Heartland & Co. Om Case Essay

1956 Words May 15th, 2012 8 Pages
Heartland & Company

1. What are the advantages of basing a supplier’s overall evaluation on its lowest performance on one of the five dimensions (Quality, Delivery, Cost Management, Technical Support, and Wavelength)? What are the disadvantages? Overall, do you think that basing a supplier’s overall evaluation on its lowest performance on one dimension is a good idea or not? Why or why not?

There are a couple advantages of basing a supplier’s overall evaluation on its lowest performance measure. One such advantage is that it is a clear and simple way of eliminating suppliers that measure poorly against suppliers that measure highly to a company. It also is a simple way to determine the major flaws of a particular supplier and how
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One could also argue that Heartland should not have to pay a price premium to a higher rated supplier. As a manufacturing company, keeping costs down is extremely important to their business. If the company keeps costs down, it can sell its products at a competitive price, which will allow it to increase sales and higher profitability. For this reason, Heartland & Company should use a supplier that is going to save them the most money immediately, which would not allow for them to hire a supplier with a price premium. I would recommend that Heartland & Company pay the price premium for the higher rated supplier. While reducing costs is a necessary part of sustaining a successful business, it should not be done at the expense of poor communication and customer service. The company needs to take into consideration the value that comes from these factors and understand the importance they play in the business as well as keeping costs low.
5. Assume that Heartland & Company is considering paying a price premium to the more highly rated supplier (New England Works) in this year’s buy of part #B02326620. If the only two suppliers quoting on this part are New England Works and Midwest Bearings what percentage premium (over the lower price) would you recommend? Please justify your response.

I would offer up to a 2.8% premium over the lower price. I would not go over this because if I was to surpass

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