Basil Brandenburg, Bernie Boatwright, and Buford Baumgartner own the 3 Bees Buttermilk Corporation. The 3 Bees Buttermilk Corporation is an international corporation that sources its supplies from around the globe. The company had expanded from its original business of selling buttermilk to selling a multitude of food products. The food industry is very competitive. Basil’s, Bernie’s, and Buford’s principle business strategy is low-cost leadership. They are intent on keeping expenses as low as possible. They believe this is their chief sustainable competitive edge.

Because of the large number of items they source worldwide, supplier selection is a major activity for the 3 Bees. It is essential to cost management. Buck Baumgartner, Buford’s son, is studying supply chain management and is doing an internship with the 3 Bees Buttermilk Corporation. This year Buford decided they would teach Buck what was involved in the supplier selection process.

Basil, chief executive officer, took the first turn. He explained to Buck that for him communication capability was the most critical factor when selecting suppliers. In the food industry, products have an expiration date. Getting the correct item to the correct locations in time was essential. Consequently, communication of schedules, deliveries and any issues is a must in their business. Basil felt that reliability was another important factor to consider and that it complemented communication capability.

Bernie, chief financial officer, is big on the cost factor. He explained to Buck that they had to

determine the total cost of ownership. This went beyond the price. Total cost of ownership also included payment terms, minimum lot size, carrying cost, inspection costs, administrative support costs and much more. Buford, chief technology officer, emphasized the importance of supplier process and product technology. In addition, he focused on the supplier’s willingness to share technologies. Because of Buford’s stance on these factors, he ensured the 3 Bees Buttermilk Corporation engaged in early supplier involvement when deciding to procure a new product.

1. Identify the three criteria of supplier assessment that have been mentioned in the case 
2. Identify factors that have been mentioned in the case taken into consideration by the management when looking at the total cost of ownership (TCO) 
3. Mention any three factors of TCO calculation that you have studied but which are missing in the case.
4. Given the product of the company, in your opinion, should the company be using suppliers from outside the country? 
5. Mention any four sources from which potential suppliers can be identified

    

   
   

Answer rating: 100% (QA)

In any supplier evaluation whether for a new or current vendor its important to gauge the companys production capacity performance risk quality and environmental impact However gauging these factors b... View the full answer