Consider a large agricultural equipment manufacturer who have vendors in many places, it is often best practice
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- Consider a large agricultural equipment manufacturer who have vendors in many places, it is often best practice to have local vendors for key parts, both for accessibility and transportation cost reasons. As such, they may wish to enter into a contract with a small metal works shop that is located in the same industrial area. Due to the small vendor being relatively unknown, the large company will require the vendor to secure a bank guarantee before entering into a contract for $300,000 worth of machine parts. In such a case, the large company will be the beneficiary, and the small vendor will be the applicant. Should the small vendor receive the bank guarantee, the large company will enter into a contract with the vendor. At this point, the company may pay the $300,000 in advance, with the understanding that the vendor is to deliver the agreed-upon parts in the following year. If the vendor is unable to do so, the agricultural equipment maker can claim the losses resulting from the vendor breaking the terms of the contract from the bank. Through the bank guarantee, the large agricultural equipment manufacturer can shorten and simplify its supply chain without compromising its financial situation.
- Moneke acts as an ingredient and materials supplier as well as an outsourcing transportation and warehouse supplier for Dixon-pro, since it is the one main supplier. Originally, Moneke is a privately owned UK group of companies providing food products. However; Dixon-Pro made an agreement with Moneke to transport half-baked and frozen bakery products from the main factory in Puerto Rico to Dixon-Pro shops. These products are not produced by Dixon-Pro but they still belong to the retail range. Although, Dixon-Pro produces part-baked breads and accumulates them to send to Moneke because Moneke has bigger warehouses to keep them. Afterwards, Vestey sends them to each Dixon-Pro shops when they get orders from the shops. Quality and safety are two most critical factors that must be monitored strictly while operating in food industry. The indispensable ingredients are flour, yeast, seeds, fresh fruits, egg liquid, cake sponge and cream. These are essential for making different breads and pastry products. The delivery of these products should be checked carefully because any deterioration directly increases the wastage and affects customer safety and satisfaction. This requires alert detection from the stock controller. However, if defective goods issues happen quite frequently, it is the question of supplier’s ability to perform consistently and the co-operative ability to avoid defective goods from both buyers and suppliers. There were times that quality issues not only created big wastes of materials, disruption in production process but also required extra procedures to deal with the finance department. The challenge on quality and food safety from suppliers requires constant considerations from many food manufacturers.
- Design different types of contract between them. Develop a Bank Performance Guarantee for the small organization.
Related Book For
Management Accounting
ISBN: 9780730369387
4th Edition
Authors: Leslie G. Eldenburg, Albie Brooks, Judy Oliver, Gillian Vesty, Rodney Dormer, Vijaya Murthy, Nick Pawsey
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