Answer to Question #187482 in Management for Karabo Maluleke

Question

(B) As a procurement manager of a fast-food company, you are expected to enter into a contractual agreement with three different suppliers. Honey limited proposes to supply you with goods that are essential in the production. The other two are suppliers of the following:

Austin corporation is a supplier of products such as office furniture (such as tables, chairs blackboard etc.); and Pentel is a supplier of electronic appliances such as laptops, desktop etc.

• Demonstrate which of the three relationships (transactional, collaborative, or alliance) is suitable for each case (5 marks per selection). 

Answer 1

Honey Limited will be supplying us with products that are important in the production using collaborative sourcing, which is a procurement process by which businesses can engage with one another to improve the effectiveness and add value within the supply chain. With the shared aim of doing better by working together than they would have if they had worked alone. Collaboration will be based around sharing needs, expertise, experience, resources, risk and overheads to promote cost reduction, added value and innovation. The company will enjoy reduced products cost, sustainable solutions, and strategic relationships.

Austin corporation, a supplier of products such as office furniture (such as tables, chairs blackboard etc.), would benefit from the transactional relationship in the supply chain. They have a distribution network within their country and sell specific terms to domestic customers, which affects how quickly you are paid and, as a result, the cash period.

A supply alliance is an agreement between a customer and a supplier. They're all focused on making quality improvements while cutting costs. The inflow of creativity from the supplier partner is emphasized in these partnerships, as is the creation of a partnership centered on mutual confidence and the pursuit of shared objectives. It will be suitable for Pentel, a supplier of electronic appliances such as laptops, and desktop. A supply alliance's main advantage would be lower overall costs. Alliances may generate synergies that are impossible to achieve in transactional or even collaborative relationships. As a result of the synergies, direct and indirect labor, equipment, inventory, and overhead costs are reduced.