1. As Kara Murphy, how would you respond to David’s estimate of $3 per kit? Are
ID: 361637 • Letter: 1
Question
1. As Kara Murphy, how would you respond to David’s estimate of $3 per kit? Are you prepared to provide him the information he needs?
2. What conditions would you place on Gilmore if you were to proceed with outsourcing?
Case 5-2 Marshall Insurance Company MARSHALL INSURANCE COMPANY Kara Murphy, purchasing manager with Marshal Insur- ance Company (Marshall), in Spokane, Washington, was The Marshall Insurance Company was a large, publicly evaluating a proposal submitted from David Callum, from Gilmore Printing (Gilmore). Dav Gilmore take responsibility for m printed materials inventory for the Marshall Automobile Club. Kara could see the advantages of outsourcing man- agement of printed materials, but she remained concerned that this arrangement would not provide the service that clients and employees had come to expect. It was Thurs- day, June 12, and David was expecting a response from Kara on Tuesday, June 17, during a meeting scheduled for clients, such as original equipment automotive ma that afternoon. id was proposing that anaging all forms and held, personal lines property and casualty insurer. Founded in 1948, it had $73.5 billion in total assets. The Marshall Automobile Club (MAC) was a division of Marshall that provided roadside assistance services to its clients 24 hours a day, 365 days a year. Its more than 750,000 clients included both individuals and corporations 1 nei yaurno or)who pro MAC provided services to two customer groups, corporilde ufacturers (OEMs) who provide free roadside assistance plans with newExplanation / Answer
Answer : Yes i would be prepared to provide him the information he needed but only to gain an edge in bargaining power and negotiation for lower costs. Kara Murphy could communicate the economy of scale and use the experience curve strategy to et lower rates form the vendor (David).
Experience Curve Strategy is based on a theory developed originally by the Boston Consulting group. They made a co relations between the amount of time that a firm or a company had been in business for and the drop in manufacturing pr production costs. The longer a firm's tenure or experience in a specific market or business. the lower their costs over than given period of time.
The reason why this works :
Vendor Relations
Firms that have a longer experience curve or firms that have been in business for a longer period of time have better relationships with their supply chain vendors and have better volumes due to their tenure of operational history. This allows them to bargain for lower price with the vendors that they work with.
2. What conditions would you place on Gilmore if you were to proceed with outsourcing ?
Answer :
Condition #1
David cannot control more than 70% of the production and Kara's firm would retain 30 % of production in house or outsource it to another vendor for business continuity and to prevent the supply chain from breaking down.
Supply Chain Risk Management or Business resiliency ensures the seamless manufacturing of a product without interruption. It plans for back up units to fill the gap in supply of one unit of manufacturing is down. It involves developing contingency plans for the manufacturing process in the issue of an natural calamity, human inefficiencies like workers strikes, technical issues like manufacturing units breaking down etc. If there is a break down in the supplier's outflow our output of supplies for some reason and the supplier does not have a backup in order to meet the supply chain requirement for a given project, this is a huge operational risk and can potentially threaten the operation and bring it to a stand still.
Condition #2
Marshall Insurance Company reserve the right to trademark and copyright the brochures and David's company cannot reproduce those brochures for themselves or any other individual firm or entity.
Condition #3
David's firm will adhere to the Quality and Quantity set by Marshall Insurance Company.
Condition #4
If davids firm does not comply with Marshall's contract it would be held accountable for the violation of the contract under the UCC
a) Contract liability : UCC stands for uniform commercial code lays down an outline for commerce laws comprising of rules of sales etc in the United States. Mirror Image Rule is a type of contract law that requires the person / individual or the organisation making an offer to accept and deliver on the terms and conditions stated in the offer without deviating from it. Battle of the forms is a legal scenario where the person / individual or the organisation making an offer through a contract receives an acceptance to that invitation through a separate contract. In such cases the contract can be voided in the event of ambiguity or discrepancies.
Contract liability can only be voided under two circumstances
#1 Contract Impossibility under UCC 2-615(a), under which a contract can be voided if one or more of the parties could not deliver fulfil their obligations due to unforseen, external circumstances and despite of their best efforts to find close substitutes or alternatives, they were unable to deliver. (in this case a draught)
#2 Substantial Performance , under which, one or more of the parties involved in the contract can be offset, if they've delivered a reasonable proportion of their obligations , to their best ability to do so.
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