Eastern Pharmaceuticals Ltd$.$

In the afternoon of September $12,$ Andrew Baines, assis$-$tant purchasing manager at Eastern Pharmaceuticals Ltd$.($Eastern$),$ was discussing the purchase of packaging mate$-$rials and contract filling of tablet samples with a supplier$$srepresentative$.$ When the details of the packaging purchaseorder were finalized, Andrew told the sales representative,John Cao, of Lucas Paper & Box Company $($Lucas$),$ thathe would send him the purchase order for the packagingcomponents and $25$ percent of the contract filling. Johnreplied that Shannon Baily, of the marketing department,had promised him $100$ percent of the contract filling. $$Thisis the first I$$ve heard of that,$$ snapped Andrew. $$It$$s not

Purchasing and Supply Management

marketing$$s responsibility,$$ he continued, controlling histemper, $$to decide what percentages of contract filling aparticular supplier will get. Purchasing arranges the con$-$tract filling with the suppliers that can give the best quality,delivery, and price.$$John Cao, an experienced sales representative, remainedunperturbed. He replied that he had always dealt with bothmarketing and purchasing and that sometimes purchasingwas not involved at all in the projects. He said that in thiscase where both marketing and purchasing were involved,he was just keeping purchasing informed of what marketingwanted. Andrew closed the meeting by politely telling Johnthat he would have to clear up the situation between the twodepartments. He told John that he would let him know howmuch of the contract packaging Lucas would be getting.Andrew Baines, his boss Matt Roberts, and a seniorbuyer made up the total purchasing staff at Eastern. Oneof Andrew$$s responsibilities was to handle the purchaseof the marketing department$$s requirements. He also act$-$ed as liaison between the department and the productionplanning, manufacturing, and packaging departments. Inrecent weeks Andrew was finding the job more and morefrustrating.

EASTERN PHARMACEUTICALS

Located in Seattle, Washington, Eastern carried an exten$-$sive line of prescription and nonprescription items thatwere mostly manufactured in its own plant. The companyhad approximately $15,000$ drugstore customers plus hos$-$pital and government accounts. Annual sales of close to$$150$ million were handled by $50$ sales representativesfrom coast to coast. Although the nonprescription items,known as over$-$the$-$counter $($OTC$)$ products, were promot$-$ed directly to the drug stores, most business was generatedby convincing the doctors to prescribe Eastern$$s productsfor their patients. No selling or advertising was directed atthe consumer.The company$$s sales strategy was that Eastern salesrepresentatives would give samples to a doctor after get$-$ting a verbal promise to prescribe. These samples wouldbe used to start the patient on an Eastern product, andthe doctor would write a prescription for the patient topick up at the drugstore. With a large number of similarproducts on the market, it was a difficult marketing prob$-$lem to keep Eastern$$s brand name in the doctor$$s minddays or weeks after the sales representative$$s visit. Tohelp solve this problem, sales representatives asked thedoctors to sign forms requesting additional samples atspecific intervals.The sales and marketing department had been recentlyreorganized, and the two new people, Shannon Bailey,sales promotion manager, and John Slaughter, advertisingmanager, were understandably anxious to do a good job.Both had made a lot of progress in working with John Cao,standardizing the samples to be used for sales promotionsand advertising mailings. Essentially, both samples werenow the same; the only difference was that the advertisingsample was enclosed in an outer mailer to be sent to thedoctor.

THE FILLING CONTRACT

The packaging contract under discussion totaled $$88,000.$In the past year, Lucas had sold $$80,000$ worth of ma$-$terials annually to Eastern. Lucas$$s annual sales were$$32$ million.John Cao had designed an attractive new style of sam$-$ple. Basically, it was a folded card holding strips of tabletsthat could be pushed through one at a time, as required bythe patient. This one idea was to be used in the near futureto sample several other tablet products. John had devel$-$oped the idea for marketing, expecting that he would getboth the printing and contract filling.Although Eastern did $90$ percent of their manufacturingand packaging, they did not have the equipment to heatseal the strip into the folded cards. When goods came infrom a contract packager such as Lucas, they were held ininventory until required by marketing.

THE RELATIONSHIP BETWEENMARKETING AND PURCHASING

While Shannon and John had been able to work well to$-$gether, they were having their difficulties in getting the co$-$operation of other departments involved. Frequent instanc$-$es of sample mailings being late or sales representativesbeing out of stock continued to plague the success of theirprogram. Delays had been caused by late ordering