1.

What parts of the supply chain are most closely involved with the situation
in this case? What is the responsibility of each part in order to maintain a
smooth flow of material?
There are three parts of the supply chain most closely involved, including procurement,
production and materials management. Procurement is afunctional group as well as a
functional activity. It performs many activities to ensure it delivers maximum value to the
organization. The production group is responsible to product on time with exact quantity.
And the materials management in this case is responsible for evaluating and selecting
the supplier, and then negotiating the agreement.

2. What initially appears to be the problem? What really is the problem(s)in

this case?
At first, Kevin and Susan, the procurement mangers consider that it is the suppliers
fault. Bill thinks that Foster Technologies lacks some depth at key manufacturing
engineering positions so that the delays and quality problems become. Actually, it is the
Avion Inc.s fault. The production group wants material within ten days instead of two
weeks which is decided in the contract. And they also change the final material release
quantities right up to the last minute before delivery. Moreover, when the supplier reflect
the problem, no one pays attention to it.

3. How easy is it to switch suppliers? What could complicate a firms ability to

switch to a new supplier?
It is not easy to switch suppliers. It takes months to perform another supplier search
with team visits and new tooling could really cost.

4. What does it mean to get to the root cause of a problem?

It is of great significance to figure out why a problem comes up in order to solve the
problem. In this case, if Kevin didnt talk with the Fosters production manager, Avion
procurement managers would think that it is the suppliers fault that cause the
deteriorating performance in material quality and on-time delivery. So maybe they will
change the suppliers, costing a few months and lots of human power. But it is unable to
solve the problem. Because the root cause of the problem is the bad communication
between production group and the procurement managers.

5. What does it mean to be a good c u s t o m e r ?

? Why does a buying firm want to be perceived by a supplier as a good
customer? Provide specific examples of what a firm must do to be a good supply
chain customer.

To be a good customer means patient, polite and honest to the sellers. People always
talk Customer is God . But it is important and favorable to be a good customer by
respecting the rules, giving the company an opportunity to solve the problem and
seeking first to understand and then to be understood.

If the buying firm was perceived by a supplier as a good customer, it would benefit
both. Good communication contributes to avoid misunderstanding and delays in supply
chain. The good customer should give the company an opportunity to solve the
problem. In this case, the Avion Inc. procurement manager should communicate the
supplier first, figure out the cause of the problem, talk with the supplier to solve it. If this
didnt work, Avion Inc. can switch the supplier. It is lacking in consideration by switching
the supplier as soon as they find the problem. Actually, all the firms should be a good
supply chain customer. It not only benefits the buying firms but also the suppliers. For

example, the manufacturing factory should communicate with the suppliers regularly to
let them know the change of need or something else to be paid attention which is
different from the contract. In this way, the manufacturing factory is able to get the
materials on time with acceptable quality. And another specific example is the service
industry, like grocery. It is important to let the suppliers know what and how many goods
they need every day.

6. Explain the role of performance measurement in managing supplychain

activities.

The role of performance measurement in managing supply chain actives is

measurement system design, implementation, managing through measurement and
refreshing the measurement system.

7. Why can changes within a supply chain disrupt the normal flow of goods and
services within a supply chain?

Supply chain is considered as a whole. Every activity in supply chain is crucial to the
whole supply chain and a little change will make a big difference or even destroy the
supply chain. For example, the raw material supply decreases for some reasons without
informing the procurement mangers and the production department will lead to the
disrupt in the production. And the increase of customer demand is good for a company.
But without enough inventory of product, it will disrupt the services.
8. Why might Avion want to reduce the lead times on its purchased materials and
components?

Reducing the supply lead time is the most effective way to reduce stock. Keeping the
stock at a balance level contributes to lower inventory cost. Avion might want to reduce
the inventory cost and provide better service.

9. Why do firms single source contracts?

Single source purchasing refers to purchases from one selected supplier, even though
there are other suppliers that provide similar products.

Although sometimes it is suggested to avoid single source contract, it still has some
advantages. Firstly, single source means less work to qualify the source and probably
less administrative effort in dealing with only one supplier. This is a real advantage in a
highly technical product where significant engineering effort is required to qualify or use
a product. Secondly, it is easier for the buyers to maximize the leverage based on total
quantity. Thirdly, the trust between the buyer and the supplier makes the supplier feel
obligation to perform better.

10. Develop an action plan for Avion that addresses the issues presented in this
case. Be prepared to explain fully your recommendations.

The recommendations are as follows. Firstly, communicate with the production group to
figure out why the changes happened, including the changes of monthly volumes, lead
time and the final material release quantities. Then try to avoid these changes to keep
the normal flow consistent with the contract. Because Kevin has already found the root
cause of the problem, it is the best way to correct the problem from Avion Inc.