The category of cakes, cheesecakes and brownies has come up for review. In the excel file, are the results of the negotiations with each of the potential suppliers. The current incumbents are Aryzta (cakes), The Father's Table (cheesecakes) and Dianne's Fine Desserts (brownies). The nonincumbents are Sara Lee, Grupo Bimbo, Mondalez and WOW Factor. All suppliers, except WOW Factor, do business with GFS currently. WOW Factor would be a new supplier for GFS. The goal for category volume growth is 5% at a minimum. Note that it is the supplier's responsibility to help grow the category volume (sales and unit volume). In fact, Category Volume Growth is one of the Supplier Scorecard categories. The goal for realized savings is $150,000 for the category of cakes, cheesecakes and brownies. Any supplier increases after we award would be passed to the customer as a price increase. Therefore, the increases are not considered part of the realized savings goal for the category. The cost of flour and eggs are currently up 8% due to supply shortages. It costs GFS roughly $7,500 to transition a line item to a new supplier. The category is frustrated with Dianne's lack of growth, supply chain issues and lack of communication. The category does not like to split award within a negotiation group, therefore, the category wants one supplier for all cakes, one supplier for all cheese cakes, and one supplier for all brownies. Note for calculations on bids, positive number (black font) is how much above current (increase); red is a decrease or savings. Questions: 1. Which supplier's bid provides the largest Realized Savings (remember that price increases are passed onto the customer)? The supplier that provides the largest Realized Savings is Mondalez with a savings of $39,500, as shown in the Excel file. 2. Which suppliers provided leverage against Aryzta's incumbent business? Grupo Bimbo and Sara Lee provided leverage against Aryzta's incumbent business. Grupo Bimbo's bid was $0.95 below Aryzta's bid for Item \#1 (Chocolate Cake) and Sara Lee's bid was \$1.05 below Aryzta's bid for Item \#2 (Yellow Cake). 3. Review Grupo Bimbo's bid. If Grupo Bimbo was selected, what problems would this cause GFS? Grupo Bimbo is a new supplier, and switching over the line item would cost $7,500 if they were chosen, which would be problematic for GFS. Moreover, Grupo Bimbo's offer for Item \#1 (Chocolate Cake) is just $0.95 less than Aryzta's, which might not yield enough savings to offset the changeover expense. 4. What is the Realized Savings if all incumbent suppliers keep their current business? The Realized Savings if all incumbent suppliers keep their current business is $0, as shown in the Excel file. 5. Is it possible to achieve the Realized Savings goal with the current bids by awarding each line item separately to suppliers? If yes, would you recommend this strategy? By awarding each line item to suppliers separately with the existing bids, the Realized Savings target cannot be met. Even if the lowest offer for each line item was chosen, the actual savings would still only equal $54,860, falling short of the desired $150,000. In order to maximize leverage and negotiate better pricing, it is advised to award one supplier for all cakes, one supplier for all cheesecakes, and one supplier for all brownies. 6. For brownies, we have 3 suppliers bidding. What is your supplier strategy for this negotiation group? In your answer, consider what we have discussed in this class (supplier scorecard, continuous improvement, risk assessment \& mitigation). improvement. Risk assessment and mitigation methods should also be in place to handle any possible supply chain problems. 7. What is your recommendation for suppliers for cakes, cheesecakes and brownies? To maximize leverage and bargain for lower prices, it is advised that providers of cakes, cheesecakes, and brownies choose just one supplier for all three types of desserts: cakes, cheesecakes, and brownies. The best suppliers for continuous improvement should be those with the highest Supplier Scorecard 34,000 $109,080.00 $43,200.00 $64,900.00 ($41,400.00) ($74,760.00) ($64,780.00) ($122,060.00)