3: Managing Supplier's Performance (33 Marks) Nelson Builders is undertaking an analysis of supplier costs in order to evaluate the relative costs and performance of each supplier. For 2021, they have isolated a range of activities that are consumed by suppliers, identified activity drivers, and estimated the cost per unit of activity driver: Activity Order material Receive order Cost per unit of activity driver $110 per order $85 per delivery Inspect order $145 per delivery Return material to the supplier $105 per return Pay supplier $75 per invoice Dispute invoiced amount $295 per dispute In 2021, the three major suppliers to the company consumed the following number of activities: Activity Supplier A Supplier B Supplier C Order material 120 125 75 Receive order 110 130 50 Inspect order 80 145 45 Return material to the supplier 75 12 32 Pay Supplier 25 150 20 Dispute invoiced amount 5 7 2 The cost of material purchased from each supplier during 2021 was as follows: Supplier A $30,000 Supplier B $100,000 Supplier C $50,000 Question 3.3 Helen Brown, CFO of the company, has suggested that the company should implement Just in Time (JIT) system for inventory management. One of the senior management members, Rob Harrison, is sceptical about JIT implementation and raised several questions such as: how can the company save money if the order size is reduced and the number of orders delivered increased?; how does the risk of running down the inventory levels be managed?; and how will these changes impact on the company's strategic priority of product quality and customer satisfaction? (10 marks) Write a memo to the Senior Management responding to Mr Harrison's concern. Your responses should explain the rationale behind improving supplier relationships and the likely impact of introducing a JIT system in line with the company's strategic priority and the calculations above. [Word limit: 150 words. Note the word count at the end of your answer] Your Answer (expand the space as required): Word count