CASE STUDY: SNEDEKER GLOBAL CRUISES
It was August 7th and Brandt Womack had just been given his first assignment by his purchasing manager at Miami based Snedeker Global Cruises Inc. It was the ‘E-Auction Development Program’ (EDP). The main purpose of EDP was to identify potential products which could be purchased via e-auctions, to find out 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 the year 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 offers a range of itineraries to destinations worldwide, comprising Alaska, Asia, Australia, the Caribbean, Europe, Hawaii, Latin America and New Zealand.
In 2005, Snedeker incurred it’s highest-ever procurement costs in sourcing the products and services required for cruise ship operations and wanted to combat this trend. To that end Snedeker had been working on changing its buying practices. In past, each 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 began moving away from this practice and put into place a centralized purchasing department in charge of making purchases for the whole 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 decrease costs and e-auctions became a viable option. However, 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 comprised everything from replacement engine parts to chocolate mints paced on pillows in cabins. When the forecast was generated it was given to the Senior Purchasing Manager, Kasey Davis. Kasey scheduled a meeting with Brandt to discuss the E-Auction Development Program giving Brandt the master list of all the products needing to purchase for the next year. Kasey instructed Brandt to determining which products would be best to purchase via e-auctions and wanted to know how the e-auction process would work. In addition, Kasey wanted Brandt to determine the effect that e-auctions would have on relationships with current suppliers.
Brandt walked out of Kasey’s office overwhelmed. It was his first assignment and he did know where to start the E-Auction Development Program.
Define the problem (not symptoms), identify the causes, and develop 3 alternative solutions.
1) Define the problem. What are the key issues or concerns in the case? What factors decrease the capacity of the organization to accomplish its objectives? Don’t confuse symptoms of problems with problems themselves.
2) Discuss any sub-problems or minor issues that might have a bearing on the situation.
3) What are the causes of the problem? Briefly analyze the causes.
4) Develop alternative solutions to address or remedy problem areas. Develop at least three different approaches to solving the problem(s). Analyze each option in terms of time, cost, reasonableness, likelihood of success and so on. Thoroughly assess the relative merits of each alternative.