TheNevada Office supply company (NOSC) aims at getting into a businesspartnership with University of Las Vegas (ULV). For that reason, NOSChas approached, Mr. Ashby, the purchasing director of ULV with aproposal to enter into a partnering agreement for office supplies.Due to the absence of a competitive bidding, Mr. Ashby needs toconsider several issues to determine the viability of thepartnership. This case analysis will provide an in-depth evaluationof issues in the agreement that need to be addressed, alternatives toaddress these concerns, recommendations, their implementation andevaluation.
Notably,there is the issue of location or access/proximity to supplier. Ifthe warehouse of NOSC is far away, this would only mean extradelivery costs and longer delivery times, which is not feasible. Thisnecessitates investigation of freight policies of NOSC. Additionally,there arise stability issues. These are concerns of how long NOSC hasbeen in the market and its credit history. Any contract with ULV willbe a long-term contract and necessitates that the company isfinancially stable. Production capacity concerns arise. NOSC seems tohave too many clients and may fail to enough labor, productivity andskill to handle the product when it goes to full production.
However,there are alternatives to address these issues. ULV could acquireproducts from the warehouse that has recently been opened by thewarehouse in Las Vegas Valley. This will increase convenience andassurance of fast delivery. There is also an alternative ofpurchasing from suppliers in closer proximity. Finally, it would alsobe efficient to encourage NOSC to relocate with regions with cheaperlabor this will reduce price of supplies thus coveringtransportation costs. If NOSC lacks stability it would be moreadvisable to enter into a short-term contract, such as six months,with an option of extension. Another alternative would be asking forreference from businesses that have used NOSC’s services such asthe casinos to find out on stability(Wuyts, & Geyskens, 2005).Moreover, it would be wise to view projected growth and sales of thecompany. Due to existing production capacity concerns, it would bewise to buy office supplies in advance and have them stored in theuniversity. There would also be an alternative of ensuring NOSCshares market feedback with Mr. Ashby to help project futureshortages or increased demand.
Markedly,not each and every alternative is worthwhile in our cases. In thecase of location concerns, it would be advisable to purchase officesupplies in bulk from the closest warehouse, that in Los Angelesvalley to cut on transportation costs. This method is effective,easier and cheaper to use (Klaus& Center for Transnational Law, 2006).In the case of goal stability issues, a short-term contact would bethe best option for ULV. This would minimize any risks of anythinggoing wrong. In the situation where NOSC seems to lack enoughproduction capacity, it is wiser for ULV to purchase goods in bulkand store them in their stores. This will allow NOSC ample time todeliver more goods while preceding purchases last.
Atfirst, Mr. Ashby should discuss issues and concerns arising withNOSC.Allthe recommendation should then be included in a written partneringagreement prior to commence of purchasing and supply (Corbett, 2012).Both partners should also make sure they fully comprehend the termsencompassed in the agreement and also demonstrate willingness tocomply with agreed issues. This will ensure effective implementationof recommended ways to solve highlighted issues.
Afterprovision of reports on transactions by NOSC to Mr. Ashby, which willbe done quarterly, meetings will be held to evaluate and discuss anyarising issues and concerns. This will ensure University of Las Vegasis monitor and is contented with the level of application of theterms of the agreement and the value of NOSC’s supply chain.Furthermore, private entities such as auditors could be used tomonitor transactions, pricing and liquidity of the supplier.
Corbett,C. J., Blackburn, J. D., & Van Wassenhove, L. N. (2012).Partnerships to improve supply chains. SloanManagement.
KlausPeter Berger, & Center for Transnational Law. (2006). Privatedispute resolution in international business: Negotiation, mediation,arbitration(Vol. 1). Kluwer Law International.
Wuyts,S., & Geyskens, I. (2005). The formation of buyer—supplierrelationships: detailed contract drafting and close partnerselection. Journalof Marketing,69(4),103-117.