Universal Ad Agency – vendor selection

Abdul Rehman Shaikh and Asad Ali Qazi

n 12th of January 2020, Ubaid Jelani – the procurement manager at Universal Ad Abdul Rehman Shaikh

O Agency – was in his office, contemplating the data he had gathered regarding the
vendors for installation of surface mount device (SMD) LED screen. He had
based at the Directorate of
IBA CC & S, Sukkur IBA,
Sukkur, Pakistan. Asad Ali
canceled some of his engagements and was working on weekends, since the deadline for
Qazi based at the
installation of SMD – the 31st of December 2019 – was already past. He was sitting in his
Department of Business
office at Autobhan Road, Hyderabad (Pakistan)[1], and had to decide for the finalization of Administration, Sukkur
a vendor to present the complete case to the board on next morning. Jelani knew that he Institute of Business
shall not be able to get any further extension in the deadline, and he had to make a strong Administration, Sukkur,
case to present in the board meeting. Pakistan.

Universal Ad Agency
Universal Ad Agency (UAA) was established in the year 2012 with the intent to provide one
window solution to its customers for all their marketing and branding needs. The company
was established at one of the emerging commercial markets of Hyderabad on Autobhan
Road. The Autobhan Road at that time was the most visited place in Hyderabad, housing all
the major restaurants, clothing brands, shoe brands and large commercial and residential
plazas. UAA would provide various types of large size hoardings, unipoles and double-
sided flex boards to their customers on rent. The owner chose to establish his office on
Autobhan Road as he wanted to work closely with his customers, and he knew that all of his
major customers were already present there. Their major customers included builders and
developers, governmental organizations, restaurants and clothing brands. The busiest
season for them was the holy month of Ramdhan [2], cultural events like Basant (Kite Flying
Competition) [3], sports fiesta organized by local government, and off-season sales as
offered by different clothing brands. However, any event could be publicly advertised on
these types of hoardings or billboards.
Unlike any other ad agency, the UAA had a dedicated team of qualified individuals. They
maintained multiple hoardings and unipoles in the city, some of them were owned by UAA,
while others were rented by them. UAA would sub-let all such hoarding and unipoles on
different terms and conditions to their customers for a period as low as seven days, and as
high as one month. If any customer would want to hire hoardings for more than 30 days, the
contract was revised every month with a price increase of a minimum of 5% at each
revision.
“We have already entered into annual contracts with different suppliers from whom we have
rented some of the hoardings & unipoles. Apart from routine procurement, I have to ensure Disclaimer. This case is written
that all contract terms are being followed. I also keep looking for new options/places where solely for educational purposes
and is not intended to represent
we can install new hoardings” expressed Jelani. successful or unsuccessful
managerial decision-making.
As of December 2019, the company’s annual revenue was around PkR. 8,000,000/- (Exhibit The authors may have
disguised names; financial and
1). Having plans to expand their operations further and to acquire new hoardings and other recognisable information
unipoles in the city, the company was already under negotiations with Municipal to protect confidentiality.

DOI 10.1108/EEMCS-04-2020-0130 VOL. 10 NO. 4 2020, pp. 1-19, © Emerald Publishing Limited, ISSN 2045-0621 j EMERALD EMERGING MARKETS CASE STUDIES j PAGE 1
 Corporation, for installation of five new large size hoardings at all entry points of the city. All
these hoardings were to be installed on the road-side, and therefore they needed
permission from Municipal Corporation of Hyderabad. The company had forecasted that its
revenues shall increase by as high as 30% once the SMD LED was installed. It was
presumed that most of the customers would prefer to have their advertisements in a digital
form, unlike the traditional hoardings/unipoles:
“We are going to be the first one to have installed the SMD LED. There is no other agency
providing a digital display. It is going to be one of its kind for the people of Hyderabad”
expressed Jelani proudly.

Jelani was a graduate in economics from one of the local universities. After completing his
graduation, he had joined UAA as a procurement officer in the year 2015. He had
successfully undertaken various field assignments. He was promoted to lead the
procurement department in the year 2018 after the earlier procurement manager resigned.
Jelani was also in the process of getting ISM certification to further improve his skills and to
position himself better in the competitive market. His expert area was vendor analysis and
conflict resolution. He was disciplined, organized and always brought up custom solutions.
His professional and dynamic personality was a major strength for him to succeed in his
current job.

Procurement policy
UAA had developed a detailed procurement policy, whereby all the procurement was
directly approved by the CEO/Owner of the organization. The procurement manager could
only recommend the best buy and the best-evaluated bid. It was the policy at UAA to
generate purchase orders for goods, while for works and services generally there were the
annual contracts. If there was no repetition of works or services, the work orders were
generated instead of purchase orders or annual contract. The procurement team had to
collect a minimum of three quotations from different vendors for preparing the comparative
statement (Exhibit 2). The procurement manager would recommend one best-evaluated bid
in the comparative statement and based on this comparative statement the CEO would
approve purchase/work order. Depending upon the nature of the procurement, the
procurement team had to arrange for technical, commercial or/and financial bids. The
procurement team would normally perform several market visits to their local markets.
The purpose of these visits was to generate a pool of vendors for different goods and
services besides maintaining a healthy relationship with existing vendors. It was the policy
to have a minimum of three vendors in each category of procurement to establish a good
competition. In some cases, the procurement team would also visit Karachi/Lahore market if
the qualified or required technical vendors were not available in Hyderabad Market. The
CEO always insisted on the procurement of the best quality material and the latest available
equipment to ensure the maximum value of products/services.
The normal procurement process would start with a purchase requisition (PR) (Exhibit 3),
which was generated for all types of goods, works and services. The PR was generated by
the concerned department which needed to have something procured. This PR was
approved by the CEO and then sent to the procurement department. The procurement
department after verifying the PR for its sanity and requirements, would select at least three
vendors from their pre-approved vendor master database, and call the quotation via email/
WhatsApp or courier service. Once the formal quotations were received, the procurement
department would prepare a comparative statement and would recommend the best-
evaluated bid and vendor. The procurement manager would review the comparative
statement and bids received, based on the comparative statement best-evaluated bid and
vendor was recommended for approval. This comparative statement was to be approved
by the CEO before issuance of work/purchase order or before entering into a contract. After

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the approval of the comparative statement, the work/purchase order was issued. The
procurement department also needed to ensure that the terms and conditions as mentioned
in work/purchase order or contract were followed and material/services were delivered on
time. After the satisfactory receipt of materials/services, the procurement department would
request the finance department for the release of payment. There were no advance
payments made to vendors in any case.
The most of procurement at UAA involved high technical specifications, such as the size of
hoardings, foundation gauges and weight lifting capability, the total strength of unipoles/
hoardings, depth & footing of foundation, etc., therefore the procurement department would
normally call the technical bids first, then the commercial bids and in last the financial bids. If
anyone could not qualify the stage of technical bids, he would not proceed for commercial or
financial bids. UAA had quite a good pool of vendors, which were assessed for their
performance on an annual basis. The procurement department had established some basic
criteria for vendor selection, including factors such as years in business, the market reputation
of the vendor, responsiveness, price, delivery time, after-sale services, quality and warranty
terms. Each of these factors was assigned weightage based on project, e.g. for some projects
the delivery time was more important when compared to the price, while for other projects the
after-sale services were more important when compared to delivery time.

Market dynamics
UAA was surrounded by all of the major businesses in the city. Their prestigious location
played a vital role when it came to grabbing new businesses. Besides UAA, around five
more agencies were providing similar types of services in Hyderabad. UAA was leading
market players because of their professional staff, dedication to fulfilling their commitments
and their customer-centric approach. Unlike UAA, their competitors were neither organized
nor possessed any dedicated team. Even two among them did not possess proper offices
and would provide the services via telephonic calls only. Most of UAA’s customers were
happy with their services and they believed they were getting the value for their money.
“Their professional staff and their way of handling the problems are their key success
factors. We are always given the due time, and special discounts as well when it comes to
pricing. We have never even tried any other agency in the city” expressed one of their
customers.

Surface mount device screen

Surface mount device (SMD) LED (light-emitting diode) is a type of LED screen that uses
surface-mount technology to house printed circuit boards (PCBs). The panels housing
PCBs can work on an individual basis or in any combination (having compatible PCBs) to
create very large screens of the desired size. Another beauty of SMD screens is that each
panel can integrate all three basic colors, i.e. red, green and blue (visualled.com). These
panels are also codenamed as 1R1G1B. With today’s latest technology, these SMD screens
are created to last longer and work more power efficiently on power consumption. These
SMD screens are being used as large outdoor screens for marketing and branding, as
indoor digital panels in commercial plazas, hotels, airports, etc., and also be used to serve
various domestic purposes. Unlike the traditional hoardings/unipoles, the SMD LED screen
brought the advertisements of life and paved a way for digital advertisements at a massive
scale.

Vendor sourcing
Jelani had no such technical vendors in his pool as it was the first time that UAA was going
to have an SMD screen installed. Besides being the first of its kind in Hyderabad, it was

VOL. 10 NO. 4 2020 j EMERALD EMERGING MARKETS CASE STUDIES j PAGE 3

 going to be an expensive and highly technical procurement. Only SMD was imported for
around PkR. 3,600,000 from China. Jelani searched some of the technical vendors on the
internet and talked to all of them over the phone. To get the best possible quotations, Jelani
had shared the technical details & drawings of SMD (Exhibits 4 and 5) imported by him,
along with the pictures of the site where SMD was to be installed. He had sourced the
vendors from Karachi and Lahore (Exhibit 6) and shared the pictures of SMD with them for a
better understanding. On 6th January 2020, while he was reviewing the initial quotations of
the vendors, he got a call from an unknown number:
Caller: “I am Iqtidar from Lahore, I hear that you have imported one SMD from China and you
need someone to install the same for you. I am sending you the pictures of one SMD, see if that is
yours”

Jelani immediately identified the pictures, sent by Iqtidar to him via WhatsApp, these were
the same pictures which he had shared with different vendors. While he was pondering, he
again received the call from the same number.
Iqtidar: “Is that your SMD. If you want to get it installed from some professional and if you don’t
want to get into trouble at a later stage, I recommend you get these installed by our fabricator. I
am sending you his number”

Jelani: “I don’t understand, who are you? How did you get my number and where did you get
these pictures from?”

Iqtidar: “The vendors you have been approaching are contacting me to help them in installation
since I am based in Lahore and I am the sole importer of these types of SMDs in Pakistan. You
should not have imported this on your own, as you will not be able to get any after-sale support or
warranties from Chinese suppliers. These are very sensitive products, and get easily damaged
in transit. Had you imported via me, you would have got all the warranties and after-sale services
as well. Anyways to save you further trouble, I am sending you the number of a fabricator, who
performs the installations along with me. You should contact him for installation”.

Jelani: “Ok, I shall talk to your fabricator as well. Aw how, how can I meet you, if I wish to meet”.

Iqtidar: “That is no big deal, whenever you come to Lahore, be my guest”.

Jelani then also talked to the fabricator and requested for his quotation.
Fabricator: “Jelani Sb, I have your product’s pictures, I shall be sending you the quotation by
tomorrow. I am sure it shall be the most competitive price”.

Jelani: “I also need your technical quotation and drawings along with your financial quotation”.

Fabricator: “OK no issues, I shall ask the computer guy to generate necessary drawing, and I
shall send you the technical quotation as well”.

Supplier 1 - Fabricator
This fabricator was based in Lahore and was referred to Jelani by the importer of SMD
screens in Pakistan. The fabricator himself called Jelani and offered for his services. After
Jelani visited his workshop and office in Lahore on 9th January 2020, he realized that this
fabricator was the man behind most of the installed SMD LED screens in Pakistan. He would
closely work with the importer. Based on his experience he would always bring custom
solutions for each of his customers. He was well versed with all types of small and large size
of SMD LED screens. He had fully agreed to work on a credit basis during his first meeting.
He also made Jelani visit and observe some of the SMDs installed by him in Lahore.

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“These are very sensitive products, how do you plan to get the replacement of PCBs
(printed circuit boards) in case of any damage or burnout[4]. You should not have imported
this on your own. I highly recommend working via Iqtidar sb, if you need any other SMD
screens from China. The other vendors that you have approached, have contacted me for
installation. I am happy that you agreed to visit and directly work with me, instead of
involving any other party in between” said fabricator.
“It is really surprising for me, and I am happy to have contacted you directly. I am sure our
first contract shall work out and you shall also provide us post-installation support if
required” expressed Jelani.
“Yes, I shall be happy to have worked with you, our estimated cost including post-
installation services shall be two million, however, this may be reduced after we have
performed the soil testing” expressed fabricator. “Soil testing shall help us understand the
depth of foundation required, the major costs are incurred on the foundation to keep it
strong so that it can bear the load of SMD and can also bear the wind pressure” he
continued.
This fabricator had already installed several such SMDs in Rawalpindi, Multan and Lahore.
He was working on two other such projects as could be witnessed from his workshop. The
fabricator committed to providing complete post-installation support, along with the
replacement of PCBs from China at a nominal amount in case of any burnout/damage in the
future. He informed us that the total time required for complete installation shall be around
15 days once the work order was received. The complete structure was to be prepared in
Lahore within 10 days, while installation and testing at the customer’s site would take around
five days. The customer (Jelani) had to arrange for boarding and lodging of the fabricator
and his team for these five days. His quoted price for the complete project was PkR.
2,000,000/- including free post-installation services for an infinite period.

Supplier 2 – from Karachi

The supplier 2 was located on Tarique Road Karachi, he was sourced out by Jelani via an
internet search. As he was near to Hyderabad, he requested Jelani for a site visit before
sharing his quotations. And after he visited the site, he provided his technical and financial
quotation. Supplier 2 had major work experience of Karachi, along with only a few
completed projects in Punjab. Supplier 2 agreed to complete the installation of the SMD
Screen for PkR. 2,400,000 bearing all the costs of installation, team boarding & lodging, etc.
This supplier also agreed to provide post-installation services free of cost charging only
travel expenses of his team. They had a dedicated team of fabricators and complete tools
required for job completion. He had agreed to offer flexible payment terms. He also
committed to providing any maintenance and repair services on customers’ sites.
“We are working in this field for around five years, this is our specialized field. I have a
dedicated team, by working day/night we can easily complete your job in 10 days. We can
also offer you the services for the installation of traditional unipoles or hoardings. Rest
assured the quality of materials shall be as per your requirements” said Supplier 2.

Supplier 3 – from Lahore

Supplier 3 was based in Y Block of Defense Phase V, Lahore. Jelani had sourced his
contact number via an internet search. It was one the most sought out locations and most
elite commercial areas of the town. This vendor had submitted a very beautiful and
profound company profile along with his technical and financial quotation. The presentation
of the package confirmed that it was prepared by some highly educated and modernized
firm. Their customers were available all over the country, and they had more than 20 years
of field experience.

VOL. 10 NO. 4 2020 j EMERALD EMERGING MARKETS CASE STUDIES j PAGE 5

 “Mr. Jelani, we are working in this field for more than 20 years now. We have installed almost
all of the hoarding in Lahore. Now we are working on the installation of SMD screens in the
town. We have a dedicated team and all equipment to fulfill your needs. We can complete
your work in 30 days after the award of contract,” said Supplier 3.
It was evident from their financial quotation that they could complete the job for PkR.
1,850,000 after receipt of 50% amount as advance, and 25% to be received on-site
mobilization. Supplier 3 also agreed to provide free of cost post-installation services for two
years. UAA shall have to arrange for boarding and lodging of the installation team once they
reach the Hyderabad site.

Supplier 4 – within Hyderabad

The organizational CEO had referred someone to Jelani, this vendor was based in
Hyderabad and was providing the services of installation for unipoles and different
hoardings. He was also a government contractor and owned some of the billboards in the
city as well.
“Have you ever installed such an SMD screen? Where is your workshop located I would like
to visit before awarding of contract” expressed Jelani.
“We have been working in this field for more than five years. We have installed several
billboards and hoardings in the city and outstation. This shall cost you around PkR.
1,800,000 to 2,000,000. If you wish we can start on an immediate basis” said the supplier “I
have a very good relationship with your CEO, you need not worry about any formalities. I
shall personally talk to him and it will be no issue” he continued.
Jelani requested him to submit his technical and financial bid formally. Jelani also informed
him about the site for installation and also shared with him the technical drawings of SDM he
had. However, the vendor could not submit any of his formal bid in due time. Jelani was
sure that this vendor shall not be able to handle the job. However, keeping in view his
relationship with the CEO, he followed up with the vendor and also informed the situation to
the CEO. CEO told him to consider this vendor as an option and maybe given the
advantage of being local, however not to rely on him or give him any special preferences.

Current situation
Jelani was sitting in his office; he had all the required quotations and details available with
him. He had estimated that if the work was awarded to any of the Lahore vendors, he shall
incur an additional cost of PkR. 60,000 on account of their boarding and lodging expenses.
After analyzing the details of technical and financial proposals received from the rest of the
three vendors, he was confident that he shall be able to present a strong case in front of the
Keywords:
Services procurement, CEO. He knew that he had missed the first deadline, but he was sure that he shall not be
Vendor sourcing, needing any more extension in the deadline.
Supplier selection,
Multi-criteria decision-
Jayshingpure, A. G., Khona, A. C., Narkhede, B. E., & Nagare, M. R. (2016). A conceptual
making, framework for vendor selection. IOSR Journal of Business and Management (IOSR-JBM),
Vendor rating 18(6), 127–133.

Notes
1. The second largest city of Sind province in Pakistan.
2. Ninth month of Islamic calendar, during this whole month Muslims perform obligatory fasting.
3. Basant festivals are organized by various communities, colleges, universities and schools. These
festivals are historic kite flying competitions.

PAGE 6 j EMERALD EMERGING MARKETS CASE STUDIES j VOL. 10 NO. 4 2020

 4. Each panel contained a PCBs which function like a motherboard in computer, if this board was
burned or damaged, none of the panels would work, as all the panels were connected via these
PCBs.

References
SMD LED. (2020). Retrieved from https://visualled.com/en/glossary/smd-led/
SMD LEDs. (2020). Retrieved from Retrieved from www.siricomindia.com/product-category/smd-leds/

Exhibit 1. Annual revenue

Table E1
Month Revenue

January PkR. 600,000

February PkR. 1,000,000
March PkR. 700,000
April PkR. 550,000
May PkR. 900,000
June PkR. 600,000
July PkR. 400,000
August PkR. 550,000
September PkR. 550,000
October PkR. 700,000
November PkR. 675,000
December PkR. 750,000
Total PkR. 7,975,000
Source: Created by authors using the information collected from the company

Exhibit 2. Comparative statement (Format)

Figure E1

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 Exhibit 3. Purchase requisition (format)

Figure E2

Exhibit 4. Technical details and drawings of SMD

Figure E3

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Exhibit 5. Technical details and drawings of SMD

Figure E4

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 Exhibit 6. Location of potential vendors

Figure E5

Corresponding author
Abdul Shaikh can be contacted at: arshaikh83@gmail.com

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