Purchasing and Supply Management - Penner Medical Products Case

If I were in the position of Neil Bennett, I would suggest that a customs clearing agent be hired. The clearing agent will ensure clearance of the consignment through the international border, without an uncertain delay. Moreover, the document can be sent to the customs agent through an email so that he can keep the custom clearance documents ready and file once the truck reaches the border. I would also recommend that the company finds an alternative supplier to Stinson on this side of the border so that both the issues of uncertain deliveries from Stinson and customs clearance. In my plan, I present two possible alternatives to Stinson (Eckert, Meyer & Stuermer, 2017). I shall also suggest reshuffling the inventory always stacked in the company inventory and ensure more stocking of the Stinson made instruments to provide the customers do not suffer due to delayed deliveries.

Why Penner Handles Its Own Inbound Transportation

Penner is handling the inbound transportation to ensure logistics cost at the minimum and also to ensure the customer deliveries are not missed out as Penner was using its driver and the vehicle.

Why Not Simply Find A New Vendor That Is On The American Side Of The Border And Closer To Rockford?

Yes, it is also a possibility. Stinson is working with Penner for a long time and also is providing good quality instruments, which carry the premium price, but the alternatives with equal quality or even better quality can also be found in America too. Since the manufacturing cost in America is higher a cost comparison of a good supplier can be made, before switching to a new supplier.

Would You Consider Outsourcing Transportation

The transportation should be outsourced as it is not the core competence of Penner and is resulting in a lot of inventory holding cost also. With an efficient transit, the delayed or missed deliveries can be reduced, and even the inventory management cost can be reduced.

Complications That Come With Filling Customer Forms

Though the forms are not so severe to fill in and also the delay in customs clearance is the procedural delay, which can be reduced by hiring a customs clearance agent, who should not cost much.

The Amount of Money the Problem Costs the Company Each Year

The company can reduce an expenditure of over $80000 per year if they outsource the warehouse services, transportation, and find an alternative to Stinson. Also, the inventory cost can be reduced drastically.

Recommendations to Ken McCallum

I would recommend Ken McCallum to wait for the decision of Neil until the end of the date or to choose another company to supply them the products because Penner has been working for last 50 years and has other suppliers too. They have captured the market and thus the proper numbers of the customer. So they will get new supplier near Rockford.

Stinson is the only supplier of the specialised equipment to Penner and has a long-term relationship with them. Stinson produces high quality of products. They have a strong bond with each other and rely on each other also (Eckert, Meyer & Stuermer, 2017). If they opt for the new vendor in America or near the border, it is not necessary that they will get that kind of products which they are getting from their current supplier. Changing in new supplier may lead to losing customers and Goodwill too.

Yes, I would consider outsourcing transportation because there is the main problem with the traffic and shipping of the products in time and outsourcing will benefit the company as it provides the:

Better productivity

Better solutions and results

Reduction in the chaos of transportation with the other factors.

Neil has the alternatives to cope up with the current situation, they are:

Stick to the supplier Ken McCallum for the continuity of getting products.

Join with more parcel services so that they pick and deliver the products to customers on time.

Go for new entrants suppliers in the market near borderline.

Long-term steps Neil should be investigating are:

Suppliers must have clear and done with the paperwork.

Shipments problem should be resolved

Try to carry on the relationship with the working suppliers to build a trust.

Reference

Eckert, R., Meyer, S. K., & Stuermer, M. (2017, August). How is Open Source Practices Possible within a Medical Diagnostics Company?: Developing and Testing a Maturity Model of Inner Source Implementation. In Proceedings of the 13th International Symposium on Open Collaboration (p. 3). ACM.