Reference no: EM133570564

Case Study

This is a group project for analysis of the procurement and risk management aspects of a selected case study. See details under "Course Content."

This is a case study developed for this class. It focuses on the "Enterprise" Company by pinpointing the objectives of a procurement, scope, key stakeholders, procurement strategy, and the context which may include legislations, external elements, and standards, policy relevant to objectives, timeframe, and lessons learned.

Enterprise is a third-party logistics' provider (3PL) supplying parts to the United States Air Force. On an annual basis, Enterprise procures over $5 million in spare parts for various air frames such as fighters and cargo planes.

The objectives of each procurement are to acquire and deliver parts' requirements to the Air Force within 30 days of notification. Key stakeholders are the Enterprise Procurement Office and Air Force Supply Chain Management personnel. The Air Force is limited, by contract, to a maximum of $5 million of parts being provided by individual 3PLs on an annual basis.

Enterprise's procurement strategy is to continuously order, replenish and deliver the air frames' spare parts throughout the fiscal year (October - September) to keep the prices low for their parts. Unfortunately, with the pandemic affecting suppliers and causing delays in the global supply chain, the parts reordering, replenishment, and delivery to the Air Force has been disrupted; no one saw this pandemic coming and virtually every legal and policy decision made by the government stopped the supply chains domestically.

To exacerbate these issues, the "freezes" placed on the parts' ordering are lifted in July, and there is a surplus of funds available for Enterprise to purchase as many requirements as possible. Unfortunately, the end of the fiscal year is fast approaching (30 September) and the $8 million the Air Force wants to buy in parts must be spent by 30 September. Enterprise Procurement Office know they will exceed their contract "ceiling" because they have already procured and delivered $3 million in parts to the Air Force.

This is a hypothetical case study, but unfortunately, often similar circumstances take place each year in the Federal Government. How do you plan for the risks presented in this case?

Question:

What contract vehicle (FFP, Cost Reimbursable) should Enterprise off their Customer to meet their requirements and maintain a profitable position in the Industry?