Mondavi Procurement Management

1959 Words8 Pages
Mondavi Procurement Management Procurement is the complete process or action of acquiring or obtaining material, property, or services at the operational level, such as purchasing, contracting, and negotiating directly with the source of supply. Procuring goods and services is a larger process than just the label price of wine; the process to buy those items includes major organizational costs, often accounting for half of the product price. When allowing for the vast number of purchases Mondavi makes in a year, it is easy to see how these costs can spiral out of control without careful management. This paper will describe the contract administration policies, procedures, tools and termination procedure for the Robert Mondavi Winery,…show more content…
Several types of contract terminations exist including evergreen, rolling contracts and end of contracts. Typically Mondavi uses "End of Contracts", where once the contract tasks are completed the contract is finished. These contracts signed by Mondavi are often long-term, whether they are dealing with grape growers or equipment suppliers. An example of this took place in 1966 after Robert Mondavi left Krug Winery. Mondavi met with several of Krug 's grape suppliers and convinced them to provide grapes for Mondavi 's new company. Mondavi signed these growers to long term contracts to provide Mondavi with the grapes he needed to produce fine wines in the years to come. This was unique to the California wine industry, because most of the deals between vineyards and wineries were handshake deals. Even in 1996, many small wineries were caught off guard when Mondavi purchased Sierra Madre Vineyard; several of these small wineries had handshake deals with Sierra Madre and could not purchase the same quantity of grapes from Mondavi that they had grown accustomed to in the past from Sierra Madre (Berger, 1996). Robert Mondavi has always done business this way, through a contract with specifications to the length and details of the contract. External Influences to Procurement Management There are a number of external influences on the procurement management processes in the wine industry; key is the price of
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