malston bakery

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MALSTON BAKERY CASE MKGS14046 Marketing Industrial/Services Done By: Delise Lim (B00469901) Pearl Tan (B00469904) 10 April 2013

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Page 1: Malston Bakery

MALSTON BAKERY CASE

MKGS14046 Marketing Industrial/Services

Done By: Delise Lim (B00469901)

Pearl Tan (B00469904)

10 April 2013

Page 2: Malston Bakery

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Q1. What Does It Say?

CASE SUMMARY:

John Thomas, Vice-President of Purchasing of Malston Bakery, was concerned over the cost-price formulas used by their flour suppliers to justify increase in flour costs

- Tried to persuade flour suppliers to decrease prices, but failed

Offered to help Peter Hellibell with the expansion of Ross Mill to produce quality bread flour for Malston’s at a reasonable price

- Had frequent and close consultations with Hellibell on the factory’s expansion and production of flour for the first year

John’s Reverse Marketing technique helped Malston to 1) acquire a new and loyal supplier, 2) convince the other previously unwilling flour suppliers to bring their prices down and

3) generate cost savings for the company.

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Q1. What Does It Say?

REVERSE MARKETING: Customer seeks firm(s) rather than the firms’ marketers seeking the customers

Supplier (Mills)

Purchaser (Malston)

Provides Flour

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•  Buyer tries to persuade supplier to provide exactly what the organization needs o  John persuades the Flour Mill’s sales managers for

discounts; persuades Hellibell to mill bread flour.

•  If buyer is uninitiated, supplier is unlikely to specifically offer what buyer requires o  John initiated the expansion of Ross Mill to include

milling bread flour

•  Great deal of negotiation and frequent non-passive behaviour required o  John negotiated frequently with mill suppliers and

subsequently, with Hellibell on the optimal cost-price formula and length of contract.

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Q2. What do we think of it?

Previously, Ross Mill had never produced bread flour.

Hence, the potential risks were:

• Quality and capacity of the new supply chain not matching expectations.

• Efficiencies arising from previous long-term relationships will be lost.

• Costs may be higher ( if venture fails)

The potential benefits include:

• Higher quality due to consistent monitoring and expertise provided

• Lowered costs due to competitive tendering

• Transparency of cost estimates

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Q2. What do we think of it?

HOW DO WE JUDGE THE AUTHOR’S MESSAGE? •  RM is changing the traditional buyer-seller relationship

•  Proactive behavior of purchaser, compared to a passive purchasing agent

•  Thus, in RM, purchasing agents need to possess the following qualities:

1.  Highly motivated

2.  Satisfied with their jobs

3.  Certain of what constitutes good performance

4.  Favours open, honest and co-operative relationships

5.  Long-term perspective 6.  Creative approach, thinking beyond present needs

7.  Assertive

8.  Organizationally integrated view (thinking in terms of the entire organizational system rather than of just one functional area)

9.  Multidimensional thought (typically thinks of the implication of the purchase on several different plans)

10. Continuing and optimizing

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Q3. What’s In It For Us, Professionally?

After cooperating with Ross Mill, Malston Bakery had managed to achieve substantial savings of $924,000 per year.

If the supply chain has developed successfully,

• Degree of understanding and trust exists between Ross Mill and Malston Bakery

• Continuation of working together with Ross Mill with similar contractual terms is a desirable option when heavy investment has been made in establishing the chain • In the long run, Ross Mill would have developed the unique skill set and technology.

• In order to continue with the partnership, Ross Mill and Malston Bakery have to work together to achieve consensus on its policy and targets

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Q3. What’s In It For Us, Professionally?

WHAT TAKEAWAYS CAN WE DRAW FROM IT? -  Successful RM requires co-operation from all levels and functional areas,

enhancing the role of the supply chain -  RM is future-oriented, thus is requires careful planning and research -  If successful, it may help the company to make impossible goals possible. -  Achieving improvements in quality, quantity, price, delivery and service

“RM is more than just a technique or tool. It presents a unique perspective on the role and management of supply, so as to contribute effectively to organizational goals and strategies.”