Ra Case
1. What is system contracting?
System contracting is an agreement between suppliers and companies that buy large bulks of supplies for a continuous period of time. Suppliers deliver all supplies in the beginning of the year. The contract also involves unloading the goods and placing it in the warehouse or wherever it belongs. The benefits of this include reduced costs for the companies. In our case, the five railroads have 25 to 30 system contracts with six different supplies.
2. What is the advantage of having a central purchasing group when developing systems contracts? The central purchasing group is essential for efficient communication and smooth operations. This group is crucial for working directly with users of each of the five railroads in order to develop and negotiate the deal within systems contracts.
3. If the goal is to improve RONA, what groups should be involved in the effort? Why is purchasing involved?
The centralized purchasing group that represent the railroads is essential for the denominator part of the RONA formula. For the inventory section of the formula, locomotives, railroad cars and the material is essential. The other functional groups are essential for the other parts of the RONA formula.
4. Why might a supplier resist longer-term systems contracts with the consignment? What incentives might encourage the supplier to participate?
5. What factors are …show more content…
Continuous communication is also important because it results in improved relationship with suppliers because they must negotiate and manage agreements through communications. The executive commitment is essential because meetings inform the president about the intent and progress of systems contracting and it protects the president from being caught unaware or being influenced while communicating with
System contracting is an agreement between suppliers and companies that buy large bulks of supplies for a continuous period of time. Suppliers deliver all supplies in the beginning of the year. The contract also involves unloading the goods and placing it in the warehouse or wherever it belongs. The benefits of this include reduced costs for the companies. In our case, the five railroads have 25 to 30 system contracts with six different supplies.
2. What is the advantage of having a central purchasing group when developing systems contracts? The central purchasing group is essential for efficient communication and smooth operations. This group is crucial for working directly with users of each of the five railroads in order to develop and negotiate the deal within systems contracts.
3. If the goal is to improve RONA, what groups should be involved in the effort? Why is purchasing involved?
The centralized purchasing group that represent the railroads is essential for the denominator part of the RONA formula. For the inventory section of the formula, locomotives, railroad cars and the material is essential. The other functional groups are essential for the other parts of the RONA formula.
4. Why might a supplier resist longer-term systems contracts with the consignment? What incentives might encourage the supplier to participate?
5. What factors are …show more content…
Continuous communication is also important because it results in improved relationship with suppliers because they must negotiate and manage agreements through communications. The executive commitment is essential because meetings inform the president about the intent and progress of systems contracting and it protects the president from being caught unaware or being influenced while communicating with