| Course | OPS 395 Purchasing and Procurement (OPS/395) |
|---|---|
| Week | 2 |
| Paper type | Strategic sourcing plan |
| Length | about 1,090 words, 4 double-spaced pages plus title page and references |
| Format | APA 7 student paper |
| School | University of Phoenix |
| Program | BS in Business |
| Updated | October 2026 |
Free sample paper for OPS 395 Week 2
Steel, Motors, Touchscreens and Mop Heads: A Strategic Sourcing Approach by Category for a Laundry Equipment Maker
[Student Name]
University of Phoenix
OPS/395: Purchasing and Procurement
Week 2 Assignment
[Instructor Name]
[Date]
Fox Valley Washer Works, its categories, suppliers and figures are composites written for a model paper.
Week 1 showed that Fox Valley Washer Works, the invented commercial laundry equipment maker in Fond du Lac, Wisconsin, spends about $112 million a year, 62 percent of sales, with 1,140 suppliers, and recommended organizing procurement around categories. This paper develops the strategic sourcing approach those category managers will follow.
The Strategic Sourcing Process
Strategic sourcing is a structured process for deciding how to buy a category over several years, not a single purchase. Fox Valley's process has seven steps: profile the category, including spend, users, suppliers and requirements; analyze the supply market, including capacity, competition and price drivers; set a category strategy; select suppliers; negotiate contracts; implement and transition; and monitor performance and the market. Each category manager will take one category through these steps each quarter.
A Purchasing Portfolio
Kraljic's purchasing portfolio model, introduced in 1983, sorts purchases by their profit impact and their supply risk into four groups, each needing a different approach. A review of how companies use the model (Gelderman & van Weele, 2005) found it widely adopted and useful for differentiating strategies, while noting difficulties in measuring the dimensions and the risk of treating positions as fixed. Caniëls and Gelderman (2007) added that the balance of power and mutual dependence between buyer and supplier differs by quadrant, which affects what strategies are realistic.
Fox Valley's categories fall as follows.
High profit impact, high supply risk (strategic): motors and drives, a $17 million category from two main suppliers, with designs built around their motor frames.
Low profit impact, high supply risk (bottleneck): custom touchscreen controllers, about $6 million of the controls category, from a single supplier that holds the tooling.
High profit impact, low supply risk (high-spend, competitive): stainless steel, $21 million from four mills and service centers selling a standard grade.
Low profit impact, low supply risk (routine): maintenance, repair and operating supplies, office supplies and fasteners.
Castings and wire harnesses sit near the middle and will be profiled next quarter.
Stainless Steel: Pool Volume and Price to an Index
Steel is a large spend in a competitive market for a standard grade. The strategy is to consolidate from four suppliers to two, a primary and a secondary, and tender the volume together. Prices will be tied to a published index for nickel and chromium surcharges plus a negotiated base, so Fox Valley pays the market price for metal but a competitive margin for processing. Expected savings are 4 to 6 percent, about $0.8 to $1.3 million a year, mainly from volume and from ending ad hoc spot buys.
Motors and Drives: Partnership
Motors are strategic: they drive product performance and energy efficiency, and switching suppliers would require redesign and testing. The strategy is a five-year partnership with the main supplier, including joint development of a more efficient motor for the next washer generation, shared forecasts and a cost-reduction target of 2 percent a year achieved through design and process improvements rather than price pressure. The second supplier remains qualified for a share of volume.
You do not run a bidding war with the only company that can make your touchscreen.
Touchscreen Controllers: Secure Supply
Controllers are a bottleneck: modest spend but a single supplier and no alternative without redesign. The strategy focuses on security: a three-year contract with guaranteed capacity, a 12-week safety stock, ownership of the tooling transferred to Fox Valley and qualification of a second source within 18 months, which requires engineering to release a specification that another supplier could build to.
Maintenance Supplies: Make Buying Easy
Routine purchases should cost as little effort as possible. Fox Valley will award a catalog contract to one industrial distributor, with agreed prices on the 800 most-used items, purchasing cards for small orders and vending machines on the plant floor for consumables. The goal is fewer transactions and lower prices, consolidating spend from 64 suppliers to one or two.
Total Cost of Ownership: The Motor Example
Ellram (1995) described total cost of ownership as an approach that considers all costs associated with acquiring, using and disposing of an item, beyond the purchase price. Fox Valley received two quotes for a washer drive motor. Supplier X quoted $412 per motor; supplier Y quoted $389. Over a typical ten-year service life in a commercial laundry running 12 hours a day, supplier X's motor uses about 3 percent less energy, worth about $160 to the end customer, which supports Fox Valley's efficiency marketing. Supplier X's field failure rate is 0.6 percent against 1.8 percent for supplier Y; with warranty repair costing about $650 per failure, expected warranty cost is about $4 per motor for X and $12 for Y. Supplier X also ships weekly from Ohio, while Y ships monthly from overseas, adding about $9 per motor in inventory and freight. Total cost to Fox Valley: about $416 for X and $410 for Y, nearly equal, before counting the energy advantage that helps sell Fox Valley's machines. Supplier X wins despite the higher price.
Make or Buy
One category raised a make-or-buy question. Wire harnesses, about $4 million a year, are bought from two suppliers, but Fox Valley's own electrical assembly area has spare space and skilled staff. The category manager compared buying with making in house: in-house labor and materials would cost about 8 percent less than current prices, but the company would need to invest about $350,000 in crimping and testing equipment and take on the risk of managing a new process. With a payback of about a year and better control over a part that often delays final assembly, the analysis favors making the simplest harnesses in house while continuing to buy the complex ones.
Expected Results and Risks
Across the four categories, the approach is expected to save about $1.6 to $2.2 million a year within two years, mostly from steel and maintenance supplies, while reducing the risk of a controller shortage stopping production. Risks include steel price spikes, which index pricing passes through, and dependence on the motor partner, which the qualified second supplier limits.
Conclusion
Fox Valley's purchases are not alike, and strategic sourcing treats them differently: pooled volume and index pricing for competitive steel, partnership for strategic motors, secured supply for bottleneck controllers and simple catalog buying for routine supplies. Total cost of ownership shows that the lowest price is not always the lowest cost. The approach turns the category structure from Week 1 into concrete strategies with measurable savings and lower risk.
References
Caniëls, M. C. J., & Gelderman, C. J. (2007). Power and interdependence in buyer supplier relationships: A purchasing portfolio approach. Industrial Marketing Management, 36(2), 219-229. https://doi.org/10.1016/j.indmarman.2005.08.012
Ellram, L. M. (1995). Total cost of ownership: An analysis approach for purchasing. International Journal of Physical Distribution & Logistics Management, 25(8), 4-23. https://doi.org/10.1108/09600039510099928
Gelderman, C. J., & van Weele, A. J. (2005). Purchasing portfolio models: A critique and update. Journal of Supply Chain Management, 41(3), 19-28. https://doi.org/10.1111/j.1055-6001.2005.04103003.x
What the OPS 395 Week 2 instructions ask
Week 2 of OPS 395 centers on building a sourcing strategy for an organization's main categories. Expect to lay out the sourcing steps, analyze purchase categories using a portfolio model such as the Kraljic matrix, consider total cost of ownership rather than price alone, choose strategies such as consolidation, competitive bidding, partnership or risk mitigation for different categories and estimate benefits. Some versions also ask whether any category should be made in house rather than bought. Use the organization's real or realistic spend data, explain why each category receives its strategy and lean on published supply management studies, cited in APA, for each major choice.
How this OPS 395 Week 2 example is built
The sample paper begins with the category structure created in Week 1. It explains a seven-step sourcing process, from profiling a category to monitoring results, then places six categories on a matrix of profit impact against supply risk. Stainless steel lands in the high-spend, competitive corner, motors and drives in the strategic corner, custom touchscreen controllers in the bottleneck corner and maintenance supplies among routine items. Each receives its own strategy: pooled volume and index-based pricing for steel, a long-term partnership for motors, a second-source development plan for controllers and a catalog contract for supplies. A total cost of ownership comparison shows why the cheapest motor quote is not the cheapest motor. The paper closes with expected savings and risks.
OPS 395 Week 2 grading rubric: where the points go
Instructors credit sourcing papers that differentiate. Strong submissions describe the strategic sourcing process accurately, apply a portfolio model to real categories with reasons for each placement and assign strategies that fit each quadrant rather than one approach for all. Use of total cost of ownership, with a worked comparison, shows understanding that price is only part of cost. Graders also look for realistic estimates of savings and attention to risk, especially in categories with few suppliers. Research support on purchasing portfolio models and their limits strengthens the analysis. Clear organization, a readable matrix or list and correctly formatted APA references earn the remaining points.
OPS 395 Week 2 help: mistakes to avoid
Applying one strategy to every category, usually competitive bidding, is the most common weakness. A bottleneck item with one qualified supplier needs security of supply, not a bidding war. Another frequent issue is placing categories on the matrix without explaining why; give the evidence for profit impact and supply risk. Students also compare suppliers on unit price alone. Add the costs of quality, freight, inventory, energy use or downtime. Some papers estimate savings with no basis; use spend figures and reasonable percentages from similar efforts. Finally, note the limits of portfolio models, which simplify complex relationships and can make a category's position look more permanent than it is. A tutor can help you position categories on the matrix if you are unsure.
Related OPS 395 sample papers
Other OPS 395 week samples
- OPS 395 Week 1: Procurement in the Supply Chain
- OPS 395 Week 3: Selecting and Evaluating Suppliers
- OPS 395 Week 4: Negotiation and Contracts
- OPS 395 Week 5: Supplier Relationships and Risk
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OPS 395 Week 2 questions, answered
What does OPS 395 Week 2 usually cover?
It usually covers strategic sourcing: the sourcing process, purchasing portfolio models such as the Kraljic matrix, total cost of ownership and choosing different strategies for different categories.
Where can I find a free OPS 395 Week 2 sample paper?
The Week 2 paper above develops category strategies for a laundry equipment maker's steel, motors, controls and supplies, free to read.
What is the Kraljic matrix?
A purchasing portfolio model that classifies purchases by profit impact and supply risk into four groups: strategic, bottleneck, high-spend competitive and routine items, each calling for a different approach.
What is total cost of ownership?
The full cost of acquiring, using and disposing of a purchased item, including price, freight, quality costs, inventory, maintenance, energy and downtime, not just the purchase price.
How do you manage a bottleneck item?
By securing supply, through longer contracts, safety stock, qualifying a second source or redesigning the product to use more widely available parts.
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