CASE STUDY: SNEDEKER GLOBAL CRUISES

It was August 7th and Brandt Womack had just been provided his first assignment by his purchasing manager at Miami based Snedeker Global Cruises Inc. It was the "E-Auction Development Program" (EDP). The basic purpose of EDP was to identify potential products that could be purchased through e-auctions, to evaluate the necessary steps to conduct a successful e-auction, and assess the impact of e-auctions on supplier relationships. As a newly hired supply chain manager Brandt wondered how to proceed.

Snedeker Global Cruises incorporated in 1986 and is a cruise company with 35 cruise ships and over 70,000 berths. Snedeker Global serves the contemporary and premium segments of the cruise vacation industry and provide a variety of itineraries to destinations worldwide, including Alaska, Asia, the Caribbean, Australia, Europe, Hawaii, New Zealand, and Latin America.

In 2005, Snedeker incurred its highest-ever procurement costs in sourcing the services and products needed for cruise ship operations and wanted to combat this trend. To that end Snedeker had been working on changing its buying practices. In the past, every individual cruise ship made all of its own purchases for the upcoming season. Purchasing was decentralized, with each ship making purchasing decisions based on its needs alone. The company start moving away from this practice and put into place a centralized purchasing department in charge of making purchases for the entire cruise line. The centralized purchasing strategy provided the overall order cost of the company. The company wanted to continue to pursue ways in which the centralized purchasing practice could reduce costs and e-auctions became a viable option. Thus, senior management at Snedeker was concerned about the impact on quality and the effect e-auctions might have on suppliers.

At Snedeker, the purchasing cycle began with a master forecast for the upcoming year with orders being placed eight to 10 months prior to need. This master forecast add everything from replacement engine parts to chocolate mints paced on pillows in cabins. When the forecast was generated it was provided to the Senior Purchasing Manager, Kasey Davis. Kasey scheduled a meeting with Brandt to show the E-Auction Development Program giving Brandt the master list of all the products needing to purchased for the next year. Kasey instructed Brandt to evaluating which products would be best to purchase through e-auctions and wanted to know how the e-auction process would work. In addition, Kasey wanted Brandt to evaluate the effect that e-auctions would have on relationships with current suppliers.

ASSIGNMENT REQUIREMENTS?

1. Define the problem. What are the main issues or concerns in the case? What factors reduce the capacity of the organization to get its objectives? Do not confuse symptoms of problems with problems themselves.

2. Show any sub-problems or minor issues that can have a bearing on the situation.

3. What are the causes of the problem? Briefly explain the causes.

4. Prepare alternative solutions to address or remedy problem areas. Prepare  at least three different approaches to solving the problem.

Analyze each option in terms of time, reasonableness, cost, likelihood of success, etc. Thoroughly determine the relative merits of each alternative.