Inventory management at Grupo Nobre: the methanol challenge

Abstract

This teaching case aimed to discuss the importance of inventory management techniques in defining the purchasing strategy, in the context of the industrial operations and production of biodiesel. From the perspective of Ricardo Mendes, purchasing director, the text proposes a discussion on the nuances involved in the purchasing strategy based on long-term contracts with reliable suppliers and on spot markets. The teaching case invites students to discuss and apply the concepts and calculations of cycle and safety stock to support decisions related to the purchasing strategy. It is a real narrative based on facts experienced by the authors that aims to provide students with a greater understanding of the fundamental differences between long-term suppliers and spot relationships, a central dilemma in purchasing management, and to provide inputs so that they can calculate the costs associated with inventory management arising from each purchasing strategy and reflect on the risks of each strategy. This case is recommended for Supply Chain Management courses, with Inventory Management and Purchasing Management modules, especially in MBA, specialization, or professional master's classes.