Case Study 3 Selection of a Pressure Vessel Manufacturer
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Selection of a Pressure Vessel Manufacturer 1
Selection of a Pressure Vessel Manufacturer
Andre Conyers
Webster University
PROC 5830: Pricing
Professor Doug Mowczko
Selection of a Pressure Vessel Manufacturer 2
1.
Major Facts For the procurement of one pressure vessel, Oceanics, Inc. sent a request for bids to twenty significant pressure vessels. The supply manager, Jack Toole, requested bids from twenty renowned pressure vessel manufacturers to facilitate this acquisition. Eighteen businesses submitted the bids. The Atomic Products Company and Nuclear Vessels, Inc. were the two businesses that made the shortlist. Atomic Products had no prior expertise with vessels of this size but provided a reduced anticipated price, assured equipment, and a better location. Nuclear Vessels had outdated equipment but offered reduced hourly and overhead rates, little subcontracting, and previous expertise with similar vessels.
2.
Major Problem
Choosing which of these businesses is the better option for the pressure vessel manufacturing contract is difficult because each has different benefits and drawbacks that the company ought to consider.
The providers offer advantages and disadvantages, so Oceanics must carefully consider them before choosing because the decision-making process involves more than just comparing costs and rating experiences. Oceanics must consider the manufacturing facilities and tools available at
each supplier since they can affect the standard and effectiveness of production; the vendors' warranties must be considered since they address things such as equipment quality and craftsmanship.
Atomic Products Company provides advantages, such as a lower estimated price and a guarantee
for the equipment. However, they need to gain experience in manufacturing vessels of the
Selection of a Pressure Vessel Manufacturer 3
required size, raising concerns about their ability to meet specifications. Nuclear Vessels, Inc., on
the other hand, provides advantages such as lower hourly and overhead rates, minimal subcontracting, and experience with similar vessels. However, they have older equipment, which
might affect their efficiency.
3.
Possible Solutions
A. Selecting Atomic Products Company would mean Oceanics, Inc. would save money on the project due to their lower estimated price of $1,232,000. Cost savings are crucial in procurement decisions and can positively impact Oceanics' budget.
B. The Nuclear Vessels, Inc. is offering a lower hourly and overhead rate, which could result in savings cost over the project's duration. The fact that Nuclear Vessel has had a positive working relationship with Oceanics in the past is also a valuable asset, as it shows successful collaboration.
4.
Possible Solutions Advantage A
The lower prices would mean Oceanics Inc. would save costs, reducing more expenses on its budget.
Disadvantage A
Atomic Products Company cannot manufacture the size of the vessels that Oceanics needs due to
a lack of competence. Due to their inexperience, there is uncertainty as to whether they will be able to fulfill the technical standards set by Oceanics (Ingemarsdotter et.al, 2021). Also, there would be uncertainty on whether they can deliver a product meeting the necessary quality and safety standards.
Advantage B
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Selection of a Pressure Vessel Manufacturer 4
Nuclear Vessels, Inc. has older equipment, which may impact its manufacturing efficiency and the ability to meet deadlines. Also, the higher estimated cost of $1,560,001 compared to Atomic Products Company raises budgetary concerns for Oceanics. Although their experience is a benefit, it may be necessary to argue that their contribution to the project is worth more than it would otherwise cost. They also have the advantage of having a good working connection with Oceanics in the past, which indicates a track record of good cooperation.
Disadvantage B
Due to its old machinery, Nuclear Vessels, Inc. may need help meeting deadlines and producing goods efficiently. The budgetary issues for Oceanics are brought up by the greater expected cost of $1,560,001 compared to Atomic Products Company. Although their experience is beneficial, the higher cost may need to be justified regarding the value and quality the company would bring
to the project.
5.
Choice and Rationale The choice of selecting Nuclear Vessels, Inc. over Atomic Products Company as the preferred supplier for the pressure vessel is due to various factors and a critical analysis. First Nuclear Vessels, Inc. has positive past interactions and relevant experience, producing vessels of comparable size and complexity. This knowledge is essential to ensure the pressure vessel meets the required technical requirements and quality standards. Additionally, Nuclear Vessels, Inc. and
Oceanics, Inc. have a successful history of working together on similar projects; this means that prior performance proves their capacity to meet Oceanics' standards, lowering the chances of project delays or quality problems.
The pressure vessel project is a crucial undertaking, and any failure to satisfy requirements or quality standards could have serious repercussions regarding compliance and safety. Although
Selection of a Pressure Vessel Manufacturer 5
Atomic Products Company has lower pricing, their inexperience with vessels of this scale raises concerns about their ability to complete the project successfully. Because Nuclear Vessels, Inc. has a good record of delivering the same vessels on schedule and to the needed standards, Oceanics may lower the project's risk by choosing them.
Although Nuclear Vessels, Inc. has estimated a higher cost for the project, this higher cost might be acceptable when considering the overall value and risk reduction it offers. The risks connected
to Atomic Products Company's lack of experience, which could result in expensive rework, delays, or quality difficulties, might offset the potential cost savings given by Atomic Products Company. On the other hand, by guaranteeing a more seamless project execution with fewer unanticipated complications, Nuclear Vessels, Inc.'s greater cost may offer a better return on investment.
6.
Recommendations
During contract talks, bringing up and fixing issues with Nuclear Vessels, Inc.'s older machinery is crucial. Despite their assurances that they can complete the project, it is still important to look for pledges or, if necessary, prospective improvements to guarantee the equipment's dependability and ability to meet project requirements. Secondly, it should Negotiate the price with Nuclear Vessels, Inc. even though their predicted cost is higher than Atomic Products Company's, try to work out a fair compromise that satisfies budgetary requirements without sacrificing the value they add in terms of expertise, dependability, and adherence to standards (Gunasekaran et al., 2018). The contract must clearly state the technical and quality requirements
that the pressure vessel must satisfy to ensure that Nuclear Vessels, Inc. is aware of and agrees to comply with these standards. In regard to this Oceanic should ensure that Nuclear Vessels, Inc. has a set a quality control process in and request for regular reports on quality control measures,
Selection of a Pressure Vessel Manufacturer 6
inspections, and tests conducted throughout the manufacturing process. These reports would ensure there is alignment with the specified quality standards.
Oceanics Inc. should work with Nuclear Vessels, Inc. to determine any difficulties that might emerge during manufacturing. This can involve equipment breakdowns, supply-chain disruptions, or unanticipated technical issues. As a result, they would devise contingency plans and address these challenges promptly (Shokrani et al., 2020). Equally, they will discuss strategies for mitigating risks, such as alternative sourcing options, upgrading equipment upgrades and speeding up the production schedules.
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Selection of a Pressure Vessel Manufacturer 7
References
Gunasekaran, A., Yusuf, Y. Y., Adeleye, E. O., & Papadopoulos, T. (2018). Agile manufacturing practices: the role of big data and business analytics with multiple case studies.
International Journal of Production Research
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(1-2), 385-397.
Ingemarsdotter, E., Kambanou, M. L., Jamsin, E., Sakao, T., & Balkenende, R. (2021). Challenges and solutions in condition-based maintenance implementation-A multiple case study.
Journal of Cleaner Production
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296
, 126420.
Shokrani, A., Loukaides, E. G., Elias, E., & Lunt, A. J. (2020). Exploration of alternative supply chains and distributed manufacturing in response to COVID-19; a case study of medical face shields.
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