Support your answers to the following questions with specific information from the case and textbook or with information you get from other sources.What importance is the check printing to the bank?How would you do a cost analysis on a check printing order?How would you evaluate a supplier of check printing for this bank?How many suppliers are desirable for check printing?What alternatives are open to Erica Carson here?If you were in the position of Erica Carson, what action (if any) would you take regarding Killoran’s attempt to secure some check printing business? Explain your reasoning
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24 Purchasing and Supply Management
“We will do it for 10 percent less than what you are paying
right now.” Erica Carson, purchasing manager at Wesbank,
a large western financial institution, had agreed to meet
with Art Evans, a sales representative from D.Killoran
Inc., a printing supplier from which Wesbank currently
was not buying anything. Art Evans’s impromptu and unsolicited price quote concerned the printing and mailing of
checks from Wesbank.
Wesbank, well known for its active promotional
efforts to attract consumer deposits, provided standard
personalized consumer checks free of charge. Despite
the increasing popularity of Internet banking, the printing of free checks and mailing to customers cost Wesbank
$8 million in the past year.
Erica Carson was purchasing manager in charge of
all printing for Wesbank and reported directly to the vice
president of supply.
It had been Erica’s decision to split the printing and
mailing of checks equally between two suppliers. During
the last five years, both suppliers had provided quick and
quality service, a vital concern of the bank. Almost all
checks were mailed directly to the consumer’s home or
business address by the suppliers. Because of the importance of check printing, Erica had requested a special cost
analysis study a year ago, with the cooperation of both
suppliers. The conclusion of this study had been that both
suppliers were receiving an adequate profit margin and
were efficient and cost-conscious and that the price structure was fair. Each supplier was on a two-year contract.
One supplier’s contract had been renewed eight months
ago; the other’s expired in another four months.
Erica believed that Killoran was underbidding to gain
part of the check-printing business. This in turn would
give Killoran access to Wesbank’s customers’ names.
Erica suspected that Killoran might then try to pursue
these customers more actively than the current two suppliers to sell special “scenic checks” that customers paid
23/06/14 3:53 PM
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Minnesota State College-Southeast Technical
Purchasing and Supply Management