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Case Study : Portland Bus Company

Satisfactory Essays

Situation Analysis
Portland Bus Company is owned by Dawe Motors, a global producer of heavy duty vehicles and cars. David McGregor is the director of materials and has designated Richard Kaplan, the buyer at Portland Bus Company, for sourcing fabricated metal components for the company. Richard Kaplan is the customer of metal component products. Nevertheless, he is selling marketing intelligence of the bidding process to other suppliers. David has indicated to Richard that he expects a 25% reduction in costs as an outcome of the method Richard choses to use when buying from the suppliers. PBC currently uses 10 companies to source 290 fabricated metal components and accounts for approximately $2 million annually. Richard plans to achieve …show more content…

This risks interrupting good supplier relationships. There will also be trade-off costs when thinking about switching part of the sourcing network for the firm that can outweigh the benefit. The costs can consist of questionable reliability, establishing relations, inspection. Additional problems that may arise from a reverse auctions may consist of unrealistically low bids leading to renegotiation afterwards, supplier collusion, and possible fake bids to promote competitiveness in the bidding process.

Alternatives Two main alternatives for the firm is to utilize private offer auctions and Request for Proposals. A private offer auction could be used and it would allow the firm to implement the auction similar to how the reverse auction was developed by researching cost efficiency and quality of the potential supplier. The benefit to using this strategy would be that it eliminates suppliers looking at other bids and undercutting them just to renegotiate a different price after the bidding is over. A Request for Proposal (RFP) can also be used for more complex requirements in which price is only one of the considerations for the decision. This includes some detailed requirements for the supplier and invites bidders to use expertise to collaborate and propose solutions. The downfall to this strategy would be how time consuming it can become to get the best quote.

Assumptions The

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