Case Study Review

Rosa Moniz

Course: Global Supply Chain Mgmt

Instructor: Earl Wiese

January 11, 2015

Pacific HealthCare

1. What alternatives should Barney Rubble consider when addressing the problem?

It is normal in supplier relations to find out that an established relationship with a given supplier is faulty or that some aspects of the deal are not favorable to the consumer. Mr. Rubble needs to bridge the gap between Pacific’s need and the supplier’s offers. This is very important since it prevents incurring extra costs, having delays in operations, and ultimately damage of Pacific’s reputation in case the procured material is substandard. Mr. Rubble has the option of continuing the deal with Kodak; reviewing their agreement and drafting a new way forward. He can also opt to conduct an extensive supplier evaluation. Given that the different providers Kodak, Agfa , Dupont, Fuji and 3M have their positives and negatives it would be best for Pacific Healthcare to establish the supplier that meets the their needs best.

Carter (1995) points out the key points to note in Supplier evaluation. First is cCompetency which entails the ability of a supplier to deal with the needs Pacific has. Views from other customers of x-ray film who are served by the different suppliers are key. Commitment to quality by each supplier is another point to note in evaluating. Since pacific calls for high quality products Kodak, Agfa and DupontDuPont make the cut. Cost is inevitably issue that comes into play in evaluating these suppliers. Mr. Rubble should however not make this the determining factor, but rather take all other factors into consideration first. The ability of the suppliers to consistently provide high quality material and services should also be examined. Mr. Rubble should ensure that the selected supplier has the right procedures in place to ensure consistency in supply of the x-ray film. The business Culture of the selected supplier should be consistent with the values pacific holds dear which are high quality at the minimum cost. The supplier that best matches this would be the perfect fit for pacific.

2. Should Pacific’s supply policies allow for any medical staff personnel to control sourcing decisions?

For better functioning of Pacific’s supply channels, individual medical staff personnel should not be allowed to single handedly decide issues on suppliers. A team should be put in place top check the process and make informed decisions from different perspectives. Letting certain staff be responsible can result into bias and misinformed decision ns, which may harm pacific as a whole. The team put in place can ensure Quality service from suppliers by working hand in hand with various local and international bodies that examine the quality of a potential supplier. Such include the International Organization for Standardization (ISO 9000) certificate. The selected team can also be in charge of drawing up a service level agreement (SLA) .These refer to the contracts put in place to monitor the relations between pacific and the preferred suppliers. The SLA point out to the suppliers the kind of service they should offer, its level and essentially the needs and priorities of pacific in this case. Given the complex nature of the SLAs, specialists are required to draw it and thus medical staff personnel in pacific may not be the best fit to handle the supply business.

3. What are the advantages and disadvantages of staying with Kodak—or changing suppliers? How would you evaluate these?

The main disadvantage of shifting from Kodak to another supplier would be the disruption in the supply of film paper. This is due to the fact that the new supplier will come up with new ways of doing business. The risk here is that the new way may not be consistent with the operations of pacific and thus halt provision of medical services. One advantage of shifting to another supplier would be the efficiency achieved in running the film paper transaction. By building on the defects observed in the Kodak deal, pacific can seal all the loopholes to ensure that they get the best deal that matches their needs. The resulting deal can combine quality products, better terms and cheaper costs. Comment by Earl L. Wiese, Jr. : By staying with Kodak, Pacific Healthcare is insured the usual product quality, reliability, and service. The two firms have worked together for a number of years and know what to expect from each other. Additionally, they can save the time and money that otherwise would be spent in searching for a new supplier. In addition, a major advantage to Pacific healthcare is the discount on equipment, maintenance, and service that Kodak currently provides, as a single supplier. However, Pacific Healthcare is faced with paying a significantly higher price for the film if Kodak refuses to negotiate—a premium of approximately $120,000 to $246,000 per year. In exploring different alternatives, students should quantify and analyze the various alternatives, making some required assumptions in the process. In the final analysis, total cost is the major concern, given acceptable product quality and service. Clearly, Pacific Healthcare is not practicing proactive supply management simply by staying with Kodak on Kodak’s terms.

4. What action could Mr. Rubble have taken prior to Mr. Howell’s death to obtain reduced film prices ? Comment by Earl L. Wiese, Jr. : You are using the questions as heading, which is okay. Level 1 heading like these should be centered, bold, and not italic. If you want to break the heading to make it look more appealing that's okay.

Firms have established various ways of efficiently negotiating with suppliers in order to get favorable deals. The first thing Mr. Rubble would have done to get reduced prices is Building a strong relationship with Kodak. A strong relationship could have been cultivated by going more into a personal relationship with Kodak. The constant interaction apart from the business of x-ray film could have had the trickling effect to lowering of prices. Mr. Rubble could also have achieved reduced film prices by taking advantage of discounts. Business advisors point out that even when an offer for discounts is not on the table, a company should ask for them. Even if not given, the suppliers get the message that recognition for the company’s effort is required. Reviewing Pacific’s terms with Kodak is another approach Mr. Rubble could have used to lower the price of film paper. Here, Ppacific Healthcare could have tabled a better deal from another supplier that is cheaper, presented it to Kodak in an effort to make them match that deal or improve their terms

to make film paper cheaper. Comment by Earl L. Wiese, Jr. : Top management should have established a policy dealing with authority in supply management activities. Mr. Rubble should have solicited Mr. Howell’s input, but Howell should not be permitted to assume full responsibility for the decision. For example, Mr. Rubble could have worked cooperatively with Mr. Howell in conducting carefully controlled tests on the five types of film for various elements of quality. If Howell played a key role in the testing process, it might have been possible to select the top two performers for Pacific Healthcare’s use. This is just one of several approaches that might have been taken to genuinely involve Mr. Howell in the selection process. Mr. Rubble also could have discussed the pricing situation with Kodak in an attempt to achieve a better overall deal for Pacific Healthcare. If this approach did not work, Mr. Rubble could then have informed Kodak of his intention to use the competitive bidding process as a sourcing mechanism for the next contract.

References

Carter, R. (1995). 'The Sseven Cs of Eeffective Ssupplier Eevaluation.,' Purchasing and Supply

Management, 44-46. Retrieved from ???? doi or societies website.

Holland, J. H. (1998). Emergence: From chaos to order. Reading, MAass: Addison-Wesley. Comment by Earl L. Wiese, Jr. : I could not find a parenthetical for this source. Every source list should have a citation. If you didn't use this source then don't include in your reference list. If you did use this source, provide a citation for the informatoin you use even if is not a direct quotation.