Rob Pincombe

A purchasing manager named Rob Pincombe who works at a company named Unifine Richardson had a tough decision to make in regards to his honey supplier. Unifine Richardson is a manufacturer for salad dressings, ice cream toppings, sauces and syrup. The company purchases approximately 1 million pounds of honey on an annual basis and they are about to lose their Chinese/Canadian blend honey because an antibiotic chemical was found in the Chinese honey.

Rob receives a call from Joanna Killan at Harrington Honey which is his main supplier for honey with some bad news. The CFIA (Canadian Food Inspection Agency) had recently found some chloramphenicol in Chinese honey. Until China develops a reliable measure to test for chloramphenicol, China would not be able to export their honey to Canada or Europe. Honey from China is what Unifine Richardson uses to produce their honey. They use it as a 50/50 blend along with the Canadian honey.

The immediate issue within the case is the fact that Harrington Honey had discontinued importing Chinese honey until China test for chloramphenicol and rejects them. Harrington's inventory of Chinese honey will be gone by May, 17, 2002 (1 month).

Another issue is the fact that Harrington Honey was quick to note that the world market for honey had just decreased by 20% and that prices for the non-Chinese honey had gone up significantly. The supplier recommended that their customers switches to another source and proposes 3 main options.

2) Some of the alternatives for Rob Pincombe would be to purchase 100% pure Canadian honey, 100% pure US honey, 50/50 blend with Argentinean honey or even look for a new supplier to see what other pricing is available.

100% pure Canadian - This alternative is expensive. Rob will be paying $1.75/pound compared to their $1.08 for their Chinese-Canadian blend. A advantage towards this alternative is that Unifine can market it as a 100% Canadian blend.

100% pure US - This alternative is as expensive as the Canadian honey. The price is only for $1.10/pound but in US dollars which is equivalent to the Canadian honey.

50/50 blend with Argentinean & Canadian honey - This alternative may be the cheaper one in regards to pricing with is an advantage. The disadvantage of this option is that taste of the honey. Rob Pimcombe believed that the blend between the 2 honeys will not taste as good.

Searching for a new supplier - Another alternative would be for Rob to start a RFQ process to look for a new supplier that can supply honey. Given the timeframe of only a month before Harrington Honey depletes their inventory of Chinese honey, there might not be enough time to complete extensive research. There may be some other suppliers that can possibly provide honey at a lower rate.

Source globally directly - With this alternative, you should be able to get the honey at a lower price. Given the circumstances with the honey from China,