Reference no: EM132828715
SIB530 Mini-Case Study Assignment
Assignment requirement:
- Prepare a management report analyzing the issues and provide recommendations to management.
- Your report should be no more than 4 pages (11-pointer, 1.15 line spacing) Case
- Red Cross Canada John has been working for Husky Energy (https://huskyenergy.com/) as a Purchasing Director for 10 years. He has recently been hired by Red Cross (https://www.redcross.ca/) to be the Chief Procurement Officer for their global operations. Husky Energy is one of the largest oil company based in Calgary, Canada. As the Purchasing Director, John found the majority of his purchase for Husky was capital equipment (e.g. machinery for oil exploration projects) from mostly Canadian suppliers. At Red Cross, the environment is very different.
Red Cross is a non-profit charity organization. As the Chief Procurement Officer, you are accountable to the International Head Office and also to the numerous donors around the world. Red Cross's purchases are mainly humanitarian aids from numerous suppliers in different countries. Your first task is to pick a truck for delivering aids.
The comparison of the 2 models under consideration are shown below:
Model A Model B Purchase price $100,000 $120,000
Expected life 10 years 12 years
Maintenance ($/year) $5,000 $4,000
Downtime per year (down time cost = @$100 per hour) 240 hour 180 hour
Fuel economy
• Diesel price = $2/L
• Average mileage = 50,000 km per year 10L/100 km 8L/100 km
Salvage value $1,000 $5,000
John's boss asked him to prepare a presentation to top management on how he plans to manage the procurement function.
After the meeting with top management, you will need to present your recommendation on the truck purchase. You are considering using the TCO approach to make your recommendation.
Discussion questions:
1. Compare and contrast the purchasing environment between Husky and Red Cross
2. What adjustments John needs to make to be successful in his new role at Red Cross?
3. What recommendations would you provide John?
4. How would you justify your recommendation for purchasing the truck using the TCO model?