Question 3: Managing suppliers (30 marks) Hubbard Industries is undertaking an analysis of supplier costs to evaluate each supplier's relative costs and performance. Currently, they are focusing attention on the two suppliers of door handles. The suppliers are SafePlus Ltd and BrushFinish Ltd. Hubbard has been dealing with these suppliers for several years. Most orders are placed with SafePlus Ltd since it charges only $7.20 per handle, whereas BrushFinish Ltd charges $6.80 per handle. In the past year, Hubbard purchased 30,000 handles from SafePlus Ltd and 5,000 handles from BrushFinish Ltd. For the most recent year, the following supplier-related activities and costs were identified: Activity Total cost Number of activities Place purchase order $25,000 100 orders Receive and inspect deliveries $84,000 400 deliveries Store inventory $8,000 200 units stored per year Rework product due to poor quality material $25,000 500 units reworked Production downtime due to poor quality material $5,000 100 hours downtime Receive and inspect late deliveries $17,500 50 late deliveries An analysis revealed that last year the following activities related to the two suppliers: Activity SafePlus Ltd BrushFinish Ltd Place purchase order 20 orders 10 orders Receive and inspect deliveries 200 deliveries 50 deliveries Store inventory 70 units per year 16 units per year Rework product due to poor quality material 200 units 10 units Production downtime due to poor quality material 48 hours 4 hours Receive and inspect late deliveries 40 late deliveries 5 late deliveries (14 marks) Required: Question 3.1 Calculate the supplier performance index for each supplier. Show your detailed workings. Your Answer: Safe Plus Ltd Brush Finish Ltd Supplier performance Index Show your workings here (Insert rows/columns and expand the space as required): Question 3.2 Based on your calculations above, discuss the relative performance of each supplier, and what if anything the company should do. Explain. [Word limit: 150 words. Note the word count at the end of your answer (6 marks) Your Answer (expand the space as required): Word count Question 3.3 The looming supply disruption from coronavirus offers historical opportunities for companies to build or destroy customer goodwill' (Byrnes & Wass, 2020) Discuss the statement. Your response should cover how an organisation can manage suppliers and maintain customer loyalty even after this pandemic crisis. [Word limit: 300 words. Note the word count at the end of your answer) (10 marks) Your Answer (expand the space as required): Question 3: Managing suppliers (30 marks) Hubbard Industries is undertaking an analysis of supplier costs to evaluate each supplier's relative costs and performance. Currently, they are focusing attention on the two suppliers of door handles. The suppliers are SafePlus Ltd and BrushFinish Ltd. Hubbard has been dealing with these suppliers for several years. Most orders are placed with SafePlus Ltd since it charges only $7.20 per handle, whereas BrushFinish Ltd charges $6.80 per handle. In the past year, Hubbard purchased 30,000 handles from SafePlus Ltd and 5,000 handles from BrushFinish Ltd. For the most recent year, the following supplier-related activities and costs were identified: Activity Total cost Number of activities Place purchase order $25,000 100 orders Receive and inspect deliveries $84,000 400 deliveries Store inventory $8,000 200 units stored per year Rework product due to poor quality material $25,000 500 units reworked Production downtime due to poor quality material $5,000 100 hours downtime Receive and inspect late deliveries $17,500 50 late deliveries An analysis revealed that last year the following activities related to the two suppliers: Activity SafePlus Ltd BrushFinish Ltd Place purchase order 20 orders 10 orders Receive and inspect deliveries 200 deliveries 50 deliveries Store inventory 70 units per year 16 units per year Rework product due to poor quality material 200 units 10 units Production downtime due to poor quality material 48 hours 4 hours Receive and inspect late deliveries 40 late deliveries 5 late deliveries (14 marks) Required: Question 3.1 Calculate the supplier performance index for each supplier. Show your detailed workings. Your Answer: Safe Plus Ltd Brush Finish Ltd Supplier performance Index Show your workings here (Insert rows/columns and expand the space as required): Question 3.2 Based on your calculations above, discuss the relative performance of each supplier, and what if anything the company should do. Explain. [Word limit: 150 words. Note the word count at the end of your answer (6 marks) Your Answer (expand the space as required): Word count Question 3.3 The looming supply disruption from coronavirus offers historical opportunities for companies to build or destroy customer goodwill' (Byrnes & Wass, 2020) Discuss the statement. Your response should cover how an organisation can manage suppliers and maintain customer loyalty even after this pandemic crisis. [Word limit: 300 words. Note the word count at the end of your answer) (10 marks) Your Answer (expand the space as required)
