Jack works as the purchasing officer in the procurement department of a five-star hotel in Chicago....

 

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Jack works as the purchasing officer in the procurement department of a five-star hotel in Chicago. The hotel operates a loyalty membership system which catego- rizes its customers in different status tiers from the entry level (silver) to the most loyal level (platinum). Based on the type of room booked and guests' membership statuses, the hotel will provide different welcome boxes to guests. For example, if a guest booked the presidential suite and is a platinum member, the hotel will provide the welcome box "A," which is valued at $100. There are 11 types of welcome boxes ("A" to "K"). Each classification of welcome box is sourced from different suppliers, so there are 11 different suppliers to manage. The price of these boxes increases in reverse alphabetical order, from box "K" to "A." Therefore, the inventory cost of these also varies, with the details shown in Table 5. Table 5. Information on Welcome Boxes. Inventory Cost Welcome Sleep Kit Box (Ratio) (%) A B C D E F G H J K 22 36 18 ∞054 8 5 4 2.5 2 21 1 0.5 Supplier ID Code 001 002 003 004 005 006 007 008 009 010 011 Supplier Location France US Mexico Spain China UK Italy Canada US US Mexico Currently, there is very limited stock of the welcome box "A" (two left), and an order for two new packs has been placed with supplier 001, located in France. This order was placed one month ago via the ERP system shared between the hotel and its supplier. Each pack contains 80 boxes of the welcome kit. The order is due to arrive by Monday. Based on current bookings, the hotel expects a group of five eligible guests will be staying at the hotel starting on Friday. Welcome box "A" is required for their visit. However, an email has been received from the supplier stating that they cannot deliver the order on time. The hotel is very concerned when seeing this email, because the failure to provide the required service to customers will not only affect the image of the hotel but also Jack's performance and bonus based on supply fulfillment. Jack can avoid this if a formal report is raised about the case to explain why this foreseen failure cannot be avoided. However, it is still likely to affect Jack's reputation and his manager will be unhappy that this issue has occurred. Therefore, such formal reports and escalations are usually avoided and seen as a last resort. Jack does not have the authority to find and purchase similar items from another supplier, so he cannot solve the issue this way. The supplier selection and monitoring roles are conducted by another department called Quality Control. He could report the supplier to this department; however, changing suppliers is still a long process and may not produce a feasible alternative with only a few days' notice. From Jack's perspective, consider the following questions: 1. What is the best strategy to manage the relationship with these 11 suppliers? Consider ABC analysis, as well as the fact that suppliers may operate in dif- ferent time zones and possess cultural differences. 2. How is Jack going to deal with the problem of this delayed order, while trying to minimize the impact on the hotel and its image, as well as on his perfor- mance? How can Jack manage the relationship with the supplier in question? Jack works as the purchasing officer in the procurement department of a five-star hotel in Chicago. The hotel operates a loyalty membership system which catego- rizes its customers in different status tiers from the entry level (silver) to the most loyal level (platinum). Based on the type of room booked and guests' membership statuses, the hotel will provide different welcome boxes to guests. For example, if a guest booked the presidential suite and is a platinum member, the hotel will provide the welcome box "A," which is valued at $100. There are 11 types of welcome boxes ("A" to "K"). Each classification of welcome box is sourced from different suppliers, so there are 11 different suppliers to manage. The price of these boxes increases in reverse alphabetical order, from box "K" to "A." Therefore, the inventory cost of these also varies, with the details shown in Table 5. Table 5. Information on Welcome Boxes. Inventory Cost Welcome Sleep Kit Box (Ratio) (%) A B C D E F G H J K 22 36 18 ∞054 8 5 4 2.5 2 21 1 0.5 Supplier ID Code 001 002 003 004 005 006 007 008 009 010 011 Supplier Location France US Mexico Spain China UK Italy Canada US US Mexico Currently, there is very limited stock of the welcome box "A" (two left), and an order for two new packs has been placed with supplier 001, located in France. This order was placed one month ago via the ERP system shared between the hotel and its supplier. Each pack contains 80 boxes of the welcome kit. The order is due to arrive by Monday. Based on current bookings, the hotel expects a group of five eligible guests will be staying at the hotel starting on Friday. Welcome box "A" is required for their visit. However, an email has been received from the supplier stating that they cannot deliver the order on time. The hotel is very concerned when seeing this email, because the failure to provide the required service to customers will not only affect the image of the hotel but also Jack's performance and bonus based on supply fulfillment. Jack can avoid this if a formal report is raised about the case to explain why this foreseen failure cannot be avoided. However, it is still likely to affect Jack's reputation and his manager will be unhappy that this issue has occurred. Therefore, such formal reports and escalations are usually avoided and seen as a last resort. Jack does not have the authority to find and purchase similar items from another supplier, so he cannot solve the issue this way. The supplier selection and monitoring roles are conducted by another department called Quality Control. He could report the supplier to this department; however, changing suppliers is still a long process and may not produce a feasible alternative with only a few days' notice. From Jack's perspective, consider the following questions: 1. What is the best strategy to manage the relationship with these 11 suppliers? Consider ABC analysis, as well as the fact that suppliers may operate in dif- ferent time zones and possess cultural differences. 2. How is Jack going to deal with the problem of this delayed order, while trying to minimize the impact on the hotel and its image, as well as on his perfor- mance? How can Jack manage the relationship with the supplier in question?

Answer rating: 100% (QA)

1 Managing Relationship with Suppliers To manage the relationship with the 11 suppliers effectively Jack can consider employing the ABC analysis metho... View the full answer