1. In 1999, Linda McGuire, manager of purchasing and customs at Amway of Canada's London, Ontario headquarters, faced a complicated decision regarding the purchase of new photocopiers. The company's six existing analog copiers were unreliable and lacking valuable new features. Linda was constantly telephoned and visited by six firms trying to win Amway's business for the needed new copiers. Amway of Canada, one of the largest direct selling companies in the world, was formed in October 1962 and had grown its London, Ontario head offices and distribution facility from 600 square feet to over 230,000 square feet as of 1999. The London headquarters had approximately 300 employees, divided between distribution-warehousing and other functional areas. The decision to buy new copiers was crucial for Amway's success in the global market.
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3. In May 1998, Amway of Canada's headquarters had a need for new photocopiers, which were refurbished analog copiers manufactured by Primus, an internationally known brand of copier and supplier of related office equipment. The five-year lease on these refurbished copiers expired at the start of May 1998, and some were beginning to show their age with decreased printing quality and increasing breakdowns and malfunctions. Jim Hunking, general manager of Amway of Canada Ltd., had given Linda McGuire and the Amway purchasing team three chief criteria to evaluate new photocopiers: stay within budget constraints, provide significant increases in functionality, upgradability, or other valued features, add one new copier to the existing pool of six, and carefully consider emerging copier features and technologies such as high-quality digital imaging and networked printing capabilities.
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5. By February 1999, there was increasing pressure to arrive at a decision regarding Amway's new photocopiers. However, Jim Hunking trusted the team to make the best copier recommendation for the company and the needs of its individual departments. The purchasing team then contacted two additional copier vendors, Accent and Cadence, to evaluate new photocopiers.
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7. As the world of the "photocopier" had changed since Amway last visited this purchasing decision five years ago, the three vendors initially described today's photocopier as a much more diverse and complex piece of office equipment. Each offered product literature and made sales presentations that clearly described how today's copiers could perform the same functions as shared network laser printers, among other things. At the conclusion of these initial consultations and meetings with the three original vendors, Linda and Karen realized that the copier decision was beginning to take on more far-reaching implications for Amway.
8. Amway, a Canadian company, was considering the purchase of new photocopiers to address advancements in technology and technical issues such as personal computing and inter-office LAN (local area network) connectivity. The purchasing team approached Neil O'Hanley Amway's MIS supervisor to work with them for the remainder of the photocopier evaluation. Neil was concerned with computer connectivity and ease of administration of the digital copiers being sold, and he made it clear that any copier equipment must have similar or better administrative features and monitoring capabilities than the current pool of direct-connected LAN laser printers.
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10. Primus, Accent, and Cadence submitted initial bids for seven digital copiers, each with a five-year lease priced at $3,900.00 per month. However, Accent's pricing was confusing due to its corporate policy not to sell outright nor lease its equipment. It estimated what each of the areas within Amway needed in terms of copied output per month and then matched seven appropriate copier models for each of these areas. Accent also included in its usage projections some photocopying and printing jobs that Amway had typically outsourced to a third party printer in London. Using this bidding method and assuming its total volume projections were close to accurate, Accent's initial pricing was competitive, coming in at just above $4,000 per month on the seven digital copiers it was recommending.
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12. After reviewing these three initial bids, it became clear that price would not be a major issue in the purchasing decision. However, it was highly confusing to sort out which vendor's copiers provided the best mix of features, reliability, and performance. To determine which vendor was truly offering the most aggressive and fair pricing, Linda, Karen, and Neil sent out a short survey to all seven copier usage areas within Amway of Canada in late 1998. The survey revealed that about 30% of Amway's photocopy output were documents originally created on a PC and subsequently laser-printed. Additionally, many employees would simply create a document on a PC, laser-print one copy, and then make additional copies on the photocopier, which seemed wasteful in terms of deployment and usage of office resources and employee productivity.
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14. In the fourth quarter of calendar 1998, the purchasing team was approached by three additional copier vendors. Linda, Karen, and Neil agreed to involve each in the bidding process, bringing the total number of vendors being considered to six. The three additional potential suppliers included New Media Technologies, Camber Imaging, and Copy-Master. Although their prices seemed somewhat high due to their lack of specialized expertise, they were considered by the purchasing team.
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16. Despite their high prices and limited LAN connectivity, Copy-Master was eliminated from further consideration as of the end of 1998. This decision ultimately led to the acquisition of new photocopiers for Amway, ensuring the company's continued success in the field of photocopying.
17. In 1999, Amway of Canada faced a decision-making process where pricing was a secondary consideration. With five vendors being considered, the purchasing team tried to be clear on their technical evaluation criteria to ensure each vendor was specific about its equipment's capabilities and "talk in the same language." They specified that each vendor should prepare all subsequent bids and present its products in terms of:
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19. Pages of output per minute (i.e., speed), toner costs (including usual toner life), paper and envelope-handling capabilities, resolution capabilities (and other details on each brand and model's "digital imaging" capabilities), computer network connectivity and functionality, warranty and service support levels, and lease specifics. This was intentional, as the purchasing team wanted Accent, in particular, to recalibrate its pricing and recommend copier models so that it was more comparable to the lease-based bids of the other five remaining vendors.
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21. Amway also had a significant amount of "ad-hoc" printing of brochures, pamphlets, and other marketing-related materials for its distributors. Typically, all of this printing was done by a London-based company called Quik Print Printing and Graphics. In fiscal 1998, Amway of Canada spent nearly $170,000 dollars on these ad-hoc printing jobs (or about $15,000 per month). Linda and the purchasing team began to wonder about Amway's ongoing needs with respect to ad-hoc printing and how these might mesh with the photocopier decision.
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23. Several copier vendors began doing various analyses for Linda and the purchasing team, all of which were designed to show how the new pool of copiers could handle much or not all of these ad-hoc printing jobs. To be fair to Quik Print, Linda and the purchasing team decided to let Quik Print's manager know that several of the copier vendors were now preparing their bids with this ad-hoc printing dimension in mind.
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25. Surprised and concerned by the potential loss of Amway's business, the manager at Quik Print prepared a detailed statement of the potential issues and costs of doing these ad-hoc print jobs in-house. In short, for every good reason the copier vendors could provide for discontinuing the practice of outsourcing these ad-hoc printing jobs and bringing them within Amway, Quik Print countered with many valid concerns, costs, and issues of their own.
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27. A Business Practices Taxation Review Report prepared by management consulting firm KPMG found that if Amway brought the ad-hoc printing jobs in-house, there would be significant tax- related issues and remittances required of Amway. The provincial government had passed a statute that would require that Amway calculate the "base costs" of its in-house mass print jobs (i.e., toner, paper, capital equipment etc.) and add a surcharge of 220 per cent to cover "labor and overhead", and then levy eight per cent provincial sales tax to this figure. Additionally, Linda realized that if the ad-hoc print jobs were brought within Amway, the accounting and finance areas would be burdened by having to track all of this activity and remit the appropriate taxes to the government.
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29. Neil's position on the software and document management issues was clear: Amway needed to find a solution that would allow Amway to continue outsourcing all of Amway's ad-hoc printing to Quik Print.
30. In February 1999, the Richard Ivey School of Business faced a complex decision regarding the copier purchase. After a meeting with Karen and Neil, the team realized that the decision had spiraled out of control. The main problem was how to approach and complete the purchase. The team was unsure of how to quickly and competently complete the long overdue procurement process. The Richard Ivey School of Business gratefully acknowledges the support of the Canadian Purchasing Research Fund of the Purchasing Management Association of Canada (PMAC) in developing these learning materials.

MANDATORY OUTLINE FOR CASE ANALYSIS

Note: Structure analysis, use headings and subheadings, and do not write an essay.

Case Name:

Team Name:

I. Major Facts - What facts could be causing the issue or issues? State here the major facts. Make statements clear and concise. Consider the implications of the stated facts. Do they point to a problem?

II. Major Problem - What is the key issue to be analyzed? State here the major problem. Emphasize the present major problem. Phrase statement in the form of a question. In a few cases, there may be more than one major problem. A good problem statement will be concise, usually only one sentence.

III. Possible Solutions/Alternatives - What are the options to resolve the key issue or issues? A. List here the possible solutions to the major problem. Let your imagination come up with alternative ways to solve the problem. B. Do not limit yourself to only one or two possible solutions. These solutions should be distinct from each other. C. However, you may wish to include portions of one solution in another solution as long as each solution stands alone. Only in this manner will your subsequent choice be definitive. D. Briefly note the advantages and disadvantages of each possible solution.

IV. Choice and Rationale - What would you do? State here your choice, A or B or ___ and the detailed reasons for your choice. You may also state your reasons for not choosing the other alternative solutions.

V. Implementation/The Action Plan - How would you implement your plan? How would you track the progress of your plans’ execution? Who does what, where, how, when, etc? Your RACI chart would fit here.

VI. Appendix to include calculations, charts, diagrams or graphs to support sections I-V where necessary, include supporting qualitative and quantitative material in the last section to a maximum of two pages. All calculations and figures must be clearly labeled and referred to in the relevant section I-V.