Nationwide telephone company case study

Introduction
Nationwide telephone has been in the business of manufacturing low-cost and high-quality telephones from 2001. The company is reliant on local suppliers in order to minimize lead times and at the same time utilizing the number of suppliers. This facilitates faster delivery times and also decreasing the travel costs. In the past 6 months, Roger Stoga who is the president of the company has seen a decline in sales of the company. Subsequent to further analysis, he was able to determine the issue to be linked to a rise in the prices of plastic components, supplied by ABC Plastics. The main aim of this analysis is to ascertain why the price of the components has increased.
1. What analytical tools can be used by the supply group to determine the right price?
There are different analytical tools that can be employed by the supply group to make a determination of the right price. One of the tools is environmental scanning. Through this method, the supply group can be able to determine the price being charged by rivals in the market and therefore determine the suitable price to charge. Another analytical tool is cost-price technique. In this way, the supply group is able to determine the fitting price by knowing the costs incurred and placing a mark-up in order to attain the sought-after profit.
2. How could Nationwide’s supply department have prevented the price escalations?
One of the actions that could have been undertaken by Nationwide’s supply department in order to prevent the escalations in price is to have a fixed-price agreement. The kay advantage of this is that it would have dissuaded ABC Plastics from placing price increases in the 6-month period irrespective of their individual state of affairs. This would have been attained by Bill whose role in the department is procuring plastics. Also, the supply department could have from time to time conducted checking of the costs incurred in order to ascertain the areas that led to the increases and the reasons why, which would facilitate in getting the appropriate price while negotiating with the supplier.
3. How does the competitive condition of the plastic component industry impact the use of price analysis?
In particular, Nationwide gets its bids from the local suppliers and therefore selecting the lowest bud for plastic components within the local region. It is imperative to note that the plastics sector is huge and comprises of several players. A great number of companies generate a virtuously competitive marketplace and therefore make the prices being charged to be largely determined by the level of consumer demand. This implies that in the event that Nationwide has a problem with ABC Plastics in terms of the prices being charged, then the company will be able to easily select a different supplier.
4. What kind of resistance might Jan encounter from Bill? How can Bill help facilitate the pricing analysis process?
Jan barely has experience as she recently graduated from college. Therefore, she might encounter resistance from Bill as he would be hesitant in giving her the information regarding procurement methods owing to her lack of proficiency. In addition, Jan may decide to bring in a number of new price analysis approaches that she learnt while in college and this might lead to some resistance from Bill who might be set on using the established and long used approaches,
Bill can largely help in facilitating the price analysis process. Owing to his significant level of experience, Bill is deemed to be the individual who would aid Jan with the essential and vital information regarding procurement and ease price analysis process. For instance, Bill can provide important information like the suitable suppliers in the region, the quality of the plastic components offered by different suppliers, efficacy in delivery, and the manner in which consumers consider ethics within the business. Therefore, in this regard, Bill can help Jan in making comparison of the different market suppliers in order to conduct strategic price bidding and also negotiations.
5. What are some of the costs/benefits of continuing to source from the same local suppliers?
One of the key benefits of continuing to source from the same local suppliers includes the strong and healthy affiliation built could be advantageous in the event of any economic changes. In addition, owing to such a relationship, the supplier may be more willing to negotiate and have a flexible plan of payment because of being a long-term client. In addition, the similar local suppliers will comprehend the business and the different practices conducted and therefore know your needs and also be able to help in any business practice changes. However, there are also downsides to this. First, this can cause the suppliers to be in a comfort zone and therefore provide poor quality supplies. In addition, they may cease being effective owing to the perception of no competition in the market. It is imperative to note that competition generates even-handed and negotiable prices as well as high quality products (Burt et al., 2010).
Conclusion
In the forthcoming periods, it is suggested that Scott ought to conduct a frequent management of analysts in order to ascertain that they are obtaining the lowest bid of supply costs. This is an imperative aspect because it will facilitate the business in remaining competitive and satisfy the market demand from consumers. In the event that price starts to increase, strategic planning ought to be formulated to conduct negotiations and prospective preparations for price bidding.
References
Burt, D., Petcavage, S., Pinkerton, R. (2010). Supply Management. New York: McGraw Hill Publishers.