Case 4–1: Bright Technology International

Bob needed to respond to the supplier 's request by the end of the week, and he decided that the
acquisition of the MJ10012 transistor would present a reasonable reason for modifying the
existing strategy used to procure specific components. It was Tuesday, March 11th, and this was
the third time this month that he was asked to consider a purchase volume for a component; he
won–he derided what purchase policies, if any, he should establish for such situations. Bob
Renwick, procurement manager at Bright Technol-ogy International (BTI), was seeking a quote
from Electronix for the supply of MJ10012 transistors in his office in Modesto, California.

COMPANY BACKGROUND

Applications included studying pro-thin folding dynamics, measuring ion concentrations inside

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living cells, studying membrane structure and function, investigating drug interactions with cell
receptors, and fingerprint-ing oil samples. Fluorescence was a powerful technique for studying

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molecular interactions in analytical chemistry , biochemistry, cell biology, physiology,
nephrology, cardiology, photochemistry, and environmental science. In recent years , the

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company has expanded internally and currently has sales and service centers in the United
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States, Canada, Germany and the United Kingdom. BTI products have been used globally for
medical research , health care, manufacturing procedures, quality assurance, environmental
protection and other applications. Management predicted that about 50 per cent of its revenue
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in the coming year will be outside the United States and Canada.
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PURCHASING AT BTI
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However, the competitor, Abram Industries, acquired Steyn the previous year and the MJ10012
tran-sistor was no longer part of the supplier 's core product offering; its supply was currently
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handled by an independent distributor, Electronix. While there was still price competition for
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high-volume components, especially for large customers, suppliers tended to charge a premium
when delivering small cus-tom orders. To fix this issue, he collaborated with the engineering
department to re-sign some items, removing certain expensive or difficult-to-use components. In
recent years, there has been a pattern of compensation between suppliers of electrical
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components and optical products, and the remaining competitors have largely been big firms
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with considerable bargaining power. Although Bob worked with more than 400 vendors, many of
whom were located outside of North America, about three-quarters of the total dollar value for
his orders was for customized components, while the balance of orders was for basic items.

CONCLUSION

In recent years, there has been a pattern of compensation between suppliers of electrical
components and optical products, and the remaining competitors have largely been big firms
with considerable bargaining power. Although Bob worked with more than 400 vendors, many of
whom were located outside of North America, about three-quarters of the total dollar value for
his orders was for customized components, while the balance of orders was for basic items.

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 Case 4–2: Hemingway College
Catherine Barkley, manager of purchasing and accounts payable at Hemingway College in
Fresno, California, stared at the latest e-mail from one of her staff.

HEMINGWAY COLLEGE

It provided training and educational programs in the fields of creative arts, business, health care,
human services, hospitality, literacy, academic development , life skills, computers, technology,
apprenticeships and English as a second language. She was responsible for 11 staff, including
four customers, the account manager, four account clerks, the traffic and customs inspector, and
the administrative assistant.

RESOURCE PLANNING SYSTEM

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After a seven-month supplier evaluation process, EduSoft, a cross-functional senior management

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team led by the Vice President of Finance and Corporate Services and the Vice President of
Administration, selected an out-of-box ERP package, EduSoft, which was successfully installed

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in similar colleges across North America.
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IMPLEMENTING THE PURCHASING MODULE

Catherine grappled with the problem about how to seek to modify the EduSoft method to operate
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with old stab-modified policies or to adjust policy in order to incorporate EduSoft 's efficient,
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automated systems that appeared to have been effective in other schools.

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TRAINING

116 Purchasing and Supply Management was important, as it needed to make the staff
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comfortable with the new system and to achieve 'buy-in.' It planned to continue training the staff
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throughout the summer, as this was the best time for the staff to get to know the new system,
because they were mostly free from the distractions of ca-tering to everyday student needs and
issues. Cur-rently, staff training meetings usually lasted 15 to 20 minutes each day or every
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second day, focusing on specific issues that had arisen while using the system, rather than the
broad-based policy and process change training sessions held earlier.
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IMPLEMENTATION SCHEDULE

The new plan called for sales and accounts payable to finish the introduction of its software by
the end of June, so that its programs will be usable by the beginning of the academic year in
August. The Human Resources Department was expected to start introducing its modules after
acquisition at the beginning of July, so that details on employee payroll and income reports will
begin on 1 January of the following year.

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 ALTERNATIVES

Catherine had a meeting with Dan Kavaliers scheduled for 9:00 a.m. the following morning. He
requested an update from her and suggestions as part of a detailed strategy to ensure that the
purchasing and accounts payable systems will be introduced by the end of June. In the first place,
Catherine believed that more staff time was needed to implement the modules than origi-nally
budgeted. Catherine will have to organize a one-week meeting for her team to address the
challenges of the structures and to draw up a new project schedule.

Case 4–3
Portland Bus Company

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Richard Kaplan, buyer at Portland Bus Company (“PBC”), in Portland, Oregon, was

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preparing for his meeting with Laura Henning, business consultant for Bothe US opera-

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tions, on October 14. (23)

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PORTLAND BUS
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Total annual purchases amounted to approximately $250 million for five major com-
modity groups: manufactured metal, systems, fiberglass, electrical, and power train.
David McGregor, Director of Materials, headed a staff of 12, who were responsible for
material planning, inventory control and purchasing. PBC was owned by Dawe Motors,
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the world's leading manufacturer of passenger cars and commercial vehicles,

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headquartered in the UK.

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METAL COMPONENTS

It has been more than two years since a comprehensive analysis of these com-modity segments
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was carried out, and Richard believed that there were substantial opportunities for cost savings
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under current market conditions. During the last three months, Richard analyzed the company's
expenditure in three categories of manufactured metal parts: hinges, brackets and ducts.
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THE REVERSE AUCTION

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PBC's parent company had a contract with Bothe AG, a provider of online bidding event
solutions, to provide support and technical support to all of its reverse auction divisions. Laura
Henning, a business strategist for Bothe US op-erations, was assigned to collaborate with
Richard at the age of the reverse auction project. On the day of the auction, Bothe will track the
online bidding case and offer assistance to all parties involved. The Dawe Passenger Car
Division in Europe recently completed a reverse auction with Bothe and was very satisfied with
the results. After the auction, Bothe would provide the purchaser with a detailed auction report,
including the results, which would be available approximately two hours after the auction event.
Located in Europe , North America and Asia, It has established a wide variety of consultancy and
development services, partnering with nearly 200 businesses in the aerospace, manufacturing,

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 computer and office equipment sectors. The All Portal helps the bidder to watch the reverse
auction live.

PREPARING FOR THE REVERSE AUCTION

For example, should a package be awarded the lowest bid-der if the price savings were lower
than the switching costs? In addition, to what degree will PBC take into account long-term
supplier relationships when taking final bidding decisions on reverse auctions? Richard wanted
to be as clear and up-front as possible with the suppliers, some of whom he expected to be
reluctant to participate. Laura explained to Richard that there were a range of strategies to
execute the reverse auction, and the key choices included exposure (e.g. what the bidders would
see during the auction), length of the auction, measures to prolong the length of the auction, and
the goal. For example, the Bothe system could be programmed in such a way that any bidder
could see either the current best price, the ranking of all bid prices (displayed by color codes), or

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the rank of bidder either (e.g. highest, second , third, etc.). Laura also suggested that although

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most auctions lasted for 15 to 30 minutes, it was not uncommon for policy to prolong the

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process, given that there was still bidding interest at the end of the scheduled time.

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