Questions to be answered
Case study
1 Avion, Inc.
Susan Dey and Bill Mifflin, procurement managers at Avion, Inc.,
sat across from
each other and reviewed a troubling performance report concerning a
key supplier,
Foster Technologies. The report detailed the deteriorating
performance of Foster
Technologies in the areas of material quality and on-time
delivery.
Susan: I don’t believe what I am seeing. This supplier was clearly
a star when we
performed our supplier visits before awarding the contract for the
new
Amrod product line.
Bill: I’m not pleased. I was on the team that performed the audit
and site visit.
Foster’s management was so smooth—they indicated they could meet
all
our requirements. I feel like we’ve been misled by this
supplier.
Susan: Didn’t you look at their processes and quality
systems?
Bill: Sure we did. Everything checked out fine. But now every other
shipment
has some problem, and the delays are hurting our ability to get our
product
to our customers. What really struck us about this supplier was how
innovative
they were. Foster’s biggest drawback was their size—they lacked
some
depth at key manufacturing engineering positions. Maybe that’s why
they
are having problems. It could be that someone has left the
company.
Susan: We are going to have to address these problems
quickly.
Bill: I’ll tell you what I am going to recommend. We should begin
immediately
to look for another supplier. I never was a fan of these
single-source contracts.
They leave us open to too much risk.
Susan: But won’t that take a long time?
Bill: Sure. We’ll have to perform another supplier search with team
visits. New
tooling could really cost, too. This could take months.
Susan: Has anyone talked with the supplier about these
problems?
Bill: Kevin went over personally today and talked with the
production manager.
He didn’t have much time to explain, but he indicated on the phone
that
Foster’s production manager said we should accept responsibility
for a
good part of the problems that are occurring!
Susan: Why should we? I think they are just trying to shift the
blame for their
poor performance.
At this point, Kevin O’Donnell, another procurement manager,
entered the room.
Bill: Kevin, glad you’re here. We were just discussing how Foster
is trying to
blame us for their problems. I think we should dump them
fast!
Kevin: Yeah, well, I’ve got news for you two. I think Foster’s
production manager
is correct. I think I would be frustrated with us, too!
Susan: What are you talking about?
Kevin: I spent a good part of the day over at Foster and
learned some interesting
things. For example, do either of you remember what we told Foster
the
monthly volume requirements for the product would be?
Bill: I remember exactly. The volumes were projected to be 2,500
units a month.
So what’s the problem?
Kevin: We need to talk with our production group more often. The
monthly volumes
are now over 4,000 units a month! And not only that, our
production
group now wants material within 10 days of a material release
rather than
two weeks. We have also been changing the final material release
quantities
right up to the last minute before delivery.
Bill: Uh oh. I remember on our site visit that the most their
production system
could handle was 3,500 units a month. And a two-week lead time
was
about as low as they could go.
Susan: But why didn’t they inform us that these changes were
causing problems?
They still have some explaining to do.
Kevin: Apparently they tried. What did your team tell this supplier
about communicating
with us after you finished negotiating the contract?
Bill: We said that any operational problems or issues have to go
through our
materials management people. The team was responsible for
evaluating and
selecting the supplier, and then negotiating the agreement.
Kevin: Foster’s production manager produced a log detailing seven
memos and letters
outlining the impact of our production and scheduling changes
on
their operation. He also called us several times with no response.
Each of
these inquiries received little attention on the part of our
materials group.
I’m not sure how fond Foster is of us as a customer. I think they
are anxious
for this contract to wind down so they can dump us!
Susan: What do we do now
The reasons a firm need to evaluate its suppliers.
A company needs to evaluate its suppliers. The suppliers are responsible for many factors that can have an impact on the business operations and the success of the company in the industry. From the prices being charged for the raw materials to the qualities of the supply, such variables can have an impact on the pricing and the quality of the final product. Therefore, it is necessary to ensure that the prices of the suppliers are competent in the market and the quality of the materials matches the prices being asked for them.
Also, it is necessary to ensure that the suppliers operate and produce the raw materials following the various environmental, legal and ethical guidelines. Practices such as releasing harmful chemicals, child labor should not be prevalent in the suppliers' company otherwise it may cast a bad light on the procuring company as well.
And lastly, the capacities of suppliers in manufacturing the materials, their timely delivery services, their customer's feedbacks would also help in understanding how efficient the services of the supplier's company are.
Evaluating this can lead to the procuring company choosing the most efficient suppliers to purchase materials from.
Questions to be answered In reference to the Avion Inc case study, identify and summarize the...
Subject - Purchasing Evaluation Identification & Description- correctly identifies missed supplier evaluation site components and; correctly details and thoroughly describes two or more evaluation method Avion Inc(Case Study) could have applied to evaluate supplier site to address missing components. Methods are supported with examples and/or valid references/facts. Case study 1 Avion, Inc. Susan Dey and Bill Mifflin, procurement managers at Avion, Inc., sat across from each other and reviewed a troubling performance report concerning a key supplier, Foster Technologies. The...
Case Study 815 Susan: What are you talking about? Kevin: I spent a good part of the day over at Foster and learned some interesting things. For example, do either of you remember what we told Foster the monthly volume requirements for the product would be? Bill: I remember exactly. The volumes were projected to be 2,500 units a month. So what's the problem? Kevin: We need to talk with our production group more often. The monthly volumes are now...
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