Cost comparison between internal and paged out procurement - THESIS UNITEC GERMANY GmbH <!--#echo var="SERVER

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4 Analysis outsourcing of the procurement

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.

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:

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:

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:

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

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:

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

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:

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:

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

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:

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:

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

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.:

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

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 expenditure	Proportional load	Activity costs	Activities
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.

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