Executive Summary On April 11, 2002, Rob Pincombe, Purchasing Manager at Unifine Richardson was notify by their main honey supplier Harrington honey that Canadian Food Inspection Agency (CFIA) has found traces of Chloramphenicol in Chinese honey. As a result to the contamination of Chloramphenicol in Chinese honey, Harrington honey has decided to discontinue importing Chinese honey. Consequently, Mr. Pincombe has to consider on a long term contract to lock down on a specific price.
The recommendation will be base on factors such as price, quality (taste), custom predictability & transportation risk (flexibility), political risk, work ethic and overall attractiveness. Not only that, they have to consider on a strategic perspective on building more suppliers to give them choice and flexibility, retain control, better pricing and growth for the business. Issues Harrington Honey has decided to discontinue importing Chinese honey due to the contamination of the honey with Chloramphenicol. Since the honey was 50-50 blend of Chinese and Canadian honey, Mr.
Pincombe would have to consider alternative options. Environmental and Root Causes The world supply of honey has decreased by 20% resulting in higher honey prices (non-Chinese) and there are still concerns about product availability regardless of price. Chloramphenicol contamination of the Chinese honey is the root cause to the world shortage of supply. Alternatives and/or Options Three options were offered to Mr. Pincombe as follows: 100% Canadian Honey at $1. 75/lb, 100% U. S. Honey at $1. 10/lb in U. S. dollars and 50-50 blend of Canadian and Argentinean Honey at $1. 2/lb. In addition, Mr. Pincombe was asked to consider the possibility of a long term contract to lock down on a specific price. The option with the highest weighted score is 100% Canadian honey due to these following criteria: quality, custom predictability, transportation cost or risk, political risk, work ethic and overall attractiveness. See Appendix A for the weighted score and Appendix B for the Pros and Cons evaluation on the honey. Recommendation Even though Canadian honey supplier has the highest weighted score, but Mr.
Pincombe should recommend going 50-50 with Canadian and U. S. honey from a strategic perspective. Currently, Unifine Richardson needs to look for other suppliers as they only have one main supplier. This will make Unifine Richardson depend less on any single supplier while providing them with more options, better pricing and growth for their businesses. Implementation Short Term: Sign contract to lock in the price by April 12, 2002 Long Term: By April 17, 2002 put out RFQ to get better understanding what alternate suppliers is out there.
Long term ongoing: Built a relationship with your current supplier to have better understanding of the situation and help them be more efficient with their process. Monitor & Control Benchmarking their supplier would allow Unified Richardson to continuously monitor the company’s business needs and measure supplier’s ability to meet those needs, so that the company always has the best suppliers and ensure that the capabilities of the supply base evolve with the company’s business needs.