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home / study / business / operations management / operations management questions and answers / erica carson “we will do it for 10 percent less than what you are paying right now.” erica ... Your question has been answered Let us know if you got a helpful answer. Rate this answer Question: Erica Carson “We will do it for 10 percent less than what you are paying right now.” Erica Ca... Erica Carson “We will do it for 10 percent less than what you are paying right now.” Erica Carson, purchasing manager at Wesbank, a large western financial institution, had agreed to meet with Art Evans, a sales representative from D.Killoran Inc., a printing supplier from which Wesbank currently was not buying anything. Art Evans’s impromptu and un- solicited price quote concerned the printing and mailing of checks from Wesbank. Wesbank, well known for its active promotional ef- forts to attract consumer deposits, provided standard per- sonalized consumer checks free of charge. Despite the increasing popularity of Internet banking, the printing of free checks and mailing to customers cost Wesbank $8 million in the past year. Erica Carson was purchasing manager in charge of all printing for Wesbank and reported directly to the vice president of supply. It had been Erica’s decision to split the printing and mailing of checks equally between two suppliers. During he last five years, both suppliers had provided quick and quality service, a vital concern of the bank. Almost all checks were mailed directly to the consumer’s home or business address by the suppliers. Because of the impor- tance of check printing, Erica had requested a special cost analysis study a year ago, with the cooperation of both suppliers. The conclusion of this study had been that both suppliers were receiving an adequate profit margin and were efficient and cost-conscious and that the price struc­ ture was fair. Each supplier was on a two-year contract. One supplier’s contract had been renewed eight months ago; the other’s expired in another four months. Erica believed that Killoran was underbidding to gain part of the check-printing business. This in turn would give Killoran access to Wesbank’s customers’ names. Erica suspected that Killoran might then try to pursue these customers more actively than the current two sup- pliers to sell special “scenic checks” that customers paid for themselves.

5. What alternatives are open to Erica Carson here?

Please write in complete sentences

Solution

ANS: From the above casestudy following alternatives are ope to Erica Carson:

Option a: Selecting new suppliers: D.Killoran (new supplier) are ready to reduce 10 percent of the total cost for check printing and mailing to the customer compare to the cost charged by existing suppliers. The only issue that Erica will face while selecting a new supplier will be of trust and quality. Since the suppliers are new there is no guarantee whether they will print good quality of checks and mailing will be on time. But there will be major difference in overall cost and profit of the company as there will 10% more saving. Erica can take arisk in selecting new suppliers afterall business involves high risk and high profit.

Option b: Continuing with current suppliers:. Current suppliers have two benefits ,that is they are reputed in the field and provide prompt and quality service. The only concerned factor is cost. If the new suppliers are selected, there will be high risk involved in it. As they are new suppliers and there is no guarantee whether they will provide good quality of product and service. In this case, if the company is only concerned with quality and not ready to take risk then they can continue with their current suppliers.