MALSTON BAKERY CASE

MKGS14046 Marketing Industrial/Services

Done By: Delise Lim (B00469901) Pearl Tan (B00469904) 10 April 2013

MALSTON BAKERY CASE

Q1. What Does It Say? CASE SUMMARY: John Thomas, Vice-President of Purchasing of Malston Bakery, was concerned over the cost-price formulas used by their flour suppliers to justify increase in flour costs - Tried to persuade flour suppliers to decrease prices, but failed Offered to help Peter Hellibell with the expansion of Ross Mill to produce quality bread flour for Malstons at a reasonable price - Had frequent and close consultations with Hellibell on the factorys expansion and production of flour for the first year
Johns Reverse Marketing technique helped Malston to 1) acquire a new and loyal supplier, 2) convince the other previously unwilling flour suppliers to bring their prices down and 3) generate cost savings for the company.

MALSTON BAKERY CASE

Q1. What Does It Say? REVERSE MARKETING: Customer seeks firm(s) rather than the firms marketers seeking the customers Buyer tries to persuade supplier to provide exactly what the organization needs
Supplier (Mills)

o John persuades the Flour Mills sales managers for discounts; persuades Hellibell to mill bread flour.

INITIATES MARKETING PROCESS

If buyer is uninitiated, supplier is unlikely to specifically offer what buyer requires

Provides Flour

o John initiated the expansion of Ross Mill to include milling bread flour

Great deal of negotiation and frequent nonpassive behaviour required

o John negotiated frequently with mill suppliers and subsequently, with Hellibell on the optimal cost-price formula and length of contract.

Purchaser (Malston)

MALSTON BAKERY CASE

Q2. What do we think of it? Previously, Ross Mill had never produced bread flour. Hence, the potential riskswere: Quality and capacity of the new supply chain not matching expectations. Efficiencies arising from previous long-term relationships will be lost. Costs may be higher ( if venture fails)

The potentialbenefitsinclude: Higher quality due to consistent monitoring and expertise provided Lowered costs due to competitive tendering Transparency of cost estimates

MALSTON BAKERY CASE

Q2. What do we think of it? HOW DO WE JUDGE THE AUTHORS MESSAGE? RM is changing the traditional buyer-seller relationship Proactive behavior of purchaser, compared to a passive purchasing agent Thus, in RM, purchasing agents need to possess the following qualities: 1. Highly motivated 2. Satisfied with their jobs 3. Certain of what constitutes good performance 4. Favours open, honest and co-operative relationships 5. Long-term perspective 6. Creative approach, thinking beyond present needs 7. Assertive 8. Organizationally integrated view (thinking in terms of the entire organizational system rather than of just one functional area) 9. Multidimensional thought (typically thinks of the implication of the purchase on several different plans) 10. Continuing and optimizing

MALSTON BAKERY CASE

Q3. Whats In It For Us, Professionally? After cooperating with Ross Mill, Malston Bakery had managed to achieve substantial savings of $924,000 per year. If the supply chain has developed successfully, Degree of understanding and trust exists between Ross Mill and Malston Bakery Continuation of working together with Ross Mill with similar contractual terms is a desirable option when heavy investment has been made in establishing the chain In the long run, Ross Mill would have developed the unique skill set and technology. In order to continue with the partnership, Ross Mill and Malston Bakery have to work together to achieve consensus on its policy and targets

MALSTON BAKERY CASE

Q3. Whats In It For Us, Professionally? WHAT TAKEAWAYS CAN WE DRAW FROM IT? - Successful RM requires co-operation from all levels and functional areas, enhancing the role of the supply chain - RM is future-oriented, thus is requires careful planning and research - If successful, it may help the company to make impossible goals possible. - Achieving improvements in quality, quantity, price, delivery and service

RM is more than just a technique or tool. It presents a unique perspective on the role and management of supply, so as to contribute effectively to organizational goals and strategies.