Hi , I need help with the studying of Sabor Inc Case. 1. What is the price that
ID: 376451 • Letter: H
Question
Hi ,
I need help with the studying of Sabor Inc Case.
1. What is the price that a purchaser has to pay for procurement flexibility?
2. How can supply be guaranteed in a period of market shortages?
3. What should the criteria be for establishing long-term contracts?
4. What are the real risks of being without marconil for Sabor?
5. Why are the suppliers interested in obtaining long-term contracts?
6. What strategies are available to Ray Soles in this situation?
Case Study Format & Methodology
Please use the following format to prepare the case study analysis and final recommendations.
Organization Background
This section provides the context for the issue or organization being examined. It is important that the reader be given a feel for the type of organization, the marketplace in which that industry operates, and the overall business environment in which the discussion and analysis will take place. Corporate and Business Unit financials may also be presented here, as well as comparisons between the company and its competitors.
Defining the Issue
It is important that the learner clearly articulate what the problem is. It is essential that the broader issue being examined relate specifically to a Supply Chain Management (SCM) material or service related issue, and that the sub issues of the broader SCM issue highlight the underlying problems that have resulted in this larger overarching issue becoming so important to the success of the organization. It is best to state this overarching issue right up front so that the remainder of the analysis always keys back on this initial statement. This is the heart of the business case and of the analysis and final recommendations. The key concern(s), problem(s), decisions(s), challenge(s) or opportunity (ies) must be clearly articulated in order to ensure that the remainder of the discussion be meaningful and actionable. This issue(s) must be important to the organization, a source of major competitiveness or significant profitability or loss. The urgency of the situation must also be articulated.
Analyzing Case Data
This is where a considerable part of the discussion should be contained: causes and effects (i.e. fishbone diagrams); constraints and opportunities; and, quantitative and qualitative assessments. People, materials, methods, equipment, money, and other factors all lead up to effects that must be determined to be valid or invalid. From there, constraints or opportunities that will impact the analysis need to be examined and factored in to possible courses of action.
Decision Criteria
It is imperative that criteria be clearly established against which alternatives will be measured or compared. These criteria provide the basis for evaluation. They can be classified as quantitative or qualitative. Such criteria may include profit cost, return on investment (ROI), market share, capacity, risk and / or cash flow to name a few. Qualitative criteria may include competitive advantage, customer satisfaction, employee morale, corporate image, ease of implementation, synergy, ethics, safety, and / or goodwill, to name a few. There may be other criteria that the learner has determined are essential to the decision making process. Ensure that the criteria are articulated. Also provide a measure of importance for each of the criteria (i.e. weighting %) so that it is clear to the author and all others which criteria is important, not so important, and so on. This weighting can then be used to score each of the alternatives with each criteria, totaling to realize a final score that can be used to rank all of the alternatives.
Alternative Analysis and Evaluation
Each alternative must be clearly identified and must address the issue as stated in the issue section. The key advantages and disadvantages of each alternative must be discussed. The compare and contrast assessment of each alternative must be done against the decision criteria previously listed. A matrix format may be used in order to more accurately compare and score each of the alternatives. If multiple decision criteria are being used, weighting of each of the criteria must be applied. It is also important to look at the short and long term results of each alternative, and to assess the best, the worst, and the most likely outcomes for each alternative. Qualitative and quantitative analysis will be required. It will also be necessary for the student to use the various supply chain management tools and techniques learned throughout the certificate program to determine those possible outcomes.
Action and Implementation Plan
Based on the predicted outcomes and the comparative strengths and weaknesses of each alternative, the most logical conclusion and alternative should be the one selected by the learner. However, a combination of alternatives may be the more reasonable approach, utilizing the strengths of various alternatives and eliminating, where possible, the weaknesses of the selected alternatives. The proposed actions and implementation plan must minimize the disadvantages while taking advantage of as many of the strengths as possible. The action plan must be specific and include who, what, when, where, and how. A contingency plan would also be useful in case things do not go as expected. The implementation plan should include a set of milestones and a schedule for everyone to measure their success against.
Assumptions, Presentation & Organization
It is important for the learner to identify all assumptions being made, when they have been used, and t articulate why case data was unavailable. This reflects real life where not all of the information is available to make the most accurate decision possible. If the assumptions are incorrect, the implementation plan and contingency plan must be flexible enough to be able to react to changes. All assumptions used must be reasonable and be as “true-to-life” as possible.
Thanks
SM
Chapter 2 Supply Strategy 39 signfcant discrepancies with inventory records on The new corporate strategy was finalized in May and the company's computer system. Furthermore, a significan ewed with the management group on June 1 in an amount of stock was written off each year due to obsoles- all-day staff meeting. The central theme of the new strat- cence. Rick suspected that production staff regularly re- egy was standardization of all product lines, in terms of moved stock without proper documentation and that workers both design and manufacturing, reducing variety to three frequently deviated from established bills of material or four hasic lines for cach product category. The sa department would no longer accept orders for specialized designs. The aim of the new strategy was to reduce the delivery lead time from 14 weeks to 6 weeks and to lower production costs dramatically NEW BUSINESS STRATEGY Competition in the heat cxchanger industry had increased dramatically over the past decade, with much of the new competition coming from Korca and Europe. Korean NEW CHALLENGES FOR THE firms, with their low cost base, competed primarily on price, while European firms focused on standardizing their product lines to a few high-volume products and competed Max Brisco indicated that he expected the materials group on delivery lead time and price. Spartan's competitors to play a major role in support of the new corporate strategy in Europe used manufacturing rather than batch or job shop operations. asscmbly-line manufacturing processes, and needed to know by next week the specifics of Rick's plan. The task force had set a number of ambitious targets. Senior management viewed the competition from First, customer lead times for finished products were to be urope and Korea as an imminent threat. Many of Spar redued to six weeks from the current average of 14 weeks tan's customers had recently developed aggressive ex Second, the new objective for inventory turns was 20 times. pectations regarding pricing and delivery lead times, and Mcanwhile, raw material stockouts were to be eliminated. some key customers had decided to opt for standard prod Third, Max believed that product standardization also uct design, sacrificing custom design for lower cost and would provide opportunities to reduce coss for p faster delivery goods. He expected that costs for raw materials and com po The changing nature of the industry forced senior man- nents could be cut by 10 percent over the next 12 months. agement to reexamine their business strategy. As a result in January, a multídisciplinc task force representing en pany was taking and saw this as an opportunity to make gineering, manufacturing, and sales was formed with the major changes. He knew that Max would want the specif- mandate to formulate a new five-year business strategy. ics of his plan during the meeting in a week's time. Rick fully supported the newd Case 2-2 Sabor Inc. In mid-April, Ray Soles, vice president of supply chain out the North American market. Total company sales last management at Sabor Inc., had become increasingly con year totaled S800 million cerned about the potential shortage of supply of marco- nil, a new high-tech raw material for air filtration. Sabor AIR FILTRATION AND MARCONIL Inc.'s three suppliers, during the last two weeks, had ad- vised Ray Soles to sign long-term contracts and he was trying to assess the advisability of such commitments.air filtration units along with its prime units in air heat- Sabor Inc. for decades had sold air humidification and ing and cooling. Until three ycars ago, air filtration had accounted for about 7 percent of total corporate sales and had been sold primarily as add-ons to a new air cooling/ SABOR INC. Sabor Inc. of Cleveland,. Ohio, produced high-quality con heating system. However, with the advent of marconil, sumer and industrial air conditioning and heating units. An air filtration had started to increase significantly as a per extensive network of independent and company-owned centage of total sales. Marconil, a new high-tech product installation and sales centers serviced customers through- developed as part of the U.S. space effort, had a range ofExplanation / Answer
Answer:-
Answer-1:- For procurement flexibility purchaser has to give purchase commitment in years and sign relevant contracts with supplier and sometimes agree to supplier price point. These all needs to be done post their product demand analysis over the contract period. Sometimes depending on supplied product demand and availability resulting in supplier price point pressure, purchaser has to agree low quality product and sometimes delayed or late deliveries.
Answer-2:- Guaranteed supply in times of shortages can be achieved with help of contracts pressure on supplier or by having contracts with multiple supplier. Increasing price point with new contract or contract amendments or temporary contract overrides with suppliers during shortages can guarantee supplies during shortages. Supplement products knowledge and making it available during shortage as well as be able to run production or make products with help of this supplement can guarantee production (not supplies) during shortages.
Answer-3:- Long term contract should have price point constant or with reasonable increase over a period, best quality product, consistency in delivery and no shortages in quantity demanded. Certain penalties on quantity shortages, not meeting quality standard, missed delivery should be there.
Answer-4:- Without Marconi Supply, Sabor growth rate will get hit. Also, may impact their brand too. It will not able to meet twenty percent rate growth forecasted by their marketing team.
Answer-5:- Supplier will get long term commitment for their product, demand of their product for the contract period. With long term contract in place and committed customer, supplier can attract more customer for their product. With committed contract and future demand growth of their product, supplier can invest in their product production capacity expansion as per their demand analysis with long term contracts. Supplier can use long term contract for their business funding too or attract investors.
Answer-6:- Contract with Bilt Chemical is requiring higher commitment, Walton Inc two year contract with less commitment but similar to Bill Chemical is effective contract whereas G.K.Specialities is less committed and high price and flexible to them but not to Sabor. Hence, the strategy is to sign contract with Walton Inc and also have a G.K.Speciality to cover supply demand not met by Walton or supply constraint at Walton end.