Managing the Next Society

Rahul Appina

Trek: Building Better Bikes through Organisational Buying

1. Buying center is a team at Trek responsible for the purchasing decisions of the components and materials which are very important for the company’s success. Their goal is to find the best suppliers and vendors for the organisation purchases. They identify the sources, domestic or international as per the requirements and find the best fit for the company. The requirements can vary from quality standards, pricing, delivery schedules, after sales service. Buying centers after finalises with a supplier, continues to evaluate their performance with the criteria of requirements. It needs to provide what trek calls a “white paper” which shows issues and benefits of dealing with the concerned supplier. These efforts are in order to develop and maintain a positive long relationship with the suppliers with potential to make them partners. For selecting a new supplier, the purchasing manager and representatives from Research and Development section take part in deciding supplier type and product standards, specifications respectively.

2. Selection criteria used by Trek are:

• Quality: The requirements and standards set by the R&D team should be met in order to lead the company towards its mission of manufacturing the best bikes in the world.
• Delivery capabilities: The supplier should be efficient and able in delivering the products on time since it affects the production line and supply chain of the products.
• Pricing: The price needs to be reasonable and profitable to both the parties ensuring future business.
• Environmental impact: This is a factor which the company takes into consideration as part of its values treating its product as a simple solution for complex problems and hence has to verify the production process itself needs to be as less negative environmental impact as possible.

     The buying center has to provide “white paper” which shows issues and benefits of dealing with              the concerned supplier. These efforts are in order to develop and maintain a positive long relationship with the suppliers.

4. Buying situations with examples:

• New buy: A new saddle or a frame with a new material which can have better riding results, involve lot of R&D inputs to the purchasing manager regarding the quality and specifications. The purchasing manager has to find the optimum supplier for the new product considering the quality, price, delivery capabilities and environmental impact. The supplier has to be evaluated throughout for performance to make future decisions.

• Modified Rebuy: This type of purchase involves modification in the type of material or a minor design alteration for better performance, hence the purchase may involve decision such as considering the same supplier or new in terms of achieving the modification and its impacts on selection criteria.

• Straight Rebuy: This might be the simplest purchase type since it does not involve any modification in the product design and means a satisfied purchase experience with the supplier, the order is simple, to the existing supplier. The evaluation must still continue to keep the supplier performance in check.

3. Trek’s organisational buying reflects the growing importance of its “Eco” perspective. The company is concerned about all the components life stage environmental impact from production stage to usage stage and then importantly recycling stage. Trek having a goal of building greener and smarter bikes, essentially takes care of the components the suppliers have to deliver. It considers factors such as fuel used in the production process, own manufacturing units and the overall environmental impact as a criterion to select and evaluate its suppliers.