Case Study: Don T Shoot The Messenger
Don’t Shoot The Messenger
by:
An assignment submitted in partial fulfillment of the requirement for MGT 608
School of Business Management
National University
February 2014
Abstract
In June 1998, Billings Equipment Inc. formed a new business unit and opened a plant in Seattle to produce a new line of earth-moving machines for the construction industry. The organization had a history of impeccable ethical treatment of suppliers and was considered to be a leader in the industry. Early supplier involvement in prototype and testing activity was cultivated to encourage active participation in the development of this new product line by all that had a vested interest in its future. Everyone …show more content…
Buyers were to follow up immediately by contacting their top 30 suppliers. Noncompliance could result into the re-opening of previously negotiated agreements, possible cancellation of the product line altogether, or the consideration of other sources of supply. Everyone was uncomfortable moving the supplier relationships from a cost-based approach to a simple request for price reduction. Shortly thereafter, the general manager made an announcement during a strategy meeting with buyers to push for an additional 5 percent price reduction; suppliers had already complied with the 10 percent price reduction. The implications of the latest price reduction request landed Jeff in a predicament of his responsibilities to the general manager against developed supplier …show more content…
Never inflate requirements to obtain better pricing. Negotiate in good faith. Don’t change the requirements and expect the supplier to hold his pricing.
Be ethical. Procurement decisions should be made objectively, free from any personal considerations or benefits.
Be reasonable. A supplier is entitled to a fair profit.
Pay promptly. The purchase order you issue to the supplier is your promise to pay for the goods and services you buy in a timely manner (usually within 30 days).
Businesses are increasingly relying on their suppliers to reduce costs, improve quality, and develop new processes and products faster than their rivals’ vendors can. Organizations have started to evaluate whether they must continue to assemble products themselves or whether they can outsource production entirely (Choi, T. 2004). The issue isn’t whether companies should turn their arms-length relationships with suppliers into close partnerships, but how (Choi, T. 2004). Experts agree that American corporations, like their Japanese rivals, should build supplier keiretsu: close-knit networks of vendors that continuously learn, improve, and prosper along with their parent companies (Choi, T. 2004).
Describe the ethical issues
by:
An assignment submitted in partial fulfillment of the requirement for MGT 608
School of Business Management
National University
February 2014
Abstract
In June 1998, Billings Equipment Inc. formed a new business unit and opened a plant in Seattle to produce a new line of earth-moving machines for the construction industry. The organization had a history of impeccable ethical treatment of suppliers and was considered to be a leader in the industry. Early supplier involvement in prototype and testing activity was cultivated to encourage active participation in the development of this new product line by all that had a vested interest in its future. Everyone …show more content…
Buyers were to follow up immediately by contacting their top 30 suppliers. Noncompliance could result into the re-opening of previously negotiated agreements, possible cancellation of the product line altogether, or the consideration of other sources of supply. Everyone was uncomfortable moving the supplier relationships from a cost-based approach to a simple request for price reduction. Shortly thereafter, the general manager made an announcement during a strategy meeting with buyers to push for an additional 5 percent price reduction; suppliers had already complied with the 10 percent price reduction. The implications of the latest price reduction request landed Jeff in a predicament of his responsibilities to the general manager against developed supplier …show more content…
Never inflate requirements to obtain better pricing. Negotiate in good faith. Don’t change the requirements and expect the supplier to hold his pricing.
Be ethical. Procurement decisions should be made objectively, free from any personal considerations or benefits.
Be reasonable. A supplier is entitled to a fair profit.
Pay promptly. The purchase order you issue to the supplier is your promise to pay for the goods and services you buy in a timely manner (usually within 30 days).
Businesses are increasingly relying on their suppliers to reduce costs, improve quality, and develop new processes and products faster than their rivals’ vendors can. Organizations have started to evaluate whether they must continue to assemble products themselves or whether they can outsource production entirely (Choi, T. 2004). The issue isn’t whether companies should turn their arms-length relationships with suppliers into close partnerships, but how (Choi, T. 2004). Experts agree that American corporations, like their Japanese rivals, should build supplier keiretsu: close-knit networks of vendors that continuously learn, improve, and prosper along with their parent companies (Choi, T. 2004).
Describe the ethical issues