Negotiations Can Be Preferred Over Competitive Bidding Essay

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Negotiations can be preferred over competitive bidding because significant cost advantages can be gained through this process which might be available through competitive bidding. When bidding is open to a large number of suppliers, the winner doesn't bother to negotiate because he has won fair and square and the buyer now has the obligation to buy from on his terms. That can be avoided with the use of negotiation method.

Epsilon's alternative proposal should be considered seriously because while it may have limitations, it is not entirely a bad choice and may offer certain advantages otherwise not possible. For one, it allows requirements contract to be imposed which means the supplier would be the only party fulfilling all orders for a certain time period. The supplier would be interested in providing the best quality so that he doesn't lose the account and the trust of the buyer. Ruhling can stop the bidding process with the notification that a winner has been selected and then proceed with award process whereby it establishes a requirements contract with Epsilon and agrees to buy from this company for the next one year.

If I were at Ruhling's, I would be more interested in agreeing to the alternative proposal by Epsilon instead of proceeding with the bidding process. I would have done that because Epsilon is giving me a good price and after checking the track record of the firm, I would recommend signing a contract with this firm. However if it appeared that Epsilon had a bad track record, I would have recommended proceeding with the bidding process.

Dual sourcing is a very good practice and makes a lot of business sense because it tends to help the company save costs on procurement and also makes the suppliers more competitive when they know there is more than one party offering its services to the buyer and the one who provides better service might be favored more in the future.

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(Lyon, 2006)

AAV ANSWERS

Bolger itself is responsible for the poor performance of its contract. For one it doesn't have enough aluminum wielders as it mostly deals with steel wielders, secondly the contract negotiators of the company are very slow in processing cost details and hence any changes in the contract can result in unnecessary delays.

Delays in the completion and production were caused by inefficient work practices that were found at Bolger. Had hydro sub-engineers chosen to work on the prototype themselves, things would have been much different since they are most skilled and hydro sub-could choose to work at its own pace. Unfortunately due to capacity issues, the company had to take services of Bolger Shipyard where several problems existed including insufficient material, inadequate supply of wielders, and poor cost reporting system. This had led to many delays which were now bothering Kathleen.

Kathleen will need to force Bolger to work as quickly as possible on resolution of cost issues. She can choose to adopt two approaches:

a. She can either ask Bolger people to start working on the new design / design changes without worrying about renegotiating the contract since that could be handled later

b. Or she can simply ask Bolger to present all cost details and other changes needed in the contract within few days so things could be processed faster

Either way she will need to take on the role of a commander without unnecessarily worrying about Bolger's reaction because in this case, Bolger is clearly at fault and the only way it can be resolved….....

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