Based upon Chapter 1, 2 & 3 material from Purchasing and Supply Management, 16e (Johnson)

CASE ASSIGNMENT # 1 TerraRound

TerraRound Inc. is a Canadian manufacturer and retailer of premium, innovative all-terrain vehicle (ATV) equipment. Terra Round Inc. has two main divisions, product development and manufacturing (PDM) and product inventory, distribution and retail (PIDR). In January, Milton Montague was promoted to the position of Chief Procurement Officer at TerraRound Inc. Milton Montague was formerly a Supply Chain Management Category Specialist supporting the product development and manufacturing division. Milton has been invited to an urgent meeting tomorrow with Louis LeBlanc, the Chief Financial Officer. st The agenda concerns the fiscal year end close for December 31 . Louis LeBlanc asked Milton to attend and speak about his Supply management plan and strategies to reduce operating, inventory and purchasing costs by 10% on August 31st to help meet projected budget and income statement improvements mandated by the corporate Board of Directors. Louis sent Milton a copy of the Income Statement:

INCOME STATEMENT March 2022 April 2022 Sales $ 180 million $ 190 million Cost of Goods Sold $ 50 million $ 55 million Gross Profit $ 90 million $ 100 million Operating Expenses $ 25 million $ 20 million Operating Income $ 20 million $ 40 million After receiving the Income Statement from Louis, Milton received another one from the corporate Controller Scott Adamson for the month of April in which the numbers varied. This perplexed Milton because the numbers were doubled from the one presented from March. Scott explained to Milton that the income statements varied considerably from month to month. Louis explained that this has been a recent problem due to recent system issues and recommended Milton to consult Sales to validate the real numbers because they had them from a recent external auditor report. Milton asked Scott to explain the variations and Scott noted that due to the company being focused exclusively on all-terrain vehicles that this is a seasonal activity so the sales and profits typically are highest from April to October and then they incur very sharp declines from November to March which makes cash flow very challenging. Scott commented that he never understood why the company never took advantage of those months to focus more on sales and product development and procurement. He indicated to Milton that his job as Controller has been very challenging during the peak season months from April to October because he is always pressed to ensure cash flow is very flush and available. He said it has placed great strain on the Accounts receivable department to press their customers to pay quickly. Scott also indicated to Milton that in the past Procurement were at odds with him and his team in Finance because they felt disadvantaged in procurement deals by Finance. Scott indicated to Milton that he hoped they could foster a most positive relationship together and would be open to Miltons new ideas. Just prior to attending the meeting with Louis, Milton received a call from Walter Neaves, Vice President Sales. Walter informed Milton that the Sales Team was pursuing Fairway Resorts International, a large corporate client in the snowmobile and all-terrain resort industry, located in Bathurst, NB. and throughout the adjacent province of Quebec, to purchase 100,000 of their new prototype Eco-Charged Green Energy Multi Season ATVs. This deal represents $ 25 million in sales for TerraRound in North America. Walter explained to Milton that the terms of the proposed sale requires TerraRound Inc. to manufacture and supply 1000 to their units to their new resort in Lorneville, NB before August st 1 ., 2022 Walter pressed Milton to have all suppliers and contracts for the goods and materials secured as soon as possible so the sales team can land the deal. What should Milton do? What should his priority be?

MBA 7704 SHORT BUSINESS CASE (Assignment # _ ) TITLE/ SUBJECT The title should be stated in terms of the immediate problem rather than solution DATE Submission due date

SECTION I - IMMEDIATE ISSuE(s) or PROBLEM(s)

This section must be written in sentence form. The sentences and sequencing should flow into the section paragraph.

WHO - Identify who, list the name of the person, Identify their role/ position/ job title

WHERE Identify where they work, company, department, business unit

WHAT - Summarize the immediate problem(s) or identify the most pressing decision(s) that need to be made in the case

WHY Outline the key reason(s) contributing the problem(s) or decision(s)

WHEN Identify the timeframe or deadline date or how long the WHO has to make a decision or provide a solution to the WHAT/ problems

SECTION II - BASIC ISSUE(S) or ASSOCIATED ISSUE(S)

This section must be in short list form

ISSUE LIST - List other issues (in point form) which may impact the company or situation and influence any decisions. The issues can be higher level or strategic The issues should relate to the immediate WHAT Issues and Problem.

SECTION III - ISSUE(S) ANALYSIS or INFORMATION SUMMARY

This section must be in summary format identifying key information from the case

Identify facts

Identify opinions and assumptions. Assumptions must be clearly stated

Financial Analysis provide an analysis of any pertinent financial or quantitative information from the case.

Conclusions Specify conclusions based on the Financial Analysis

Identify any long term issues