Traga Bank

1. MAJOR FACTS:

a. Bank is customer oriented, aggressive and quality conscious.

b. Purchasing has a policy of splitting awards for standardized checks equally between two quality suppliers.

c. Bank spends about $4 million annually on standardized checks which are provided free to customers.
d. Deluxe scenic checks are available from current suppliers at extra cost to checking account customers. There is aggressive marketing by check printers.

d. Cost analysis has shown that current suppliers are efficient, cost conscious, fair Priced and making a reasonable profit.

e. Unofficial quotations has been received from a new printing supplier:

(1) Quotation is l0% lower than current prices.
(2) Supplier is unproven.
(3) Danger exists that this supplier might be overpriced and overly aggressive in selling scenic checks to the banks customers.

f. The more scenic checks sold, the less money the bank has to spend on providing standard checks.

2. MAJOR PROBLEMS:

a. How can the bank best balance its need for quality and service with the need for lower costs and higher profits?

b. How should the bank handle the unsolicited proposal which might be a “Buy in’?

c. Can the bank continue to split its requirements for standard checks?

3. SOLUTIONS:

a. Best solution:

- Bank has large enough volume to split awards. It should continue to split its Business between the two current suppliers until the next contract period. At that time it should open up the bidding to all 3 suppliers, asking them to quote firm prices on quantity brackets of 33%, 50%, and l00% of the total requirement. It should also require a firm price schedule on the deluxe scenic check which could be published and furnished to all of the banks customers.

Advantages:
- This will allow bank to maintain quality and service and low cost while at the same time