Answer to Question #299577 in Management for sumit

Question

The Fighter Fire Fighting Company is mainly into manufacturing & sells protective equipment.products use high quality & global safety standards They upgrade product spec& maintain guidelines globally.

U r buyer at FFF has taken this role recently from jnr position as senior buyer got retired. With lmtd exposure on category,handled in past were mostly indirect in nature.u hav always learned to focus on cost & finds it difficult to influence correct sourcing strategy.For ppe category,quality and timely delivery is main aspect,have to work immediately to explore sourcing strategy & approac.other concerned is that company’s key suppliers are facing financial difficulties. However,buyer is still uncertain on how to investigate the financial position of these suppliers.

• Identify atleast five signs that buyer should look for to indicate that certain

suppliers are Facing financial difficulties.

• Explain sources and approaches that the buyer could take to evaluate new prospective suppliers for FFF

Answer 1

Answer

a)Signs that suppliers are facing financial difficulties.

1.Cash Flow Problems where a great inconsistency is observed.

2.Defaulting on bills is another sign of financial difficulties among suppliers as they cannot foot their bills.

3. Extended Terms where they form terms that tend to favour them by giving them enough time to rise again.

4.High Interest Payments so that they can at least get some cash out of what they happen to supply.

5.Decrease in sales is another sign which indicate that the suppliers are under financial difficulties.

b) Different ways and sources can be used in identifying other prospective suppliers. Some of the ways and sources are :

-Competency by looking at how competent the potential supplier is

-Capacity where the supplier needs to have enough capacity to handle the company's requirements.

-Commitment is another way of identifying a supplier.A supplier needs to provide evidence that they are committed to high quality standards.

• Newspaper advertisements.
• Trade directories.
• Catalogue, price lists
• Trade journals.
• Salesmen.