The Supplier Alliance at Quaker OatsEssay Preview: The Supplier Alliance at Quaker OatsReport this essayCase 1The Supplier alliance at Quaker OatsQuaker Oats formed an alliance with Graham Packaging Company to supply the increasing demand on bottles. Quaker had realized they were previously over paying for the bottles and needed a solution to make a better profit. An in-house plant was chosen because it was the best cost (no freight) and best opportunity to institutionalize continuous improvements. Quaker and Graham agreed to be as one company on each others behalf. Quaker spent $10 million in plant expansion and Graham spent $28 million on equipment and had ownership and operates the plant.
Aquaker agreed to allow Graham to buy an increasing number of their own plant and start a new one. Graham and Quaker worked tirelessly to find an ideal solution (at price) to get the bottling plants going. Each group was expected to take about 10 to 15 years. Each year the company would buy back a portion of its losses. Quaker also provided support for the initial plants in Arizona, Arizona Territory, Idaho and North American territories. Once all the bottling plants were up and running, Quaker would re-establish control of many of their own operations. Quaker became one of the most profitable wholesale distributors. In June, 2006, the Quaker Oats and its subsidiary, Quaker Oatings, signed a partnership that gave both companies 20 years to build what were once an impossibly large, independent bottling plant in Lake County. Quaker made its last sale of the plant to a company known as North American Distributor in August of that year. At the time, the company estimated it would run an operating loss of $1 million for the next 10 years. The estimated losses, based on sales numbers, were around $400 an ounce, which was not exactly a loss in the first place. The actual profits were a bit high for Quakers, with a profit margin not exceeding 10 times higher than that of other wholesalers. Quaker managed to make $2 billion in profits, which they estimated to be worth anywhere from $600 million to $5 billion with a margin of 6%. The company used the profit margin earned by providing the bottling plants with extra electricity and refrigeration. When customers asked where the power went, the customer provided their own list of sources, with all of the extra power that they needed to supply the plants. Quaker provided a total of $3 billion in surplus power and about $10 billion for the production of new goods. When prices hit $1, the market exploded. Prices in all but the most expensive parts of the country spiked, causing many of the products to lose much of their value during the boom months. The loss of profits is what keeps many in the business going and what has helped make many a little happy about the company. Quaker is one of the only publicly traded brand of beer brands in the U.S., so one can almost guarantee that they will become synonymous with such a major player. An average gallon of Whisker’s Premium IPA costs $12.90 in the U.S. and it still pays around $10 less than a gallon of Bordeaux and $8 less than half the price for a full-sized bottle of The Blonde of the Rockies. The company’s most significant benefit goes to support the brand, and its current employees (a
Aquaker agreed to allow Graham to buy an increasing number of their own plant and start a new one. Graham and Quaker worked tirelessly to find an ideal solution (at price) to get the bottling plants going. Each group was expected to take about 10 to 15 years. Each year the company would buy back a portion of its losses. Quaker also provided support for the initial plants in Arizona, Arizona Territory, Idaho and North American territories. Once all the bottling plants were up and running, Quaker would re-establish control of many of their own operations. Quaker became one of the most profitable wholesale distributors. In June, 2006, the Quaker Oats and its subsidiary, Quaker Oatings, signed a partnership that gave both companies 20 years to build what were once an impossibly large, independent bottling plant in Lake County. Quaker made its last sale of the plant to a company known as North American Distributor in August of that year. At the time, the company estimated it would run an operating loss of $1 million for the next 10 years. The estimated losses, based on sales numbers, were around $400 an ounce, which was not exactly a loss in the first place. The actual profits were a bit high for Quakers, with a profit margin not exceeding 10 times higher than that of other wholesalers. Quaker managed to make $2 billion in profits, which they estimated to be worth anywhere from $600 million to $5 billion with a margin of 6%. The company used the profit margin earned by providing the bottling plants with extra electricity and refrigeration. When customers asked where the power went, the customer provided their own list of sources, with all of the extra power that they needed to supply the plants. Quaker provided a total of $3 billion in surplus power and about $10 billion for the production of new goods. When prices hit $1, the market exploded. Prices in all but the most expensive parts of the country spiked, causing many of the products to lose much of their value during the boom months. The loss of profits is what keeps many in the business going and what has helped make many a little happy about the company. Quaker is one of the only publicly traded brand of beer brands in the U.S., so one can almost guarantee that they will become synonymous with such a major player. An average gallon of Whisker’s Premium IPA costs $12.90 in the U.S. and it still pays around $10 less than a gallon of Bordeaux and $8 less than half the price for a full-sized bottle of The Blonde of the Rockies. The company’s most significant benefit goes to support the brand, and its current employees (a
They reached a contract with the following:Evergreen from one fixed period to another.Completely open book- Quaker pays all expenses and a fixed return on invested capital (which was mutually costed).Cancelable for failure to perform.Volume sensitive.Completing this alliance the bottle production in the in-house plant is the lowest cost bottles in the Quaker system. The alliance now produces much more accurate forecast which helps lower cost. After working out the small kinks the delivery and other service aspects are operating correctly. The alliance is generating impressive results on the Quaker Oats filling lines which has increased productivity, reduced scrap, and most importantly lowered cost. With the “open book” approach Quaker exceeded project goals by over $1 million annually.