1. What is the relationship between financial soundness and supplier performance? Quality of product produced and shipped can become weaker when suppliers experience financial issues stemming from contractual performance. This happens primarily when flawed products are shipped to meet present currency requirements. Because of the fact that management is highly interested in cash flow, deliveries start to get behind schedule. Late deliveries or bad quality product is not acceptable so financial ratios must be monitored and acted upon professionally.
2. What action should Bill take? Bill should try to work out fiscal issues with Qualco. He should also look into contract modifications that will meet everyone’s requirements. Qualco is a very strong supplier for the Randall Corporation and better performance could be achieved by strengthening relations between them. It would be in Bill’s best interest to help fix Qualco’s fiscal problems since he has 40% of his total subassembly volume invested in them. Bill will have to be careful not to offend Qualco management or any other vendor that may see his actions as favoritism towards a specific company. Bill’s alternative option would be to remove his funding from Qualco and redistribute to other qualified suppliers. He wouldn’t have to worry about losing money on his investment with Qualco if they went bankrupt.
Case Study #2 – Blozis Company
1. If you were the Supply manager, what recommendations would have made? There are several opportunities for improvement in this scenario. Currently roles and responsibilities in the supply organization are not laid out very well. Employees must know, understand, and be trained in their specific duties to achieve top performance. The supply organization has limited control over materials once arriving from the supplier. Receipts for supplies are not documented properly, and no paper trail is present for movement of merchandise.