Procurement at Betapharm

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LGM 201/205
Procurement at Betapharm Corp.

Question:
Can Betapharm use the Emptoris ePass system to source both, hotel rooms and malic acid?

Solution 1:
Use ePass for all procurement of hotel nights and malic acid. Pros:
Unified procurement process
Larger potential cost savings
More diverse supplier base
Cons:
Less flexibility in choosing suppliers
Less intimate knowledge of suppliers
Risk of alienating current suppliers

Solution 2 :
Use ePass for procurement of malic acid and all hotel nights in North America and the United Kingdom Pros:
Semi-unified procurement process
Concentrates on major markets (80% of hotel nights are in the N. A./U. K.) •Large number of bids
Cons:
Leaves out all non US hotels
Less intimate knowledge of suppliers
Risk of alienating current suppliers

Solution 3:
Use ePass for N. A./U. K. hotel nights and getting bids for malic acid but require 50% cost savings and complete quality and reliability audits to replace incumbent and allow incumbent to offer a counter bid. Pros:

Large number of bids
More flexibility in the selection process
Allows re-negotiation at a later date
Cons:
Leaves out all non NORTH AMERICA/U. K. hotels
Less intimate knowledge of suppliers
Risk of alienating current suppliers

Out of these three solutions I would recommend number three. It would generate a large number of bids for both the malic acid and the hotel rooms. You would still be able to insure the quality of the heavily regulated drug ingredients. The selection process for the malic acid supplier is weighted toward the incumbent who helped develop the process for turning malin into malic acid. This weighted process, while favoring the incumbent, lets them know that their prices are considered too high by Betapharm. While this solution only covers hotel nights in North America and the United Kingdom, which is 80% of Betapharms lodging cost, it will encourage the eventual winner to...
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