Question

Subjest: BADM 2161 Purchasing and supply managment

FOUR SQUARE LUMBER MILL

Case

Jon Johansen was the supplies buyer at Four Square’s Valdosta plant. One day he sat examining a traveling requisition (TR) card for ten carborundum saw blades. The specified blade was made in Switzerland and obtainable through a mill supply house in Birmingham at a cost of $225 each, F.O.B. Birmingham. Jon observed on the TR that some 110 blades were ordered a year. The requisition specified that no substitutes were permitted. Even so, Jon decided to see if any money could be saved through alternative sourcing. He contacted two of his better mill supply sources to see what they could do. Both suppliers indicated that the Dipson 412 blade was every bit as good as its Swiss counterpart. Based on an annual purchase of eighty or more blades, one supplier quoted a unit price of $112.50 per blade. (The second supplier’s price was $115.00.) Both prices were F.O.B. Valdosta. Jon then contacted Sam Sharpe, the foreman of sawing operations at Four Square. Jon explained the potential savings and asked Sam to give the American blade a try. Sam was certain that the Dipson blade would not stand up to the Swiss blade. After several minutes of trying to convince Sam of the desirability of buying the Dipson 412, Jon said that he thought that they really should give it a try. Sam left in a good humor saying, “O.K., but I know it won’t work.” Jon ordered ten Dipson blades. He included a provision that any unused blades could be returned for credit if the Dipson did not prove to be equal to the Swiss blade. Two days after the blades arrived, Sam entered Jon’s office. Sam was grinning from ear to ear, holding a saw blade in each hand. Both blades were burned as a result of the excess heat generated during the cutting operation. Jon was convinced that the boys in the yard had treated the blades unfairly to ensure that they would fail.

Questions:

1. What could Jon have done to avoid this situation?

2. What should Jon do now?

Answer 1

1. Since, John believed that Dipson 412 was better than Swiss blade and in order to prove that he asked to Sam to give a try. But Sam on ther other hand, He believed tha this won't work. Inspite of that he gave a try and that result into faliure of Dipson 412 blade because of excessive use. John knew that the blade has been used over and over in order to prove him wrong. In this situation, John should not have sell that Dipson 412 blade with Sam because Sam has been getting used with Swiss blade. John should not convience him inspite of that he should sell him the blade which sam wanted. On the next coustmer, he should deal and talk about the Dipson blade then it could be a great move by John.

2. John should start to sell both the product but he should convience only to new coustmer rather than experienced one. If the new coustmer is satisfied with the working of Dipson Blade then there could be a chance to talk about Dipson blade to experienced coustmer becasue as of now, he would have proof in order to show that its quite great product in comparison to Swiss blade.