Essay About Support Of Local Business And Sole-Source Contract Negotiation

The Montreal Transit Corporation
Essay Preview: The Montreal Transit Corporation
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[pic 1]Montreal Transit CorporationProblem:The Montreal Transit Corporation (STM) and its procurement director Jean Belanger requires to provide detailed information, recommendation and procurement methods to choose from a sole-source contract negotiation or an RFQ for a modernization contract of 336 metro cars with an estimated value of over $1 billion dollars.  Jean is aware about competitors in this industry and has a tight deadline to submit his findings to Board of Directors of the Company. He has to make a strategic decision based on several criteria such as:The added value for the customerPlanningFinancial considerationsOrganization and controlCause: The Montreal Metro subway system was introduced and operated since 1966 with rubber-tired trains and it is outgrown by the volume of daily passenger usage, by technology, with high maintenance cost and energy inefficiencies.  Analysis:Bombardier Sole-Source – SWOT AnalysisStrengthsWell known and well recognized Brand nameExpertise and strong specialization in Planes and Trains manufacturingGlobal leader in TransportationLocal Company with support of local business and community (Factory in La Pocatiere)Focus on supplier’s long-lasting relationships with improving their own CSR performancesFaster and less cost logistics Contract negotiation focus on project’s cost controls, terms of contract, train specifications and warranty only WeaknessesFinancial backlog for the transportation subsidiary from $7.6 billion to $6 billionTechnology dependency and integration from other innovators – Not in-house  Lack of competitive strength Less advanced technologyOpportunitiesPositive impact on supporting local business with creation of 4,600 direct and indirect jobs for the next eight yearsPublic support and positive public influence from developing local economy and continues growth Lead time and cost reduction Threats Possibility of higher cost with no competitionDelays in delivery and not supporting deadlines Financial problems Negative Public impact for not offering bidding competitionAlstom Sole-Source – SWOT AnalysisStrengthsFrench global company with worldwide operations in rail markets, passenger transportation, signaling and locomotivesFinancial growth and stabilityIncrease life and performance due to modern solutions to all phases of a train’s life CSR integration in their products and services in exchanging information between Alstom and its suppliers and partners to understand and meet local requirementsInnovative solutions and more advanced technologies to all aspects of transportation WeaknessesGeographical presence – head offices and production are outside of a CountryLogistics delays and possible damages, returns (ex. union strikes, tariffs) Production delays or shortages due to natural disasterOpportunitiesTime saving in awarding a contract Innovative solutions to lower total cost of ownership Better price due to multiple selection of suppliersDedicated CSR team will focus on company short- and long-term business decisions with producing and improving products and processes and will work together towards the sustainable and profitable business modelThreats Possibility of higher cost with no competitionNegative Public impact for not offering bidding competition Negative Public impact to STM for not offering contract to a local companyNegative impact on local economy growthCurrency fluctuation/Exchange RatesRFQ – SWOT AnalysisStrengthsCompetitive biddingWide variety of productsRational decision makingTrade Agreements and Purchasing compliances WeaknessesTime consuming and long process High competition in the industryPossibility of not meeting deadlines in delivering from staff managementOpportunitiesOpportunity for high quality, innovative and sustainable productLower cost of ownershipOpportunity to share contract with other vendor for different product or servicesOpportunity to have not only A but B or C vendors for different products or services if A partner cannot meet the requirementsThreats Negative Public impact to STM if contract not offered to a local companyNegative impact on local economy growth if contract not offered to a local companyIncrease in the costCurrency fluctuation/Exchange RatesLogistics, production, political or natural disaster delaysSolution:Jean Belanger has a very difficult decision to make as it might have big impact on STM as public sector transport agency and local economy. He has to understand and evaluate different options in a timely manner.