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
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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
There are many factors that appeal to leaders why organizational change is needed in today’s business to stay competitive. Weiss (2016) noted “Factors such as technology and globalization have made the world far more interconnected” (p. 4). These factors can create more risks and opportunities for organizations to succeed or fail. Change management is inevitable, in order to successfully bring an organization into the twenty-first century, leaders must recognize this, develop plans and successfully execute them to remain relevant in today’s economy. This paper will provide an overview of Discount Tire Co. and diagnose the strength, weaknesses, opportunities and threats and present a plan using Kotter’s eight-step change process and
As seen in the cases above with castings and O-rings, even the simplest of parts can pose complications in the auction process. Potential for successful reduction in cost can be recognized with a more concentrated event and management effort. This can be true for engineered parts as well but on a less likely basis. The primary key to success to an auction of this nature would be to not have any surprises or to anticipate suppliers’ behavior. Building on this idea would be to truly know your suppliers, which can get cumbersome in a company with a lot of growth through acquisitions and locations. However, with regional procurement managers, it is not impossible. There should not have been a question “if” an incumbent was going to bid, good vendor management would have assured that a last minute entry by way of an incumbent would not have happened. Applying this thought to the engineered parts, an auction would only be effective if suppliers invited to bid have been fully vetted. An auction can speed up the process of getting time sensitive information to suppliers, but it also may open
Second, always make sure there is an alternative source. As I mentioned before, this is much easier with single source procurement (but not sole source), since other similar suppliers could be able to supply similar products with more or less that same quality as the previous suppliers.
Based on the textbook and my understanding, whenever there are negotiations between a procurer and a supplier regarding a competitive bidding, the first thing that might be favored is the scope of the project, meaning both will sit down and discuss the entire project prior the work begins. Meanwhile, during the negotiations, evaluation criteria should be clear, and stated and defined. As the evaluation is based on the criteria stated and the procurer can request or ask the supplier’s opinions on certain specifications and where things can be improved.
Case Name: Norkunas v. Cochran, 398 Md. 1; 919 A. 2d 700, Court of Appeals of Maryland, 2007.
Competitors must be monitored constantly. If they are known to be involved in an intensive, long-term project that’s consuming many of their resources, they likely won’t be bidding on other projects for some time. When they are bidding, there strengths must be assessed. Suppliers must also be monitored for price increases and resource availability. There is rarely supplier dependence, however, as there are usually multiple options.
1. Is the air taxi industry poised for take-off? What customer segments are most likely to lead to success?
Although competitive bidding will continue to be used, especially in the public sector, to ascertain market prices for non-strategic items, many of these items will be outsourced to third-party buyers or consortia to conduct the bidding. Moreover, organizations will continue to purchase most non-strategic products and services under master contracts, some of which will be negotiated by consortia that have leveraged and buying expertise. A trend is expanding for the continued use of third-party purchasing by primarily private sector firms pursuing all forms of competitive advantage possibilities.
Procurement by public entities is guided by primary law principles of transparency, equal treatment and non-discrimination, procurement laws sets up an extensive legal framework regarding the procurement of work, supply and service contracts. There are two main reasons for the use of specific procedures i.e. why contracting authorities do not just negotiate or simply buy from the closest supplier. First, it provides for more public accountability and therefore less cases of corruption practices. Additionally, tendering procedures aim to ensure the best value for money by making it necessary for suppliers to act highly competitive. As a result, market mechanisms will help in facilitating the best possible practices. In situations where market mechanisms are not effective, tender procedures might lose their effectiveness as well. If for example there is lack of competition due to certain complexities or as a result of lower bidder interest, negotiations with just one or two suppliers may be the most efficient manner to handle the process. Therefore, we discuss the inherent advantages and disadvantages of sealed bidding and contracting by negotiation as procedural frameworks for tendering.
Hello John, I enjoyed your post and the write-up were well informed. Discount Tire Company must get to expand it's view on the Call to Action (CTA) Marketing. This is a new way business expand its customers range through online social media platform by sponsoring it product not only in the United State but outside the world. This will improve it conversion strategies percentage of online visitors
Total annual purchases were approximately $250, and about $60 million to be sourced through Materials Department
Procurement intends to explore supply market opportunities and to implement resourcing strategies that deliver the best possible supply outcome to the organization, its stakeholders and clients (Kidd, 2005). Therefore, construction procurement exists to purchase a construction project as requirement of firms or organizational entities to achieve its goals. However, the choice to use external resources is the part of firms’ decision-making
Peter Nicholson wishes to convert the factory in the north east to production of the electric taxi. Using data in Appendix C, Table 1, calculate payback period and the average rate of return.
The Pacific Oil Company a well-established oil company with an assorted diversified product line including “Vinyl Chloride Monomer (VCM)”. (Lewicki, 2010, p. 583) As one of the pioneer producers of VCM, Pacific Oil cornered the market share for contracting, distributing and selling their niche product, VCM worldwide. One of Pacific’s longtime customers was Reliant Corporation. This partnership was more than a decade old and was strong. However, if Pacific Oil decided to further diversify its product line to include Polyvinyl Chloride (PVC) a VCM derivative, “it would not want to be in the position of supplying a product competitor with the raw materials to manufacture the product line, unless the formula price was extremely
[PDF]Case Study: Transport Corporation of India Limitedsiteresources.worldbank.org/.../t...পাতাটিকে অনুবাদ করে দেখাও(TCI), as a major cargo transport company, recognized the importance ... The information in the TCI case study is based on personal interviews with TCI Foun- .... cess to medical records, it also supports analysis providing useful insights.