Case Analysis

Main Problem of the Case:

Rocky plains are ending the contract with Gilpin and want installment of an authoritative refund or
contractual rebate of $690,000. Gerald has refused and demanded $4.4 million wire transfer in order to
continue material supplies. Problem is to resolve supply problem and avoid production interruption due
to supplier holding shipments. Contract expire on May 30 decision has been made to test the market for
better pricing, material and method of printing major issue for ongoing financial problem at Gilpin

Alternatives (potential solutions):

Search for a new supplier Stiles which offer them same material with less price so that the profit
margins can be increased.
Work with both the suppliers to ensure effective supplies
Legal action be can taken against the supplier but it can a time consuming and a costly process
Arbitration or mediation can be opted by both the parties for faster resolution .
Negotiation can be done with the current supplier based upon purchasing power capacity and cost.

Decision Criteria

Avoid production loss : The decision is avoid production loss and have maximum performance capacity .
Price protection against incremental increase every year i.e protection against crude material costs and
other PEST factors.
Financial stability of supplier and keeping the freight cost to the lowest.
Lesser lead time with effective supplies

Analysis (assessment) of the Alternatives:

The current agreement with Gilpin is finishing and choosing whether to proceed with Gilpin or not.
Rough plains has figured out relationship with Gilpin as it’s on a verge of liquidation.
Below are the SWOT for the same.

SWOT

Strengths :
One of the most recognized brands in US
Product quality using high quality raw material
Proven Technology / Brewing techniques

Weakness
Ending of contract with critical supplier : Gilpin
Opportunity
Bringing in New Supplier with Better pricing , technology, product and print methods
Stiles : No cost increment in the subsequent year
Marginal increase in third year with maximum limit to 3 percent.

Threats
Label shortage due to termination of contract
Changing supplier can bring product changes
Customer loyalty will be affected with product is not good.

Recommendation(s) and prediction of outcomes:

Depending upon the performance of new supplier – Quality, Material methods could be exceptionally
good or can be compromised

Gilpin’s second proposal had missing information as asked for measure to support lower pricing – hence
effecting supplier relationship

Gilpin holding shipments will be directly effect initial market supplies creating instable sales and drop in
profitability.

Action/Implementation plan:

Prepare to take legal action/ Arbitration or mediation Options

Immediately opt for new supplier for material supplies
Maintain threshold stock.
Implement production trials and product trials.