Quaker Oats was importing the bottles for their product from a single supplier. When the new purchasing management noticed that the cost of the bottle is high (the material of the product was costing the supplier only 40% of the product). Well, the management realised that the proﬁt that the supplier is making is too high and excessive and the request for lowering the price of the bottle was refused by the supplier company. However, Quaker started a new research to ﬁnd alternative way to make the product either by building a new alliance or make it inside the company. Finally, after research and choosing from alternative options, they decided to go with the in-house plant operated by a supplier (alliance).
Q2.What were the options available to Quaker Oats?
They had three options to choose from: 1. Merchant supplies the total product. 2. Self-manufacture with key row material suppliers. 3. In-house plant operated by supplier. Q3.How did Quaker Oats research the bottle making industry?
They did it by visiting two consultant companies, eight bottle making companies, one practitioner of in-plant modelling, and two machinery suppliers. Finally, they narrowed the research to two bottle making companies and they used one outsider consultants as a facilitators partners.
Q4.What were the risks that the buyer and supplier faced?
1. If Graham didn't meet the requirements of Quaker it will bear the cost of nonperformance. 2. Although the trust is given by both companies,the open book policy could expose some of the Quaker critical information to Graham company. 3. Companies could hide some information from each other.
Q5.What happens if the production of the bottle plant exceeds Quaker needs?
Since the agreement said that the operator company which is Graham will own the products they make, then the excessive quantity will be in Graham responsibility, which make Quaker free of...