Purchasing and Supply Management-Section A

BADM 324 Purchasing and Supply Management-Section A

Ran Jin

3/6/2015

Assignment 2

        Carson Manor, providing personal nursing care for elders at the city of Winston, offered a request for proposal (RFP) for consulting companies on study the operation of the city-owned old-age home. Based on the description of the case study, Carson Manor had confronted the problem of budgeting and cost control in purchasing and supply division (PSD). PSD tried to maintain high quality service level with low cost, quick response on delivering and business reliability. After comparing facilities cost with similar industry in the surrounding area, city council found that Carson Manor was running 470 beds but costs were approximately 14 percent higher than the average of private institutions. In order to reduce expense on facility, the city decided to recruit a professional consultant team to improve financial inefficiency with proper strategies and feasible alternatives. Finally, three consultant firms responded to the RFP that demonstrated particular requirements and concerns in terms of current situation of Carson Manor. Ms. Elaine Taylor, director of supply, summarized relevant information of bidding firms so that she would be able to recommend the best candidate to the city administrator after carefully evaluating.

However, before PSD making any recommendations to upper level managerial team, there were several issues that should be noticed and declared. First and foremost, Carson Manor lacked a standardized supplier evaluation system. Although Elaine prepared a summary from each bidder, the department could not quantify the literal data and background information they had collected. In other words, there was no consolidated supplier selection process to help the organization to find potential suppliers who can meet the requirements. Comparison of RFPs received is considerably more difficult than an RFP evaluation because it may involve a lot of judgment (Johnson, Leenders, Flynn, 2011, p.322). Therefore, a consistent, clear and comprehensive evaluation is essential for Carson Manor to target the best suppliers. Another problem is incompatible description between RFP and the actual needs of the social services division. The service division tried to improve their service level basing on an operational review that was come up with by an independent consulting firm. In contrast, RFP written by supply division actually wanted to “develop recommendations for introducing improved operating and cost efficiencies for future operations”. Besides, the Carson Manor not only did not reflect actual needs via the content of RFP, but also did not make a clear agreement on whether seeking for innovation in the market or doing specification before sending out RFP. If the buyer does not provide boundaries in the proposals and ask for creativity, RFP will allow more latitude. In addition, the organization was supposed to be aware that the cost reduction was the last concern; instead, quality, competence, capability and compatibility need to be considered at the first place because of the tradeoffs between cost and quality. As result of sacrificing low cost, the overall patients care level would be impacted some how. For instance, nurses might not treat well to patients because they were paid less to do the similar job. Thus, customer satisfaction level could be difficult to maintain due to the financial change. Last but not least, there was a potential issue that organization structure needed to be improved and coherent with new strategies in the future. Separated reporting and managing system delayed the speed of decision-making and prevented the effectiveness of cross-department communication so that purchasing department and service providers could not get involve into the same activities.