The Consolidation of Sourcing Activities Across Non-Competing Companies

The relevance of this study is to analyze the feasibility of the consolidation of sourcing activities as a tool to optimize the total procurement costs and improve the economic efficiency of the company's core business. The aim of the research is to develop a project for the introduction of consolidated sourcing in Fazer LLC To achieve the aim, the next objectives should be carried out: to analyze the key concepts and regulations governing the subject of research; to develop an algorithm for choosing alternatives when the consolidation of sourcing activities; to characterize the internal and external environment of Fazer LLC; to analyze the efficiency of the procurement process and identify its constraints; to apply the developed algorithm to the solution of the problem of choosing alternatives for optimal consolidation of sourcing activities; to assess the economic efficiency of the consolidation of sourcing activities. The methodology of the research is based on the case study. The empirical basis of the research is the data of the Federal State Statistics Service of Russia, SPARK-Interfax, as well as the internal data of Fazer LLC and partner companies. According to the results of the study, the integration of companies within the marketing and commercial aspects of sourcing by joining a group purchasing organization was recognized as the most desirable way of the consolidation of sourcing activities. The obtained results have showed that the consolidation of the sourcing activities of Fazer LLC with non-competing companies is economically feasible in the chosen option. The net present value of the project for three years will be 292.9 million rubles. The project will reduce the annual total procurement costs by 1.67%, and purchasing costs by 1.87% compared to the reference period. The return on Fazer's assets will increase by 34.89% and the return on equity will rise by 34.87% compared to the basic period because of the project implementation.