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How could AAA have avoided the problems it experienced with Comstock?
The contract between AAA and Comstock would have been clearly defined and understood before a deal was reached to minimize time and cost wastage. AAA had assumed that the strategic locations of the Comstock offices in Steubenville and Evansville would be ideal for the project management by reducing the potential for coordination problems. This proved otherwise as the project took more time than expected in addition to facing more problems. AAA should have allowed Comstock to manage the project from its Steubenville office when relocating its staff to Evansville had proven futile. However, the contract should have specified the entity liable for any inconvenience caused. This would have made Comstock responsible for its failures hence took precaution to avoid such inconveniences. In a nutshell, AAA should have adopted a different type of contract instead of the fixed- price contract it pursued which jeopardized the quality of service offered.
What are the potential implications of the type of contract AAA used? Discuss.
Fixed price contracts would jeopardize the quality of the service offered as the supplier may indulge in cost cutting to maximize profits. Besides, the increased unexpected costs such as those resulting from economic recession would increase the supplier’s expenditure. Moreover, the fixed contract has many assumptions which later on prove sensitive to the contract. For instance, the contract does not address the potential changes in pricing which has direct impact on the service delivery. Comstock for example had problems of relocating as well as staffing its offices in Evansville and had to meet the costs even though such expenditure was not taken into account while signing the deal. Finally, such contracts have problems of too much or too little contingency. Basically, business entities rush to win the contracts irrespective of the cost and risk involved.
How could AAA have improved its approach to sourcing in this case?
AAA should not have assumed other important aspects of the contract such as potential changes in pricing. Instead, it should have subjected all the potential firms to a thorough scrutiny and avoided using strategic locations of the Comstock’s offices to award contracts.
What should AAA do now? Discuss.
AAA always believed that cost was not an issue but time mattered more. It should therefore contemplate offering incentives to Comstock on the completion of the project within an agreed duration. This would motivate the firm to facilitate its project management process. However, Comstock should take responsibility of the time wasted as it can be seen that the project has no manager five months after its commencement.
Did Lisa do the right thing? Was it ethical? Should she be commended for saving $6,000?
No, Lisa’s action was not right. It is neither ethical nor professional to cancel bids on the basis that a potential firm would place a favorable bid when rebidded. Though she saved $6000, her actions were uncalled fore.
Would it have made any difference if the original bid opening had been public?
Yes, it would have made a big difference. Lisa would not have been allowed to cancel the bid once initiated and that Praire Company would have been locked out of the process. Public bidding enhances transparency as everyone follows the process.
How might this look to the original bidders?
It is no doubt that the original bidders would not only be discouraged by Lisa’s decision but also with the entire bidding process. The opaqueness of the bidding process undermines Lisa’s dignity as well as tarnishing the image of Central Teachers College. In short, the original bidders would be disappointed.
Is there an ethical problem here?
Yes, the Alternate Technologies’ attempt to offer the additional software package to Dr, Smith without informing the supply management is unethical conduct meant to compromise Smith’s decision in accepting their offer. By eliminating both the item and its price in the letter sent to supply management, Alternate Technologies is attempting to bribe Dr. Smith to consider the offer.
What additional information does Buylow need, if any?
Buylow needs a clear confirmation of the legitimacy of Dr. Smith’s copy as well as the sender of the document so as to proceed with the proper actions.
What are his options?
Buylow’s options are obvious. He should disregard Alternate Technology’s bid for the sales of the software upon confirmation of the legitimacy of the letter addressed to Dr. Smith. He may also contemplate taking legal action against the company to corruption in the industry.
What advice would you give Buylow?
First and foremost, I would urge Buylow to confirm whether the letter is genuine by investigating the sender of the document. If legitimate, he should first terminate their bid before proceeding to pursue legal procedure against the firm.
What specific action should the company take in the area of inventory control?
Support your proposal with an analysis of its strengths and weaknesses.
Big D-Company should adopt a stricter inventory control within the firm’s management process. At the outset, there should be a formal inventory control and production planning activity to enhance manufacturing process which has been highly jeopardized in the company. Currently, the superintendent is bestowed with the authority to make decisions on the manufacturing process in informal consultation with the engineers. The formal planning of the process would ensure sound decision making concerning the management process. Moreover, the firm should adopt a formal process of record keeping thereby ensuring accountability of all the processes including ordering and supply of materials and products. Currently, the firm has assigned the process of materials and equipments supply in the hands of superintendent who makes and buys such materials as sheets. This may compromise the process hence the need to adopt a formal recording keeping process. Furthermore, production efficiency can also be enhanced through scheduling of work to minimize time wastage. This is called for given the firm’s current inefficient time management process. For instance, the machine foreman is authorized to work on orders he deems viable. This is a weakness due to the fact that the individual may make wrong decision thereby compromising the production process. Besides, the company should adopt strategies aimed at increasing the sales particularly on the timing of posting of completed lots on the sales and production records. Currently, the firm waits for the completion of all lots before posting them on the records. Generally, Big D-Company should adopt an efficient inventory control over all equipments and processes including the raw materials, company parts as well as the products to enhance efficiency in the production process.
What is your reaction to the argument of those who oppose tighter controls?
The opposition against the adoption of stricter inventory control is uncalled for. To begin with, the proposed control aims to improve the production process hence suitable for Bog D-Company given its aforementioned weaknesses. It is noteworthy that any business undertaking is characterized by risks and adoption of new control methods is not exceptional. Managing the risk should be the issue and not the risk itself. Besides, the funds spent on the new control approach are far less than the wastages incurred by the firm while operating on the informal control procedures. The adoption of new control in the production planning and control, receiving, warehousing, and traffic is inevitable as these areas are vital in the production process which has since deteriorated due to the informal process currently utilized.
How would your recommendation in answering question 1 differ if this company were making a single product?
The processes involved in the manufacture, production and sale of a single product is less bureaucratic and procedural hence minimal control approaches adopted instead. The formal procedures would not be necessary as the line of production would be easy to monitor in an attempt to improve the process.
How does the inventory control problem change as the company’s overall volume of business increases?
The increase in volume of business by Big D-Company would complicate the production process thereby elevating the problems associated with the process. Notably, the production process would not only be bureaucratic but also labor intensive given the increase in both the raw materials supply and sales of the finished products.
Do you think that Big D could benefit from the establishment of a supply chain management department? If so, what functions should it include?
Yes, the supply chain department would be ideal for the company given its large magnitude of the production process. This department will be responsible for a variety of functions including forecasting and product ordering, inbound transport management, invoicing and record keeping, product distribution, as well as warehousing management which the company has proven to be in dire need of as a result of increase in its production process.
What are the most likely benefits of forming strategic supply alliances with Sunspot’s key suppliers?
The benefits accruing from such alliances are several including among other things increased access to the market, expertise, knowledge and skills that Sunspot Inc, currently employ in its management strategies. Moreover, the company would save a lot of finance in its management process including distribution and marketing costs. Furthermore, the company would also strengthen its relationship with key suppliers thereby improving production process. It would also enhance market penetration thereby enlarging its customer base.
What are the disadvantages or risks of such alliances?
The disadvantages may include challenges that the firm may encounter especially in financing future opportunities. The sharing of risks as well as losses or profits accruing from such allowances would be an uphill task for the companies. Moreover, a company may engage in alliance with another company which would later prove competitive. Besides, dealing with diverse or conflicting operating practices is another drawback that the company may face.
How can these disadvantages be offset?
The disadvantages of alliances may be offset through a myriad of ways including proper description of the ideals of the alliance including financing of projects and opportunities. Moreover, the methods adopted in sharing of profits and losses that may accrue in the alliance should be well defined.
Discuss the basic inventory problem confronting this firm.
There is poor coordination between the departments thereby ensuring inefficiencies in the management process. For instance, the supply chain .............
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