Part 2 Supply Issues Case
Part 2 - Supply Issues Case
Ryan Schwab
MGT147 31512 Principles of Supply Chain Management
Case 3) Don’t shoot the messenger
1. If you were in Jeff’s position, what would you have done to preserve relationships?
If I were in Jeff’s position, I would first have thanked my suppliers and expressed gratitude to them for being willing to work closely with the company in not only designing the new product line, but in then reducing supply prices by the asked for 10 percent. I then would have tried to explain the position of the company and how the price decreases were essential to ensuring a successful product launch. Explaining why the additional cost reduction was requested may not make the actual price cuts easier to make, but it should help somewhat when it comes to maintaining the relationships with the suppliers. Hopefully Jeff has treated them honestly up until now and has a level of trust built up with them.
2. Describe the ethical issues involved. It seems to me that the main ethical issue is in the letter that was sent to suppliers on July 5th. The implicit threat that business with suppliers would be cancelled if the cost demands were not met is not consistent with the type of relationship that Jeff had built with his suppliers, based on honestly, integrity, and hard work. In addition, Billing Equipment was asking for previously agreed upon contracts to be re-opened and re-negotiated in order to make the price cuts, essentially going back on their own word.
3. What is your assessment of the general manager’s approach to meeting target cost objectives?
My assessment of the general manager’s approach to meeting target cost objectives is that it is not the right way to approach the issue. I don’t like the strong-arm tactics, with the thinly-veiled threat of cancellation if they don’t comply. The General Manager should have involved the suppliers and been more open with them on the need to reduce overall costs for the product line. He could have
Ryan Schwab
MGT147 31512 Principles of Supply Chain Management
Case 3) Don’t shoot the messenger
1. If you were in Jeff’s position, what would you have done to preserve relationships?
If I were in Jeff’s position, I would first have thanked my suppliers and expressed gratitude to them for being willing to work closely with the company in not only designing the new product line, but in then reducing supply prices by the asked for 10 percent. I then would have tried to explain the position of the company and how the price decreases were essential to ensuring a successful product launch. Explaining why the additional cost reduction was requested may not make the actual price cuts easier to make, but it should help somewhat when it comes to maintaining the relationships with the suppliers. Hopefully Jeff has treated them honestly up until now and has a level of trust built up with them.
2. Describe the ethical issues involved. It seems to me that the main ethical issue is in the letter that was sent to suppliers on July 5th. The implicit threat that business with suppliers would be cancelled if the cost demands were not met is not consistent with the type of relationship that Jeff had built with his suppliers, based on honestly, integrity, and hard work. In addition, Billing Equipment was asking for previously agreed upon contracts to be re-opened and re-negotiated in order to make the price cuts, essentially going back on their own word.
3. What is your assessment of the general manager’s approach to meeting target cost objectives?
My assessment of the general manager’s approach to meeting target cost objectives is that it is not the right way to approach the issue. I don’t like the strong-arm tactics, with the thinly-veiled threat of cancellation if they don’t comply. The General Manager should have involved the suppliers and been more open with them on the need to reduce overall costs for the product line. He could have
References: Joel D. Wisner, K.-C. T. (2012). Principles of Supply Chain Management. Mason, OH: South-Western Cengage Learning.