed service can each of these enterprises the unrestricted entrance to each camp and stock have. Thus a virtual increase of the own stock results, without additional stock program costs. Rather the reduction of the own stock is made possible by its logistic extension and by utilization of this revolutionary service.” 119
The implementation of the use of virtual camps with other users is particularly meaningful for in the same industrial range active enterprises. “the virtual camp with the automatic replacement of the stock and the virtual stock management by InterNet is fast changed and rapid conversions required the suitable answer to a market, that itself.” 120
“capital-binding storekeeping is unwanted. The procurement must ensure that the goods arrive just in time in production.” 121
“the virtual camp is to be helped a new challenge, which belong to the general goal of the Unitec of converting all potentialities for the development of the procurement and logistics into the reality as well as the industrial enterprises with a more efficient and more economical resources consumption.” 122

119 Marino V.: Interview, P. xxii.
120 Marino V.: Interview, P. xxii.
121 Ohl J. (2002), in: http://www.infraserv.com.
122 Marino V.: Interview, P. xxii.

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Appendix

Interview with Mr. Vincenzo Marino, managing director of the Unitec Germany GmbH.

Explanation of the abbreviations :
F = question
A = answer

1. Interview: 6.11.2002

F: What do you understand by procurement?
A: By procurement one understands the acquisition and supply of the goods necessary for the production and utilization of the products of an enterprise.
These goods are raw -, auxiliary -, and fuels, parts, commodities which can be inserted as well as material assets. It is important that the term “procurement” is not to be confounded with “purchase”.

F: What is the difference between purchase and procurement?
A: The purchase possesses a strategic meaning and has the necessary know-how, in order to find the suitable suppliers, in order to negotiate the prices and determine around the terms of payment and supply as well as the kind of relationship with the individual suppliers.
The procurement concerns itself however with the operational activities for the completion of the order process.

F: Thus is the procurement process only an operational procedure?
A: This depends on the necessary activities with the search and/or the selection of the suitable supplier. The search effected on the basis in which all who are applicable suppliers for each materials type are contained of business DATA cousin, since the enterprise has usually, from the past orders arising, Suppliers portfolio.
For well-known and/or the past the selection is usually limited ordered products to this Portfolio, whereby for “unimportant” products in normal catalogs (yellow sides, etc..) to be searched can. For important products this phase takes over a strategic meaning. The selected supplier must have the suitable technology, in order to offer the inquired product with good quality, in the necessary quantity and at low price. Further relevant conditions are the reliability, the after Sales service and the location.
After the examination of these criteria takes place the decision for one or more suppliers. An individual supplier can being selected due to special characteristics such as patents, technical conditions, available raw materials, location, etc. and because of a strategic project, e.g. in the case of a planned long-term relationship.
Different suppliers are applicable however, if none of the characteristics mentioned are present, whereby the competition can ensure lower prices and better services.
Possibly a negotiation takes place concerning the prices, delivery times and terms of payment for specific orders.
As the final conditions result, depends on negotiation power and the behavior of both parties. For standard products, with which the selection of suppliers is high, the prices are fixed in the supplier catalogs and can be negotiated only in the case of large purchase volumes.

F: The selection of suppliers is thus a strategic phase. Why is it so important?
A: Because the suppliers an important role play. From its product program the enterprise can be also completely dependent, since the quality of the products and services of the supplier can affect the business procedure of the entire enterprise strongly.

2. Interview: 3.12.2002

F: What is the difference between order and order?
A: The difference between order and order lies in the fact that the order refers to products of the supplier catalog, while the order concerns a commodity specific to the customer need.

3. Interview: 14.01.2003

F: In the procurement are specific investments transacted?
A: This happens rather on the side of the suppliers as on that of the customers, since generally each enterprise orients itself at its customer market. (1) location-specific investments, e.g., are mostly transacted by the suppliers, itself after the size, which and the prestige of their customers arrange strength. At the customers such investments are usually small. (2) system dependent investments can occur for example with the organization of the camp, if e.g. the supplied products require special conditions for the storekeeping (refrigerators, etc.). Also the use of a specific software can cause relatively high investments. (3) investments into specific human resources refer e.g. to the necessity, in the camp with special and/or. to deal dangerous materials or in the office with firm specific work procedures. But one must train the own coworkers or specialized coworkers to adjust. One finds this kind of specific investments in the procurement most frequently. (4) customer-specific investments concern the customers, but the suppliers by definition not. There can be however the case that the customer due to a large order with one its customer more commodity the suppliers necessarily and the camp must extend. In this case a relatively high investment must be transacted. (5) investments in the Reputation serve for the more successful sales and not purchase. Therefore they are transacted in the procurement only by the suppliers (see e.g. ISO certifying). (6) date-specific investments in temporally only limits for removable or profitable goods and achievements are transacted, if e.g. the customers of the procurement customer season goods or just in time produce. This can affect also the relationship with the own suppliers, and cause high investments.

F: In which extent are specific investments in the procurement thus transacted?
A: Although specific investments in the procurement area are transacted rather of the suppliers as of the customers, they are potentially relatively high. Most specific investments are transacted however for the strategic need and the so-called A-parts. For B and C-parts, which do not exhibit a strategic meaning, however the specific investments are generally small.

F: In what respect does the uncertainty in the procurement play a role?
A: Uncertainty belongs to the everyday life of the transaction “procurement”, independently of whether it concerns A or B or C-parts. An enterprise can be uncertain e.g. over the quantity of the products which can be ordered, so that the agreement with the suppliers becomes more complicated. Also regarding prices, possible discounts, delivery times and quality of the commodity there can be uncertainty. Thus a procurement contract can become costly, since it cannot consider all circumstances and eventualities.

F: How do they judge the frequency of the procurement process? Highly or small?
A: The procurement process usually very often repeats itself. This applies in particular to B and C-parts, which constitute 80% of all order procedures on the average.

4. Interview: 23.01.2003

F: Which kind of contract connection represents a decision for the outsourcing of the procurement?
A: This can be very different. No firm partnership between enterprises and service supplying company can be determined, i.e. the enterprise selects and/or the most economical service supplying company most suitable in each case for each procurement transaction. Also within a firm relationship the clearance can be different. E.G. the service supplying company can worry also about additional service, like transport and logistics.

F: Is the “customer GmbH” also an example of it? How did the implementation of the outsourcing decision come with it?
A: The implementation of this decision came at the customer GmbH gradually, so that the procurement process ran from B and C-parts – despite reduced load of the purchase department – in the year 2001 still over it. Only starting from 2002 one could complete the process for B and C-parts without engagement of the purchase department.

5. Interview: 12.02.2003

F: Why your opinion after is the outsourcing economically meaningful the procurement?
A: If you observe the statistics, see a clear increase of the number of employees and a reduction of the number of workers. Behind this tendency a problem, which most enterprises recognized, is but not to against-steer can. The administration structure was modernized in the comparison to production too little. Both use resources however contrary to the production, which creates an increase in value for the enterprise, reduce the administration the increase in value. Each reduction of the increase in value is a net yield loss, which can be avoided by rationalization of the administrative processes. Today we have the means to arrange the administrative activities efficient and to reduce their costs at the same time. These means are information automation in the office activities, and the outsourcing of the processes and in particular the procurement, which represent the predominant portion of the administrative structure.

F: Why is the outsourcing of the procurement applicable only with B and C-parts?
A: A-parts possess a high value and exhibit therefore a strategic meaning. By paging of its procurement an enterprise would lose control of its own strategic function. With B and C-parts this danger does not exist.
In addition the price of B and C-products stands in no economic relation to the internal process costs, because these are often higher than the commodity value. Partially procurement costs exceed even the actual purchase price of the ordered goods. Therefore B and C-products bind substantial capacities and this despite low unit price lead to a high process/overhead surcharge.

F: Which advantages arise for the customers from the outsourcing of the procurement and/or as a result of the partnership with Unitec?
A: With the outsourcing the enterprise does not have no more on the domestic market to be limited and can to buy, where the price is most favorable. This is made possible also by the multilingual personnel of the Unitec, which overcome the language barriers and the necessity for the translation. In addition a reduction of the commodity prices results from the economy of the purchase volume (scale effects), which concentrates on the fields of technology and being, which are with the different users equal to procurement services. The delivery costs can sink drastically, since it becomes actually no longer necessary to move small quantities high costs. With the Unitec agreed upon administrative model of logistics, which makes the consolidation possible of the goods of the different suppliers in only one supply, has to the consequence that those can induce customer GmbH large quantities to low costs. This effect is naturally the higher, the ordered quantity is the larger. This permits also an improvement in the river to logistics. The entrances can be organized in such a way that the acceptance of the goods takes place irregularly regulated and no longer. The expirations of camp can be concentrated and accelerated. The idle running times are eliminated thereby and increased at the same time the efficiency of the existing structures.

F: Which cost factors play a role in the evaluation and in the comparison between enterprise-internal procurement and outsourcing of the procurement?
A: Four cost factors must be considered: Commodity price, transport costs, stock costs, process costs and if necessary price of the service supplying company.
Most enterprises are limited however with one another to compare the sums of commodity price and transport costs in order to judge the pro and cons outsourcing of the procurement. The organizational cost factors, i.e. process costs, stock costs and if necessary supplying service border RPR ice, remain however in many investigations unconsidered, also, because they are to be determined many more with difficulty and more time-consuming.
The fact that the outsourcing lowers organizational procurement costs is considered thus rarely. But are the process cost and the stock program costs reduction a stable and structure-referred saving and remain decisive therefore for the comparison between procurement organization forms.

F: They try to develop and implement also new solutions for the organization of logistics. What is the so-called virtual camp?
A: The virtual camp is to be helped a new challenge, which belong to the general goal of the Unitec of converting all potentialities for the development of the procurement and logistics into the reality as well as the industrial enterprises with a more efficient and more economical resources consumption. In practice the virtual camp consists of the stocks of the enterprises, which cooperate in this project with Unitec. By one of Unitec each of these enterprises can have specifically developed service the unrestricted entrance to each camp and stock.
This a virtual increase of the own stock results, without additional stock program costs.
Rather the reduction of the own stock is made possible by its logistic extension and by the use of this revolutionary service. The virtual camp with the automatic replacement of the situation existence and the virtual stock management by InterNet is the suitable answer to a market, which requires itself fast changed and rapid conversions.

Insurance in lieu of an oath

Here I explain on oath instead of that I made the available work independently and without use of others than the indicated aids. The out strange sources directly or indirectly taken over thoughts are marked as such.
The work was submitted or published so far in same or similar form of no other test authority.

Augsburg, 24. Juli 2003 Enrico Poli

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