Executive Summary 3
Issue(s) Identification 4
Environmental and Root Cause Analysis 4
Alternatives and/ Options 6
Recommendation and Implementation 7
Monitor and Control 8
Executive Summary
Platinum box is a printing company that specializes in making fold down boxes. They have successful business in Canada and the president Jim Hicza has announced a new market direction for the company to enter the US market with a high quality box. For this strategy, the organization is planning to add five more printing equipment to their current operation in Winnipeg. Their current supplier is JabaKing Printing Equipment, a local company in Manitoba whose equipment produces good quality boxes but not the very best. Platinum and JabaKing share a strong relationship with each other as JabaKing helped Platinum set up in its early stages when many of the suppliers did not offer reasonable terms of purchase and did not trust the new entrant in the printing market.
With the growth in the company and need for high quality material for this new business strategy, Platinum wants to explore other printing equipment suppliers available in the market. A supplier selection study was conducted by the purchasing team and it was narrowed down to three suppliers JabaKing, Merakuri and Pnutype. JabaKing was the existing supplier based in Winnipeg, Merakuri, Korean company with its distributor based in Regina a neighbouring province and Pnutype based in the US.
All three suppliers are compared on elements such as purchase price, production rate, and quality with low maintenance costs. Merakuri amongst them comes out as an optimal selection based on the efficient performance and savings that it has to offer.
Issue Identification
Platinum box has decided to enter the U.S market with a high quality product. As a result of this decision, they want to add 5 more printing equipment to increase their output to reach a projected target of producing 250,000,000 boxes per year in the US and this was expected to double in 3 years. Their existing supplier JabaKing could support their operation with good quality pf product but not the best available in the market. The purchasing team has decided to explore for other suppliers in the market and conduct a supplier selection study with wide range of attributes such as quality of the product, cost, output and operating costs.
The study is expected to help them make decision whether to stick to their current supplier or choose a different supplier. They have received bids from 3 companies JabaKing, Merakuri and Pnutype. The best and cost effective supplier will be presented with the purchase contract.
Environmental and Root Cause Analysis
In order to enter the highly competitive US market, Platinum’s strategy is to provide its customers with the highest quality box at an economical price. The bids received from printing equipment suppliers was compared based on attributes such as cost, operating costs and production output. The table 1.A below shows the comparison of bids and attributes of 3 suppliers Merkuri, Pnutype and JabaKing.
Table 1.A Comparison of suppliers
Attributes
MERAKURI
PNUTYPE
JABAKING
Cost/Price
500,000
675,000
400,000
Operating Cost
$0.05
$0.04
$0.07
Output/No. of sheets
10,000
7,500
7,000
Thickness
150cm paper
125cm paper
125cm paper
Financing option
5% per year/10 yrs.
4% per year/5 yrs.
Not available
Decommission costs
$4000
$4500
0
Reasons to choose Merakuri over other suppliers:
Cost of the machine is reasonable and comparable with other suppliers available in the market.
Since the operating cost per sheet is to be kept low for maximizing the profits; we can compare the 3 machines on basis of 250,000 boxes produced per year.
Supplier
Merakuri
Pnutype
JabaKing
Operating cost per sheet
$0.05
$0.04
$0.07
Production of 250,000 sheets X operating cost per sheet
