Workplace reviews and discussion: 一詮精密工業股份有限公司

The office staff are warm and personable.

As an employee of Y.C.C., I have keenly felt the pressure of continually rising material costs and steadily declining profit margins, with the Procurement Department playing a crucial role in this situation. Over the past several years, the company’s operating performance has been weak, and its stock has also lagged behind its peers, prompting reflection: could the lack of an effective market-competition mechanism in procurement be affecting overall profitability? The following explains the current problems within the Procurement team and feasible recommendations for improvement from four major perspectives: organizational structure, work practices, process controls, and strategic planning.

Y.C.C.’s Procurement team currently has fewer than five people and shares office space with the General Administration Office. Despite its small headcount, it is responsible for procurement across the entire company. Because staffing is limited, procurement personnel generally operate in a “reactive execution” mode: they place orders as soon as they receive purchase requests, with little initiative to conduct market research or seek second-source suppliers. More seriously, Procurement does not attend the profit-making business review meetings convened by the Chairman, and cost control and supply-chain risks have never been discussed there.

The core of professional procurement lies in “diversified sourcing” and “thorough price negotiation,” thereby balancing suppliers’ bargaining power. In reality, however, the Procurement team maintains long-term relationships with existing suppliers without simultaneously gathering market pricing information or promoting competitive bidding. It also generally accepts suppliers’ price increases in full, lacking mechanisms for upstream management or introducing alternatives. This reliance on a single supplier not only concentrates costs but also means that any increase in raw-material prices is directly passed on to the company’s gross margin, resulting in an unavoidable decline in profitability.

In addition to insufficient sourcing and negotiation, key performance indicators (KPIs) in the procurement process are also unclear. For example, the required annual number of new suppliers, procurement cost-reduction targets, supplier on-time delivery rate, and rate of reduction in quality issues have not yet been incorporated into team evaluations. Without clear metrics, procurement personnel can easily become limited to routine duties and lack the motivation for continuous improvement. Even when the Finance Department identifies abnormal gross margins, Procurement is unable to provide first-hand cost analysis reports or solutions.

Overall, Y.C.C.’s current procurement system has considerable room for improvement in staffing, sourcing capabilities, KPI setting, and cross-departmental collaboration. As global supply-chain volatility intensifies and raw-material prices rise, failure to strengthen the procurement function promptly could continue to erode the company’s profitability, ultimately making it difficult to support its stock price and market competitiveness. I sincerely recommend that senior management elevate the Procurement Department to the level of a strategic business partner, invest in the necessary resources and digital tools, and establish clear objectives and evaluation mechanisms. Only in this way can the company overcome its high-cost predicament and restore Y.C.C.’s “profit recovery” and “stock-price rebound.”

The above is a rational observation of and set of recommendations for the current state of Y.C.C.’s procurement operations. I hope it will prompt organizational reflection and initiate effective internal reform.