Erica Carson Case

1. Problem/Situation

In Case 1-2, Erica Carson is a purchasing manager for Wesbank, a large western financial institution. She met with a sales rep from D. Killoran named Art Evans. Carson is not currently receiving business from D. Killoran, however, she quoted him a 10% reduction on the printing and mailing of checks. Wesbank is also spending $8 million per year to provide free checks to customers. In the last five years, the company has had 50% split suppliers. Supplier A is printing and mailing half the checks. They have just renewed their contract eight months ago. Supplier B is printing the other half of the checks and their contract expires in 4 months. Each of these suppliers offered good quality and service within their two year contracts. A year ago, Carson performed a cost analysis of both suppliers and it was determined that the price was fair.

2. Alternative Solutions

In this situation we need to weigh our alternative solutions. For example, completing a cost-benefit analysis. We also need to determine if free checks are really needed since Internet banking has become popular. Since Wesbank is receiving unsolicited bids, we should see what the company policy for unsolicited bids are.

3. Recommended Course of Action

To start off, Wesbank should have created a cost-benefit analysis and reviewed it. They should present the case to upper management and take action from there. Also, we need to determine whether or not Killoran is a viable supplier. To do this, there could be a joint meeting and/or having a trial run on the supplier to test service, quality, cycle time, etc. Another option would be to not accept Killoran’s proposal and to stick with the current suppliers.

4. Explanation of Decision

If it’s decided that Wesbank accepts Killoran’s proposal, they could create a contract for maybe a year to try it out. They would also have the opportunity to open new markets and generate additional revenue. For example, the business of scenic checks that Killoran deals with. If it is decided that Wesbank declines Killoran’s proposal then the opportunity to create savings and generate new revenue would be eliminated. Wesbank would continue dealing with the two current suppliers. It is also possible for the company to renegotiate their contracts with the two suppliers to create some savings