Business Development: Assessment 2 - Supplier Management and Contracts

This report, prepared for an assessment, focuses on supplier analysis and contract negotiation within a business context. It begins with an overview of existing suppliers, including seafood, bakery, and cutlery providers, evaluating their performance based on key performance indicators (KPIs) such as quality, efficiency, and pricing. The report then identifies alternative suppliers and justifies recommendations for supplier replacements based on factors like delivery promptness, product range, and pricing terms. It also outlines key elements for supplier contracts, including price quotations, quality specifications, and lead times. Furthermore, the report includes simulated negotiation scenarios and concludes with sample contracts for seafood and bakery items, detailing supply conditions, payment terms, and the scope of goods. The references used in this report are also listed at the end.

Assessment 2
[Document subtitle]

Assessment 2
Table of Contents
Part A...............................................................................................................................................2
Question 1....................................................................................................................................2
Question 2....................................................................................................................................2
Question 3....................................................................................................................................3
Question 4....................................................................................................................................4
Question 5....................................................................................................................................7
Question 6....................................................................................................................................7
Question 7....................................................................................................................................8
Part B...............................................................................................................................................9
Part C.............................................................................................................................................10
Question 1..................................................................................................................................10
Question 2..................................................................................................................................11
Question 4..................................................................................................................................12
References......................................................................................................................................15
1

Assessment 2
Part A
Question 1
Supplier 1: The Fish Factory
Seafood Supplier
Supplier 2: P.E Foods
Bakery and Food Ingredient Supplier
Supplier 3: QCC Hospitality Supplier
Cutlery Suppliers
Question 2
Supplier Key Performance Indicator
The Fish Factory  The product meets the desired quality requirements
 Efficiency of packaging
 Faulty packaging rate
 Waste per product
 Rotted quantity per lot
 On-time replenishment
 The freshness of the products
 Customer feedback
P.E Foods  Customer feedback
 Quality
 Number of products delivered of which expiry date is near
or has passed
QCC Hospitality  Rate of defective cutlery delivered
2

Assessment 2
Supplier
 Availability of goods with the vendor at the time of order
 Pricing
 Quality of cutlery
 Delivery promptness
 Updated inventory so that nothing is delivered which is
obsolete or out of trend
 Reconciliation of actual count with the invoice
 Lead time for delivery
 Number of times emergency purchase orders were fulfilled
 Breakage
Question 3
Alternative Suppliers
Supplier 1: B & E Foods
Wholesale seafood suppliers
Supplier 2: JL Stewart Sons
Bakery and Food Ingredient Supplier
Supplier 3: Trenton International
Cutlery Suppliers
3

Assessment 2
Question 4
Wholesale seafood suppliers
The Fish Factory B & E Foods
Quality All fresh fish is cut to order
Extensive range of seafood available
60 refrigerated vans running across
the town.
Prices Negotiable pricing Fixed pricing, partially negotiable for
long term contracts
Payment
Condition
Payment is required 10% in advance
and 40% on delivery for rest of the
50% payment 10 days credit period is
granted
50% advance and 50% within 30
days
Service
Provisions
Delivery six times in a week No limit on number of deliveries
24/7 delivery
Reliability Trusted brand of Brisbane Robust supply chain
Other needs Centralized supplier system Local suppliers are given distribution
orders
Cutting and packing as per customer
specification
(Fish Factory, n.d.) (Be foods, n.d.)
4

Assessment 2
Bakery and Food Ingredient Supplier
P.E Foods JL Stewart Sons
Quality Customizable bakery items and
ingredients and maintaining high-
quality standards
Years of experience in the bakery
industry. Highly professional workers
manufacturing quality goods.
Portfolio of 6000 products makes it a
one-stop destination.
Prices Fixed pricing Negotiable pricing
Payment
Condition
Advance 50% payment on order, rest
on delivery
Credit period available
Service
Provisions
All orders are required to be placed
before 12 PM
Delivery on order. Needs to be placed
one day in advance
Reliability Freshly baked goods as they are
made to order, in the wholesale
industry for the past 28 years
Huge loyal customer base and
established brand name
Other needs Delivery available in selected areas
of Brisbane on fixed assigned days
only.
Any time delivery
(PE Foods, n.d.) (JL Stewart, n.d.)
5

Assessment 2
Cutlery Suppliers
QCC Hospitality Supplier Trenton International
Quality Wide range of cutlery for all
hospitality needs. Unbreakable high-
quality material.
Excellent quality of products and
support services. A wide array of
cutlery brands.
Prices Fixed wholesale rate. Additional
discount on bulk purchase and
prompt payment.
Negotiable pricing on term contracts
Payment
Condition
100% payment on delivery Credit period available without any
extra cost
Service
Provisions
Prompt delivery and customization
available on extra chargeable basis.
Three days lead time required
Reliability A reliable name in terms of quality. Guaranteed products.
(QCC, n.d.) (Trenton, n.d.)
6

Assessment 2
Question 5
Wholesale seafood suppliers
The Fish Factory’s contract should be replaced by the B & E Foods as they offer more prompt
delivery at short notice which is necessary for fast-moving goods like fish. The company has
refrigerated vans and procure material from reliable suppliers in Brisbane which ensures supreme
product quality.
Bakery and Food Ingredient Supplier
JL Stewart and sons should be replaced with PE foods as they provide bigger product range,
grants credit period and the pricing terms are negotiable. They have a loyal customer base which
indicates the quality of service and reliability of products supplied by them.
Cutlery suppliers
The existing supplier QCC Hospitality supplier should be retained as the quality has already been
tested and it costs more economical as the order is mostly made in bulk.
Question 6
Currently, the terms for managing the suppliers are not much formal and stringent. However, in
order to maintain a harmonious relationship, there should be a formal agreement with every
supplier with detailed terms and conditions. However, the following are the key points that
should be addressed in every supplier’s contract-
 Price quotation for different items.
 Quality specifications.
 If the price varies it should be specified what will be the conditions that will lead to
variations in prices.
 Packaging requirements should be clearly specified.
 Lead time after the purchase requisition is raised should be outlined.
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Assessment 2
 The delivery frequency required should be specified in the order.
 Emergency purchase requirements and pricing in such cases.
 Insurance
 Liability if any extra cost is incurred.
(Upcounsel, n.d.)
Question 7
The contracts will be made for six months and the negotiations will be made in advance. The
terms and conditions of the contract will clearly indicate that the prices that are not subject to
variations will not be allowed for renegotiation.
8

Assessment 2
Part B
Negotiation 1 Bakery and Food Ingredient Supplier
Real Negotiation
Simulated Negotiation
Supplier details JL Stewart and Sons
Represented by Sales head
Location Brisbane
Date 3/2/2020
Nature of negotiation Half-yearly negotiations
Details The daily requirement of bakery products and
monthly requirements of ingredients
mentioned.
9

Assessment 2
Negotiation 2: Wholesale seafood suppliers
Real Negotiation
Simulated Negotiation
Supplier details B & E Foods
Represented by Sales head
Location Brisbane
Date 3/2/2020
Nature of negotiation Price and detailed co
Details The daily requirement of specific seafood requirement,
condition of goods, quality, packaging, pricing and terms of
payment.
Part C
Question 1
Supplier 1
JL Stewart and Sons
Approved Not Approved
Price Yes
Quality Yes
Delivery frequency No
Lead time Yes
Supplier 1
B & E Foods
Approved Not Approved
Price Yes
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Assessment 2
Quality Yes
Delivery frequency Yes
Lead time No
Question 2
Supplier 1 Outcome Approved Not Approved
Details negotiated
Price
Delivery terms
Liabilities
Other details
Supplier 2 Outcome Approved Not Approved
Details negotiated
Price
Delivery terms
Other details
11