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Supply Management

Organizations must distinguish between the contract and the contracting process and strategy, ensuring that the form of contract reflects the nature of the required relationship. In other words, relationship definition comes first. In the event that the relationship changes, the contract must also be adjusted. Also, for longer term and more complex deals, the risk focus should be more on how they will be managed than on how they will be allocated. AAA needed to do a better job in managing their relationship and contract. There clearly wasn’t enough forethought put into pre-award activities or these circumstances would have been most likely discovered and addressed. They are also failing to effectively control their contractor’s performance- it seems that Comstock and AAA aren’t even on the same page. AAA should have employed the essentials of good contract relationship management, some of which include:

•Good preparation.

•Careful supplier selection.
•Appropriate contract selection.
•Comprehensive description of the goods or services.
•A Contract Management Plan.
•Service delivery management.
•Relationship management. Effective contract management relies on good communication based on mutual respect, trust, understanding, openness and accountability. Keep the relationship between you and your supplier open and constructive, resolving or easing tensions and identifying issues early. •Contract administration.

•Continual improvement.
•People, skills and continuity.

Cost plus percentage of cost pay a fee that rises as the contractor’s cost rise. Because this contract type provides no incentive for the contractor to control costs it is rarely utilized. The U.S. Federal Acquisition Regulations specifically prohibit the use of this type for U.S. Federal
Government contracting (FAR Part 16.102). Contractors have little reason to cut costs in a cost-plus plan, which might lead to a project going far over budget. •There is limited certainty as to what the final cost will be. •Requires additional oversight and administration to ensure that only permissible costs are paid and that the contractor is exercising adequate overall cost controls. •Properly designing award or incentive fees also requires additional oversight and administration. •There is less incentive to be efficient compared to a fixed-price contract.

Comstock isn’t making any progress on this effort, but they are surely incurring costs.

Strategic sourcing is an approach to supply chain management that formalizes the way information is gathered and used so that an organization can leverage its consolidated purchasing power to find the best possible values in the marketplace.

AAA had a very narrow focus; you might say there was no real strategy in place. They drew demands for the project and even before award, when they received push-back from the bidder, they still pressed for what they wanted. By not thoroughly examining the opportunities, they committed themselves to a mediocre supplier whose saving grace was proximity and is unable to perform to the SOW to this point.

AAA should have examined if proximity to Steubenville and Evansville was truly so important. At outset AAA felt that that Comstock’s proximity to their office locations would reduce the potential for coordination problems. If they knew they would find themselves on the brink of a stop work situation, they would have most likely readdressed their sourcing needs.

If estimated time to complete is still of the utmost importance, sans cost, and AAA is not making any headway with Comstock, as they have wasted 20% of their schedule, termination may be a viable option. Contracts can be terminated (discharged) in four ways, by Performance, Agreement of the Parties, Operation of Law or by Nonperformance. AAA might be in a better
position to cut their losses and readdress their needs rather than continuing in a back and forth relationship with Comstock. Termination discussions with Comstock might incent progressive action on their part as well.

Additionally, AAA may consider developing a partnering vice contractual relationship with Comstock. Construction partnering is a commitment between the owner, consulting engineer and/or architect, and the contractor(s) to improve communications and avoid disputes by working together towards shared and common goals and objectives on a project specific basis.

Partnering builds goodwill and trust, encourages open communication, and helps the parties eliminate surprises and adversarial relationships. It enables the parties to anticipate and resolve problems, and avoid or minimize disputes through informal conflict management procedures. While the contract and specifications form the legal relationship. The partnering processes and philosophies and establish working and communications relationships.

No Lisa didn’t do the right thing nor was it ethical. However, it happens often in today’s economy and market. But for her relationship with Prairie, Lisa would have never expected their low bid and one of the initial bidders would have been awarded the job, most likely on a lowest price, technically acceptable basis. Prairie wasn’t responsive to the RFB, one of the key qualifiers.

If the original bid was posted publicly, Lisa wouldn’t have likely gotten away her cancellation, nor would she have possibly went forward with her actions unless she was comfortable with risking a protest. Unless she was able to prove unreasonableness of the proposed prices, she would be left with little option.

The original bidders would most likely take issue with the cancellation and new IFB, especially given Prairie’s relationship with Knockout. A protest, or further action on their parts, might be in order.

Yes. Alternative Technologies has not documented all of the information that should be present on the face of their bid. They are attempting to provide Dr. Smith with unsolicited additional software in order to sway the winning the bid decision in their favor, above competing suppliers even though their product’s price is considerably higher. Alternative Technologies is attempting to conduct business behind closed doors.

None, unless he wants to open discussions and ask the bidders to clarify their prices. Alternate Technologies intentions are apparent- Buylow can evaluate as is.

Either to disqualify the Alternative Technologies bid or to allow it to remain in the pool to be evaluated based on the requested proposal information only if it meets the criteria for the competitive range.

Remove the Alternative Technologies bid from the pool- although based on price it is likely to not make the competitive range. There are too many risks for SRL to allow the bid to remain in the pool, both internally and externally. SRL should also clarify to Alternative what their acceptable bidding practices are for further solicitations.

Inventories should neither be excessive nor inadequate. If inventories are kept at a high level, higher interest and storage costs would be incurred. On the other hand, a low level of Inventory needs proper control as it is one of the largest assets of a business. Inventory inefficiencies may result in frequent interruption in the production schedule resulting in under-utilization of capacity and lower sales. The objective of inventory management is therefore to determine and maintain the optimum level of investment in inventories which help in achieving the required objective.

Inventory management software helps create invoices, purchase order, receiving lists, payments receipts and can print bar coded labels. An inventory management software system configured to The Big D Company will help to create revenue for the company. The Inventory Management will
control operating costs and provide better understanding.


•Established and moderately successful

•Proactively re-examines processes and procedures

•Consistent design and product line

•Ability to keep up with competitors


•Materials brought in from the supplier were not crossed checked with the Big D records and taken directly to the production or assembly.

•No formal purchasing system, no formal inventory control system

•Completed jobs were not recorded and sometimes units were assembled in advance of the completion of the entire lot.

•No records were kept of raw materials.

•An Informal tabulation of finished goods was used.

•Ability to keep up with competitors

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