principle of procurement
THE BOARDROOM
In June 2002, Tom Dewey, supply manager for Builder’s Bank, Inc.’s (BBI) New York office, wanted to resolve a set of problems arising from the purchase of eighty chairs for the executive boardroom. General Company Background
BBI was a large international bank with operations throughout the world. It had recently purchased an office building and had hired the well-known architect Peter Tropper to do the major design and renovation plans.
The Supply Department
The supply department in the New York office was responsible for all local purchases, in addition to a few major purchases for the international offices. The bank did not have an approved supplier list; an invitation to bid was an indication that the potential supplier was considered qualified.
Building Renovation
The architectural firm of Peter Tropper was hired to redesign the entire building, including the selection of furniture. Once the design was completed, a working group, including the president and vice president, had approved the design, including selection and color for all major furniture.
The supply department did not participate in this process.
In June 2001, Peter Tropper sent a specification sheet to the supply department for all purchases, which included model number and manufacturer. Suppliers would bid on the same manufacturer, with no substitutions allowed. Although the department had the option to split the order between suppliers, Tom Dewey decided to order through a single source.
In late June, the working group asked Tom Dewey to submit a budget of what the bank would have to spend to complete the renovation during fiscal 2002. Therefore, in early July, Tom
Dewey submitted a request for proposal (RFP) to ten potential suppliers, all of which responded.
When the bids were received in mid-August, the working group reviewed the bids and rejected them as being too high. The working group and Peter Tropper agreed to a scaling down of the work proposed.
In June 2002, Tom Dewey, supply manager for Builder’s Bank, Inc.’s (BBI) New York office, wanted to resolve a set of problems arising from the purchase of eighty chairs for the executive boardroom. General Company Background
BBI was a large international bank with operations throughout the world. It had recently purchased an office building and had hired the well-known architect Peter Tropper to do the major design and renovation plans.
The Supply Department
The supply department in the New York office was responsible for all local purchases, in addition to a few major purchases for the international offices. The bank did not have an approved supplier list; an invitation to bid was an indication that the potential supplier was considered qualified.
Building Renovation
The architectural firm of Peter Tropper was hired to redesign the entire building, including the selection of furniture. Once the design was completed, a working group, including the president and vice president, had approved the design, including selection and color for all major furniture.
The supply department did not participate in this process.
In June 2001, Peter Tropper sent a specification sheet to the supply department for all purchases, which included model number and manufacturer. Suppliers would bid on the same manufacturer, with no substitutions allowed. Although the department had the option to split the order between suppliers, Tom Dewey decided to order through a single source.
In late June, the working group asked Tom Dewey to submit a budget of what the bank would have to spend to complete the renovation during fiscal 2002. Therefore, in early July, Tom
Dewey submitted a request for proposal (RFP) to ten potential suppliers, all of which responded.
When the bids were received in mid-August, the working group reviewed the bids and rejected them as being too high. The working group and Peter Tropper agreed to a scaling down of the work proposed.