Georgia Pacific

Georgia Pacific has encountered a maintenance issue from their primary supplier. The supplier is currently analyzing its manufacturing situation to determine if it can resume production within one week or declare force majeure. Because the supplier is under contract to ship orders each week, our issue is that the orders may not be filled in time and that in short-term, no product will be available to produce the chemical WSR.

Our primary option is to form a contract with supplier 5. Supplier 5 gives us the best option given the weight given to each category. Supplier 5 could be problematic because they will need a re-test for quality approval which has a lead time of two weeks. This two week lead time will push back MPS 10 days which will result in backorders. To prevent shortages, Georgia Pacific will need to spot buy from available suppliers for the 10 days waiting for supplier 5 to re-test and lead time. If supplier 5 fails, supplier 2 will be the next best option.

Creating a multi-year contract with supplier 2 would be the next best option. Although supplier 2 is fifth best according to the weights, they are able to fill the need immediately. They are also a reliable long term supplier with their safety rating as B. If Georgia Pacific chooses supplier 2, they should negotiate a spot buy stipulation in the contract which would then reduce the cost of spot buying 20% of the monthly demand.

The third option would be to write a contract with both supplier 2 and 6