1) Recommend and justify a solution Be sure to address how this proposed solution will fix the problem(s) Don't just punt by delaying a decision and recommending further analysis. Make a decision and recommend a course of action 2) Suggest an implementation strategy where appropriate What one thing are you going to focus on to help correct the problem within the next two weeks? 3 months? 6 months? 1 year? What barriers might you run into during implementation and how would you propose that these barriers be overcome

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services and photocopier supplies. The total dollar volume of purchases amounted to $75 million of goods and services each year. According to Heather Sloman, the main objective of the purchasing department was to achieve the greatest cost savings. She commented on the role of purchasing at the university: "Our training in purchasing allows us to negotiate the best deals for the university and help avoid wasting university money." Although it was university policy that approval from the purchasing department was required before commitments could be made to suppliers, it was not unusual that university personnel contacted suppliers directly. Every year there were about 275 cases where contracts were signed with suppliers without prior approval of purchasing. Heather described what happened in these situations: "Most of the time, the only thing we can do is to call them and ask them to provide the details of the purchase. Usually the purchase has already been made, and there isn't much else that can be done." THE FOLDING MACHINE ISSUE The office of registrar handled about 160,000 pieces of mail a year. There were four major peaks of mailings each year: fees, admissions, records, and scholarships. As many as 50 to 60 people could be occupied manually stuffing envelops two days a month. A combination of full-time employees and temporary staff were used to perform this activity. Walter Charbonneau had seen an advertisement in a flyer for an automatic folding machine, which could be used to eliminate some of the manual work in dealing with mass mailings. He later contacted a representative of the company and placed an order for the machine, at a cost of $14,000. Glen was notified shortly after the machine had arrived because Walter needed to make arrangements for payment. As far as Heather knew, the machine had arrived only in the last few days and had not been installed. Heather found that the supplier of the folding machine was not on her approved supplier list. She then contacted three of her suppliers and received quotes of $10,000, $11,000, and $15,000 for similar equipment. The third quotation included one year of free service. HEATHER'S OPTIONS Heather recognized that some employees were going to ignore university policy from time to time and she had to be prepared to deal with such situations. However, if university staff failed to appreciate the benefits of sound purchasing practices, the university's centralized purchasing system would be undermined. When she spoke to Glen Meredith about the situation two days earlier, he said: "Let me know what we should do about this machine in the registrar's office. But also think about what else we can be doing to prevent these kinds of situations from happening again. These bad deals cost the university too much money each year. Besides, as a public institution, we must be extra careful to follow our procedures." There were a number of alternatives Heather was considering regarding the equipment. One option was to simply keep the machine and pay the supplier. However, she felt the equipment could be returned, and if nec- essary she could negotiate a cancellation penalty with the supplier. Alternatively, Heather could go back to the supplier and use the quotations to negotiate a lower price. Heather had about four hours before her meeting with Glen. As she sat down to prepare for the meeting, Heather thought about what she might say to Glen regarding avoiding future problems of this

Southeastern University Heather Sloman, buyer in the purchasing department of Southeastern University, was preparing for a meeting with her boss, Glen Meredith, for later that day. Two days earlier, on April 6th, Glen had received a phone call from Walter Charbonneau, manager of the university registrar's office. Heather was surprised to learn from Glen that Walter had just bought a new piece of equipment for his department without following standard university purchasing policies. Glen asked Heather to look into the situation and get back to him with recommendations. PURCHASING DEPARTMENT Southeastern University was one of the largest universities in the state, with total enrolment of more than 25,000 graduate and undergraduate students and approximately 3,500 staff. [callus-JIIIII-pll-Faml: l 3. Supply Pracaans Tm Purchasing and Supply Management, 13h Erl him as Purchasing and Supply Management There were 12 faculties at the university, over 20 continuing education diploma and certicate programs, and three affiliated colleges. Purchasing was centralized, and the purchasing director, Blake Hyatt, reported to the university's vice president of administration. The purchasing department was responsible for negotiating with suppliers, signing contracts with suppliers, and supervising the execution of contracts. Small-value purchases, those less than $100, could be handled out of petty cash. The purchasing department had also recently introduced a purchasing card, which could be used to acquire eligible goods and services with a value of less than $1,000. The purchasing process began when a purchase request was submitted to the purchasing department. A clerk would stamp the requisition with the date and time received and checked it for proper signing authority. In some cases, it was necessary to forward the requisition to the research aCcounting section in the department of finance for account approval. Other information also was added to the requisition, such as tax and duty status, product classification, and supplier status. Although the purchase requisition form provided an opportunity for the requisitioner to identify the preferred supplier, policy was to solicit at least two written l @ The McErawHlll Companies, 2005 quotations for purchases in excess of $7,500 and a minimum of three quotations for purchases in excess of $15,000. One of the buyers would prepare a request for quotation form (RFQ) and contacted approved suppliers. The RFQ form specified details, such as product or ser- vice description, quantities, FOB point, and terms of payment. Recent government legislation required that any RFQs in excess of $100,000 had to be p05ted on the Internet. Aer all bids were received and evaluated, the buyer would select the supplier and issue a purchase order. The purchasing department maintained a list of approximately 1,200 approved suppliers, which was adjusted every three to five years. The selection criteria for becoming an approved vendor was based on the following weighted average evaluation system: - Price, 50% - Compliance with specifications, 25% - Service, 20% - Partnership, 5% The purchasing department had three buying groups, and each group handled approximately 20 requests each day. [See Exhibit 1 for the organization chart.) In addition, approximately 250 contracts were rehid each year for ongoing purchases, such as snow removal Exhibit 1 Organization Chart of the Purchasing Department Blake Hyatt Director Cindy Presser Administrative Assistant Joan Karla Edward Bell Glen Meredith Ray Sharen Elizabeth Robertson Senior Buyer Senior Buyer Senior Buyer Manager Purchasing Purchasing Maintenance Equipment Scientic Equipment Computer and Systems Administrator and Supplies Business Products Ken McKellar Leslie Heyninck Heather Sloman Barbara Hillman Buyer Buyer Buyer Clerk James Pryor Central Supplies