Reference no: EM132120586

Please review the case below. It has many facets, including procurement, contracts, manufacturing, operations, sales, marketing, and finance. It has strategic implementations for the entire company, but I want you to focus only on the procurement aspects of the case (and we will deal with the interactions between the procurement department and other departments later this semester). The VP of operations has interrupted your vacation with some startling news. One of your company’s important products is called "The Superwidget". The US Government, and the national governments of many NATO countries, Japan, Australia, Argentina and Brazil each buy thousands of these Superwidgets a year. Several companies manufacture a similar competing product and competition for Superwidgets is fierce, based on technical innovation, price, and delivery criteria. The Superwidget is manufactured from components, software, and firmware from numerous companies plus some internal fabrication of parts and subassemblies in your own plants. The final Superwidget usually sells for between $800 and $1200 per unit, based on some special features, warranty, and service. Your company has manufacturing facilities for the Superwidget in the US, Germany, Australia, and Brazil. These manufacturing facilities service specific areas of the world and there is no overlap. Your company buys a particular subwidget for about $100/unit. This subwidget is a critical component of your Superwidget. You source the subwidget from only one supplier in the US through an exclusive supply contract. Your key competitors have similar exclusive arrangements for their subwidgets from other suppliers. The phone call to your vacation spot is very disturbing. You have just been informed that deliveries of the subwidget will be late for the next 3 to 4 months. After your staff completed an analysis, it determined that your company does not have sufficient stock of subwidgets to cover the required deliveries for the next 4 to 6 months. Based on the introductory readings from Week 1 and Week 2, what are the procurement issues here? How do you address the aspects of this issue that concern procurement process?