1st March Small Supplier, Big Volume Viewpoint This case is about wavering relationships with supplier. For companies, large or small, it is essential to undertake the financial position of other companies before settling any contract or agreement. This case specifies various unjust tactics which the other company can play in order to settle an important deal by any means. Many companies go for unethical and illegal practices in the obsession of making more money. This case is about two companies in which Success Inc is the customer of ABC GmbH, which is a supplier.
This case focuses the challenges and issues which Success Inc faces while dealing with its supplier, ABC GmbH. Central Problem Success Inc. is facing serious troubles with one of its supplier namely ABC GmbH. Success Inc is a newly established company and has been looking for supplier for the manufacturing of the components if its two products, X and Y. As soon as the deal is finalized and the commencement of the proceedings happens, Success Inc realizes that for the manufacturing of its Product Y, ABC GmbH requires a substantial amount of investment.
It was known to Success Inc that the investment would be required but the miscalculations done by ABC GmbH were beyond the consideration of Success Inc. ABC GmbH stated that the investment would require $10 million just to trap and confine Success Inc. However, the original figures were not revealed at the time of discussing and finalizing the deal. Statement of Objectives Success Inc should have pondered upon the financial position of ABC GmbH.
It is not possible to determine whether the company is treating fairly or not, but before settling any deal, all the documentation, requirements and other essential conditions should be stated. ABC GmbH had placed Success Inc in a much critical condition by misleading them through inaccurate and deceiving computation done intentionally. Areas of Consideration In this section, the integral areas of consideration are stated which include strengths, weaknesses, threats and opportunities of Success Inc. Strengths Success Inc has strength that its top management has good relations with its suppliers. If the situation doesn’t get settled, then the top management can come up at frontline to manage this issue.
Determined and honest staff of Success Inc is it’s another major strength. Despite of the strong relations of top management with its suppliers, its employees, Jack and Jill are at frontline and are handling this critical condition with huge determination. Weaknesses Success Inc is a newly established company therefore it should have analyzed and thoroughly checked the financial position and stability before finalizing any deal with its supplier. This negligibility can cause loss of huge time and money and can also result in frustration.
Another weakness of Success Inc is that it should not let go any good deal just because of its ill mannered staff. Tolerating the worst attitude of staff members can be much better than losing substantial amount of time and money. Threat Success Inc has a huge threat of bargaining power of supplier. Due to their negligibility, their supplier, ABC GmbH can alter the decisions of Success Inc in their own favour which can cause huge loss of money to Success Inc.
Opportunities This mistake gives a lesson of being more cautious in future. There are number of supplier present in the industry and Success Inc has the opportunity to specify their own requirements before settling deal with any new supplier. Time Context As far as time frame is concerned, it is quiet favourable for Success Inc because after analyzing the case study, it became evident that Success Inc does not have any time pressure to launch a particular product in a particular time.
It can be an edge to Success Inc as in the mean time it can switch to another supplier and can save the additional time which would be incurred in dealing with ABC GmbH. It also doesn’t seem that ABC GmbH would provide any substantial savings to Success Inc as they are not in the position to provide money for investments and Success Inc is compelled to take the burden of investment on its own shoulders. Success Inc can delay the time of launching product but needs to overcome the mishaps it is facing at this point of time.
The reason is because at the end, Success Inc would not be in a better situation when both time and money would have gone. A company which has betrayed once can never be trusted again. Alternative Courses of Action There are several viable options which Success Inc can opt in order to overcome this situation. First of all, it needs to schedule a meeting where it can unmistakably check the financial position of ABC GmbH. It can ask ABC GmbH for the correct calculations and investigate and validate through different sources whether those computations are right or not if it prefers to deal any further with this company.
If not, then Success Inc can immediately switch to other supplier be it Elite Ltd or any other. But at the same time, it is not feasible as it would require starting from the scratch. Therefore, the viable option is to make meetings on regular basis with ABC GmbH and keeps on asking them about the investment procedurals. Correct computations should be gathered from ABC GmbH and appropriate actions should be taken.
Success Inc can also ask for discounts, additional product for free of cost or it can penalize ABC GmbH after the deal is done. Final Decision After analyzing the case, in my opinion, a final decision has to be taken by Success Inc in order lighten the pressure which is being rendered from ABC GmbH. Success Inc should schedule further meetings with ABC GmbH and must keep track of its future position as long as it is dealing with ABC GmbH.
Success Inc should have eye on each step which is taken by its supplier in order to avoid any potential problems. It should take the best possible steps to alleviate the loss of money and time. It can be done by keeping relevant actions of ABC Inc under the control of Success Inc. There is not a single chance which Success Inc can provide to ABC GmbH. Success Inc should also consult this matter with its top management which have great expertise in handling with supplier.
Apart from these strategies, Success Inc should be cautious now in finalizing any deal in future. It should avoid suppliers like ABC GmbH and should consult more reliable suppliers for future transactions. Detailed Action Plan Any company must not choose its suppliers blindly. Instead, a proper action plan must be designed which incorporates all the necessary requirements which are essential while choosing a supplier. This action plan of choosing a supplier differs from company to company. For Success Inc, detailed action plan for selecting the best possible supplier is mentioned in the subsequent paragraphs.
Quality The foremost criterion for selecting a supplier is to acknowledge the quality of products which it manufactures. If the right quality is not provided, then the supplier must not be dealt with. Lead time After analyzing the quality, the firm should determine how much time the supplier take to deliver the final product. Delay in lead times can cause huge loss of time and money to a company. Productivity The company must also determine the productivity of the supplier. Economies of scale is another concept which judges the productivity if a manufacturing concern.
Financial Stability The most important criterion is to evaluate the financial stability of the supplier which was missing in the case of Success Inc as well. Reference Ostring, Pirkko. Profit Focused Supplier Management. New York: American Management Association, 2004. Print.