Vendor Management, The Scenario

Your Assistant Manager, Lauryn Christophe, with the support of Rick Davidson (one of

your Board members), presented a plan to both you and your Golf Pro, Greg Flanagan.

The plan was to phase out one of your major suppliers, Trophist. Currently, Trophist is

your primary vendor for the Pro-Shop. They supply items such as hats, shirts, pants,

jackets, clubs, balls and bags. Trophist is widely recognized as the #1 brand in golf, and

they are positioned to an upper-scale clientele.

Lauryn received a bid from StableShot, the number #2 brand in golf supplies, and a

company targeted to a mid-range audience. From what Lauryn passionately describes,

StableShot could provide these supplies at an annual saving of at least $75,000 (based

on purchases or cost of goods sold)!

Greg ( the Golf Pro) disagrees with this suggestion, claiming that your current supplier

Trophist, has been extremely dependable. They have always taken back overstocked

items and issued a full credit, a great value to your operation. Greg continues by

reminding the group of the additional contributions that Trophist has made to your

organization over the years. These include, but are not limited to, hosting and funding

monthly "demo days" and providing a gold-level sponsorship contribution to the club's

highly profiled Junior National Golf Tournament. Greg finishes by saying, price isn't

everything. The vendor without the business is always the cheapest, and over time,

they will raise their price."

The Assistant Manager, Lauryn Christophe, claims that StableShot is a young company

with trendsetting technology that is on the move! In comparison, Trophist is

conservative, complacent and set in their ways. Board member Rick Davidson adds that

StableShot is committed to providing an even better level of service. What's more, is

that StableShot will provide an inventory control system and an electronic data

interchange (EDI) system (for PO's and billing). This technology will reduce lost or

misplaced inventory by 10%, reducing labour to manage the ordering and inventory

reconciliation process by 5% in addition to a lower overall price. Lauryn goes on to say

that sometimes vendors get too comfortable with their existing business, and we need

to keep them hungry to service our business. She concludes by saying, "Gentleman, the

risk is low. If StableShot does not meet our expectations, we have a 30-day

cancellation clause built into the contract."

Greg likes the idea of saving up to 10% but expresses additional concerns. If things

don't work out with StableShot, rebuilding a good relationship with Trophist will take

time and cost us money.

As the conversation builds, Greg concludes by saying, "We have been a Trophist

flagship course since we opened, and our guests love the brand. Who says the

members will buy StableShot? If we switch to StableShot, we will also lose the

value-added services from Trophist such as taking back inventory, demo days and

sponsorships. Don't we have some responsibility to suppliers as a partner in business?"

Lauryn Christophe retorts by saying, "Listen Greg, doesn't our vendor have a

responsibility to us, their customer? Also, don't we have a responsibility to ourselves? If

Trophist can't meet the competition's prices, are we supposed to be held hostage by

them?"

As the General Manager, you have done your best to provide autonomy and

accountability to each department head in making their own decisions. This is a unique

situation; however, the decision affects both of them, as well as the business as a

whole.

Additional Information:

The Pro Shop spends an average of $350,000 in purchases with this vendor per year.

What will you do?

QUESTION

Choose one of the following options. Support your decision with a detailed

rationale of the pros and cons it offers in comparison to the other 3 options.

Explain how this choice is in line with the strategy of your Golf course business.

Option 1:Switch to the new supplier, StableShot.

Option 2:Stay with your current supplier, Trophies.

Option 3:Put the request for a new vendor out to tender (a Request for

Proposal).

Option 4:Split the business between both vendors. In this case, pricing will be

equal and higher from both StableShot and Trophies.