1 Case 11-3 Budget Case 11-3 Budget Jajeana Kelly The University of Arizona Global Campus INF 336 Project Procurement Management Michael Jones August 7, 2023
2 Case 11-3 Budget Introduction When it comes to supply management it can be the one thing that will help an organization thrive within a competitive market. Johnson (2020) describes that a profit-leverage effect of supply can help an organization be able to meet its goals to be able to continuously develop further as an organization and bring great customer service, quality, and increased competitiveness in the market. In order to fully meet strategic goals, will require an organization to look into all opportunities that will reduce, contain, or avoid high costs so that the organization can create high quality goods and services at a low cost (Johnson, 2020). Carmichael Corporation is a UK based producer of veterinary products, and feed additives, and has distribution agreements with three distributors that cover all part of the United States. Three years earlier Carmichael introduced Stimgro which is a feed additive used for young turkeys to promote raid, healthy development. Brisson corporation which is one of Carmichael biggest competitors introduced a similar product in the market organization in the market had annual sales of $1.4 million each. Carmichael special product Stimgro requires the purchase of MS-7 for production and based on the purchasing managers assessment the major cost increase could affect the profitability of the product and Carmichaels competitors recently purchased equipment to manufacture their own MS-7. Staying with their current UK provider it is likely the organization will lose 13 percent of their profits. Thus, it is in the best interest of the organization to come up with a more competitive cost structure to decide how to proceed in the market. It may be in the best interest of Carmichael to consider making their own MS-7 as if they were to invest in equipment it could help them save on cost of production in the long run. There are still costs for making their own as this would be an investment that may not bring instant profit as they will still need to buy the equipment and materials to produce MS-7, which could be
3 Case 11-3 Budget pricey in the beginning. If producing their own MS-7 they would need to buy a warehouse and think about its location so there would be many things that would need to be considered before going down this path. Carmichael could also consider stockpiling an inventory of MS-7 as a way to keep their profits up. This would also require the organization to consider many aspects such as warehouse and location. Conclusion Based on my finding I believe it would be in the best interest of the organization to stockpile an inventory of MS-7 currently in order to save on cost and look further into making their own MS-7. If by investing in manufacturing their own MS-7 the organization can still, make a decent profit then I do think this would be the most cost effective method otherwise they may want to consider looking into other distributors.
4 Case 11-3 Budget References Johnson, P. F., Leenders, M. R., & Flynn, A. E. (2020). Purchasing and supply management (16th ed.). Retrieved fromhttps://redshelf.com/