A Supplier Partnering Agreement at the University
A Supplier Partnering Agreement at the University of Las Vegasof Las Vegas
A
A Case StudyCase Study
In partial fulfillment of the course requirements In partial fulfillment of the course requirements
For Supply Chain Management For Supply Chain Management
Decision Sciences and Innovation Department Decision Sciences and Innovation Department
Ramon V. De
Ramon V. Del Rosario l Rosario College of !usinessCollege of !usiness De "a Salle #niversity
De "a Salle #niversity
$y% $y% Feli&' (im ). Feli&' (im ). "im*aichong' "eonard S. "im*aichong' "eonard S. "una' +erseus Anthony S. "una' +erseus Anthony S. +anopio' Arman ,oseph -. +anopio' Arman ,oseph -.
Sy' (ay
Sy' (aye Marineth e Marineth -.-. +rof. illy Cuason +rof. illy Cuason
Instructor Instructor
Table of Contents
I. Summary of Findings
II. !a"#ground Information
III. Problem Statement $
IV. Analysis of Alternatives $
V. %etailed &e"ommendations $
VI. Ans'er to Case (uestions $
I. Summary of Findings
Mr. !o$ Ash$y' /ho is a ne/ly hired purchasing director of the #niversity of "as Vegas 0#"V1 is faced /ith a decision' /hether or not to accept the offer of -evada 2ffice Supply Company 0-2SC1.
Currently' #"V has around eight suppliers for their general office supplies' 3o/ever' general consensus in their department /ants them to lessen the num$er of suppliers to around 4 /ith 5 of them $eing $ac*ups. 6his can increase efficiency $y lessening the num$er of papers that need to $e filed and the num$er of truc*s coming in and out. -2SC right no/ provides the $est value and already fulfills up to 789 of their office supply demand.
6he partnership agreement is for -2SC to $e the sole supplier of #"V for their office supplies. In return they /ill get a discount of around 78:89 and /ill receive daily deliveries. In addition' -2SC /ould also install soft/are that /ould allo/ individual users to order from them and have it delivered the ne&t day. 3o/ever' the terms of the agreement include that #"V /ould recommend other educational entities in "as Vegas to the same partnership. 6hey /ould also $e a$le to get a 59 re$ate for com$ined purchases that e&ceed ;<'888'888 a year. !ut' according to -evada la/ that if an entity enters into an agreement other entities may tie into that' $ut -2SC doesn=t let other institutions *no/ a$out the 59 re$ate its offering.
II. !a"#ground Information
Nevada Office Supply Company
6he -evada 2ffice Supply Company has $een supplying office materials to educational institutions for over <7 years' it has a /arehouse in Southern California $ut has recently opened one in "as Vegas Valley since it /as a$le to gro/. It e&pects to increase sales $y around 589 due to the increase of institution and population gro/th in the "as Vegas Valley area.
University of Las Vegas
#niversity of "as Vegas recently hired a ne/ purchasing manager' Mr. !o$ Ash$y. #"V is a state university and is a heavy consumer of office supplies /here they spend $et/een ;<'888'888 ;<'788'888 a year. 6hey have multiple suppliers for office supplies $ut their main supplier is -2SC.
III. Problem Statement
6he pro$lem Mr. !o$ Ash$y is facing is /hether or not he should accept the offer given his <7day time limit. !asically' the #niversity of "as Vegas /ants the $est value for money office supplies and sometimes the cheapest priced ones. 6hey used to do this through competitive $idding $y having multiple suppliers associated /ith them.
Another pro$lem Mr. !o$ Ash$y should consider is not >ust /hether or not it /ill $enefit the company in terms of costs' $ut /hether it is legally allo/ed to undergo in such a partnership /here competition is $ypassed. 3e also has to consider /hether it is an ethical move to ta*e part in this deal *no/ing that -evada state la/ states that other educational institutions should also get the same deal' $ut in reality they are potentially getting an e&tra 59 re$ate not offered to the others. Furthermore' the deal $eing $rought upon Mr. !o$ Ash$y appears to $e a $it shady considering that -2SC does not /ant any details of the deal to $e disclosed to other organi?ations. 6hey are seemingly trying to get ahead of competition $y not giving them a chance to compete.
IV. Analysis of Alternatives
6here are four alternatives in /hich Mr. Ash$y can choose. First is to agree to contract the partnership agreement /ith -2SC. Second is to ignore or disagree the partnership agreement and stic* to its previous supplier setup. 6hird is to pursue their intention of finding three suppliers' one of /hich /ill $e the ma>or and the other t/o /ill $e the $ac*up. Fourth /ill $e to negotiate /ith -2SC to contract /ith them $ut include a clause that they /ill source at t/o $ac*up suppliers for a list of reason /hich are stated into the contract.
V. %etailed &e"ommendation
2ut of the four alternatives listed' negotiating and pursuing a contract /ith -2SC including a clause that supplies can $e also sourced to t/o $ac*up suppliers for listed reason /ill $e included. 6he agreement /ith the -2SC /ill $e very $eneficial to $oth parties $ut unfortuitous events can happen hence the #"V must protect itself in the contract. If the -2SC /ill not agree to the contract' then that /ill $e the time to inform the other suppliers that initiative for partnership /as introduced $y their competitor to spur competition /hich /ill $e $eneficial to #"V.
ma*e sure the mar*et is a fair and competitive one. As stated in the first paragraph' @Mr. Ash$y /as given this offer /ithout $enefit of competitive $idding and /as only given <7
days to accept the offer.' this meant that they /anted to $ypass the $idding process and instantly gain customers pro$a$ly $rea*ing la/s in the process for it $eing an under the ta$le arrangement type of agreement. Furthermore' $y the state la/' if an educational entity enters into an agreement then it means other institutions may also tieinto that agreement /ithout the need to see* further quotes or $ids from other suppliers. hat I thin* this implies is if #"V gets a deal' other institutions should also get the same deal' /hich not /hat /as offered to #"V since they are getting a $it e&tra compared to the others.
$. *hat are the ethi"al issues involved in ,-SCs proposal/
6he ethical issue here is that #"V is a government o/ned school. 6hey have to $e careful $y operating ethically and under the $oundaries of the la/. hat -2SC is offering is anticompetitive and seems to $e trying to pressure #"V into ma*ing a hasty decision $y giving them such a short time to decide' <7 days. As a government o/ned university' they have reason support other competitors in the state and create a healthy industry since $y partnering /ith -2SC' they are paving the /ay for other educational entities into the same partnership effectively eliminating competition in that mar*et and creating a monopoly.
0. Is this a true partnering agreement/ %is"uss.
6his is a true partnering agreement since it /ill $enefit not only the #"V /ith the discounts in the contract $ut also the supplier' -2SC' $y continuous sales in their part. Moreover' /in /in situation for $oth parties /ill $e o$served since $oth of them /ill $enefit tremendously.
). 1o' should 2r. Ashby analy3e the proposal/
Mr. Ash$y should analy?e the proposal $y measuring the overall $enefit of the contract /ith -2SC throughout the term and then comparing it to the $enefits factoring not only the cost $enefit $ut also the $enefit of supplier relationship should they not pursue the contract' or should they pursue their prior intention of pursuing one ma>or supplier and then t/o $ac*up supplier. 6he proposal of -2SC is >ust an opportunity they /ere presented and they must do their $est to determine if it /ill $e a good opportunity for the company or a hoa&.
VII. Learning
In order to get the $est suppliers' one company must have 4 suppliers in hold < ma>or and 5 $ac*ups. A $idding setup among 4 companies /ill give #"V at the care of Mr. Ash$y to have the $uyer $argaining po/er in terms of cost. A great num$er of suppliers is good $ut is not cost efficient' and in order to increase efficiency it is $etter to pool 4 suppliers and *eep the list of all suppliers as a $ac*up in case of fortuitous events.
Also' every $usiness decision has an effect due to its environmental factors such as government rules and regulations.
