Case 1-3: Southeastern University

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Case 1-3: Southeastern University Date: 01/26/2012 ------------------------------------------------- Situation: * Heather Sloman is a buyer in the purchasing department of Southwestern University. * Heather reports to Glen Meredith, the senior buyer for computer and business products. * University has a centralized purchase system. * Unapproved purchase of a folding machine (Quoted price is $14,000) * Seller is not an approved supplier of the university. * Current situation: * About 16,000 pieces of mail are sent per year. * 50 to 60 people manually stuffed envelopes two days in a month. * Quotes received from approved suppliers show that price is unfair. * University has about 1,200 approved suppliers, a list adjusted every three to five years. * Purchased folding machine had not been installed. Basic Issues: I. Purchasing for a public-sector organization. II. Purchase of an automatic folding machine at $14,000. III. University’s main objective is to achieve greatest cost savings. IV. Lack of transparency and fairness of access to all eligible suppliers. V. Handling of breach of standard university purchase process and policy. VI. Ensuring supply strategy is congruent to organizational strategy. Task: * What should Heather recommend? * Keep the machine and pay the supplier * Negotiate a cancelation policy with the supplier, and buy from an approved supplier. * Use approved supplier’s quotations to negotiate a lower price. * Maintain status quo. * Weigh the alternatives. * Is the machine really needed? * What is the organization/purchase director’s position on unapproved purchases? * How will this transaction affect the university’s reputation? * Carry out a complete cost-benefit analysis. * How can a reoccurrence be prevented? *
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