The Billings Equipment, Inc DSM Analysis
Summary of the Case
The coordination of a business management unit is important in handling problems and misunderstandings which might occur within the business. Most often, changes in business operation cause rifts between business stakeholders including suppliers and buyers (Jackson, 2001). However, there are business guidelines and principles which should be adhered to when planning to make changes in business operation. The case study offers a good business management entangles involving Billings Equipment, Inc general unit manager, purchasing, and supply chain management (Jackson, 2001). Historically, the construction Company had impeccable business ethics until June 1988 when it started a new plant at Seattle. The increasing cost of operations prompted the company’s unit general manager to initiate a 10% price reduction in supply on July 2000. Consequently, the supplies chain manger, Jeff Martin became concerned about the possible deterioration of the company’s relationship with its suppliers. This was owed to the fact that Jeff had cultivated an active and competitive supply management program at the time the unit was started. Provocatively, the general manager coerced Jeff while collaborating with the purchasing team to serve the company’s suppliers with a price reduction letter thereby breaching the agreement (Jackson, 2001). Fortunately, about 80% of the company’s major material suppliers immediately complied with the demand within 30 days. This further prompted the general manager to demand another 5% reduction during the company’s strategic meeting. In addition, those suppliers who easily complied with the first 10% price reduction were to be penalized (Jackson, 2001). Buyers were directed to make follow ups by contacting up to 30 suppliers to ensure that the newly designed rules were fully implemented. Ultimately, the company’s supplies manager was confronted with many ethical issues to handle.
Handling the Company’s Relationship with Suppliers
Jeff’s situation requires a broader understanding of ethical and legal application of business management rules and regulations. This is because in company’s management hierarchy, every department is expected to mutually liaise with each other for the overall befit of company’s stakeholders (Monczka, 2011). However, the company’s general unit manager out of ignorance or disrespect of law demanded that the changes be imposed without seeking the suppliers’ consent. This is evidenced when the company’s supply manager cited that he was worried the ethical standards could be violated to an extent that it could affected the relationships which they had built for a long time (Turner, 2011). Jeff further alleged of having collaborated with others it carried out cost and benefit analysis thereby approving that the suppliers’ prices did not have any errors. Ideally, ethics is important for any business practice because every player expects to be treated in a just and a fair manner (Ferrell, 2014). Therefore, Billings Equipment Company’s management team ought to have applied strategic supplies management techniques and business ethics. Unfortunately, most leaders engaged in the management often perceived ethics as only applicable in the academic, social, and philosophy. Therefore, leaders have often failed to use simple practical business ethics (Turner, 2011). For instance, Billings Equipment company could have used a number of business ethics. First and foremost, it would have created a diverse and interactive internal and external team of stakeholders. Jeff in collaboration with the company’s general unit manager should have created an inclusive team to discuss the increasing cost of supplies. Such form of collaboration would have positively impacted both suppliers and the company’s wellbeing by offering commonly agreeably solutions. This is because both sides were equally important in the company’s progression agenda (Monczka, 2011). For instance, the suppliers link the company’s production process with buyers and other stakeholders; therefore, their pleas ought to have been considered.
Secondly, they would have identified key behaviors that they needed to adhere to. The company should have recognized ethical behaviors and values which are for organized structural and goal oriented practices (Turner, 2011). Managers should form ethics management committee to ensure that issues which require the company’s urgent attention are addressed on time. For instance, Jeff supplies relationship concerns are urgent and should be handled and solved amicably for the benefit of all stakeholders. Ethics would then be integrated into the day-to-day running of the company. In addition, the company needs to incorporate an ombudsperson to enhance institutionalization of ethical policies (Jackson, 2001). The company’s ethical redress is responsible to enact various values such as trustworthiness which entails loyalty, integrity and honesty. It should respect the autonomy, dignity, and privacy of every stakeholder. Moreover, the company’s transparent and accountable operations would enhance integrity. The third aspect is the need for the company’s civic virtues and patriotic stance of environmental conservation to be upheld (Ferrell, 2014). Overall, the companies’ ethical program implementation helps in establishing integrated, organized, and structured mechanisms of addressing wrong behavioral issues.
Therefore, Billings Equipment Company’s general unit manager flouted ethical process in the quest to change cost of supply chain operations. The manager should have maintained good supplier-company relationships as a core principle to effect his proposed changes (Jackson, 2001). In addition, the strategic public procurement meeting should have been called by the company’s management in liaison with suppliers to forge the way forward. This is because the contract signed between the company and supply agencies did not expire, but was abruptly terminated through a circular letter (Turner, 2011). Moreover, the Billings Equipment Company ought to have served suppliers with a notification requesting them to redress the supply contract terms and conditions. Financial and delivery issues of late payment, losses, and deliveries could be collaboratively solved by the two entities (Monczka, 2011). The companies’ prior exchange of information concerning production management and material supply has been shown to enhance mutual relationships thereby developing more stability. This is certified through mutually revised price supply rates, customer satisfaction, company’s high productivity and profits.
References
Ferrell, O. C., & Hartline, M. D. (2014). Marketing strategy: Text and cases. Mason, OH: South-Western/Cengage Learning.
Jackson, D. R. (2001). Supply management. Don’t shoot the Messenger. 13(1) 17-18.
Monczka, R., Handfield, R. & Giunnipero, J. P. (2011). Purchasing and Supply Chain Management. South-western, Mason: Cengage Learning
Turner, R. W. (2011). Supply management and procurement: From the basics to best-in-class. Fort Lauderdale, FL: J. Ross Pub.
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