RUHLING MANUFACTURING COMPANY
1. Why might negotiation be favored over competitive bidding in certain procurement situation?
In certain procurement situations negotiations may be favored over competitive bidding because when either party is negotiating they are given the opportunity to brainstorm and come up with several alternatives whereas with competitive bidding the bidder is just trying to out bid the competition so that the seller agrees. Another reason why negotiation is favored is because it allows for all parties to have a complete understanding of all issue and can reduce the number of problem that may arise in the future.
2. Consideration of Epsilon’s alternative proposal:
a. What is the applicability of a requirements contract from Ruhling’s point of view? The applicability of a requirements contract from Ruhling’s point of view is the cost would be cheaper. Ruhling would also be locked into a contract and would not be able to do business with anyone else. The requirements contract that Epsilon is offer does not completely meet the wants of Ruhling. I.e. Epsilon would carry fewer motors and would only increase with demand.
b. Assuming Ruhling is now interested in a requirement contract, how Ruhling should proceed with the bidding / award process? If Ruhling is interested in a requirement contract, they should proceed by informing the other bidders of their requirements. They should also ensure that the contract states the specific want and needs of the company.
c. What would you do if you were the decision-maker at Ruhling? If I were the decision-maker at Ruhling I would go with the Epsilon’s proposal. I would go with their proposal/ requirement contract because it is more cost effective.
3. Comment on the practice of dual sourcing when part of the requirement is produce internally. Relate this to the advantages and disadvantages of a 100 percent requirements contract....