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Case 1. 1OHN DEERE AND COMPLEX PARTS, INC.

Q1. Discuss the strengths and weakness of 1ohn Deere`s achieving excellence program.
Consider and discuss other criteria to include in the analysis.
Ans. Strength oI Achieving Excellence Program:-

1. Internal Evaluation Process

Evaluation is conveyed out by Deere staII Irom distinct agencies Ior example provides
administration, procedures, value technology etc. This makes the evaluation more clear and
comprehensive since the attitudes oI varied staII Irom distinct agencies are taken into account.

2. Supplier Assessment
Suppliers were assessed in Iive key localities that are quality, delivery, cost management,
wavelength and technical support thereIore producing the evaluation all-inclusive.
3. Quality assurance
The quality rating oI 1000 would be equivalent to one reject per 1000 units delivered. The
delivery rating provided a measure oI how well a supplier met Deere speciIied delivery dates and
purchase quantities. Thus, a delivery rating oI 75000 would be equivalent to seventy-Iive
delivery 'deIects per 1000 deliveries.
. Composite Rating Team
The cost management rating was a composite rating by the evaluation team, based on
perIormance in 5 areas: cost management initiative, cost reduction activity, cost index
perIormance, perIormance during new programs, and global market competitiveness.
. Innovation
The use oI the wavelength ranking is an innovative set about to assess the supplier's aim on
value, cost etc. The yearly modiIication oI presentation grade cutoIIs is another power oI the
AEP. Periodic modiIications conIirm that the rankings contemplate present changes
. Technical Rating
The technical support rating was also a Iive-point consensus composite rating comprised oI
group assessment oI the supplier perIormance in the area oI assembly line support,
environmental responsibility and supply chain management support.The cost, wavelength and
mechanical rankings are agreement composite rankings, which assesses a kind oI inherent Iacets,
other than supply a short overview.
. Classification
Suppliers were classiIied into Iour that are conditional, Approved, Key or Partner, producing it
so straightIorward to recognize where each supplier stood with consider to others. The supplier
presentation abstract provided each quarter provides suppliers with all pertinent data related to
their classiIication.
. Training

Training and recognition are only provided to suppliers with high ratings, thereby acting as an
incentive to suppliers with low ratings to catch up.
eaknesses of Achieving Excellence Program

1. Skewness of eakest Class

The weakest class tends to skew the general evaluation, which would work contrary to
suppliers supplying reliable service with secondary glitches. These glitches are inclined to be
magniIied in the rating.

2. Lack of previous History
The biggest drawback to the AEP is that it does not consider the Iull history oI the supplier`s
relationship to the company. The evaluation only Iocuses on the past year and not the historical
highs and lows oI productivity.

3. Lack in training to suppliers

Training is not supplied to dependent suppliers, which is contradicting productive. A teaching
program Ior such suppliers is probable to advance perIormance.

. Economic & Market Condition

The program also does not take into account the current economic conditions and how the
market is perIorming. It examines what the supplier is doing to increase proIits Ior Deere, but
does not explore what Deere could be doing to help the supplier, beyond training, plaques and
honors.

. lurriness in Composite ratings

The consignment and value rankings are not composite ratings. Breaking down these rankings
into one-by-one constituents would supply more clarity. For demonstration, the consignment
ranking makes no mention oI the percentage oI late, early or over deliveries.

Other Criteria to include in the analysis:-
The Achieving Excellence Program is an ideal way to analyze how a supplier is Iunctioning, but
it would be beneIicial to include an assessment oI how or what Deere & Company could do to
aid the supplier. Historical inIormation oI how the supplier has perIormed, its current Iinancial
situation and the current market state or trends should all be considered as part oI the appraisal oI
a supplier.

Q2.Do you think complex parts has performed adequately over the past year? hy or why
not? hich of the Deere supplier assessment classification should be assigned to complex
parts?
Ans. Using the AEP evaluation, it is tough to work out how Complex Parts has presented over
the past year. While the supplier has Iinished exceedingly well, it has Iurthermore Iinished very
badly, producing in an ample perIormance. Overall, the supplier has presented well,
accomplishing a value ranking oI 666 and a consignment ranking oI 8650, both well underneath
the perIect Ior a Partner classiIication.
UnIortunately, the past quarter displayed a pointed Iall in Complex Parts` presentation,
accomplishing a consignment ranking oI 155,000, higher than the perIect ranking Ior a
Conditional supplier. Looking nearer at other localities oI the AEP, Complex Parts obtained a
tepid tally with both aIIirmative and contradictory Iacets in all categories. The supplier was large
at next through on proposals Ior value enhancement and was very proactive, but had little
designs Ior cost decreases or how to eradicate diIIiculties producing in late deliveries. The
business took an hardworking Iunction in holding up with needed speciIication alterations, but
did not come back telephone calls to the clientele service assembly and cost Deere tremendously
with every week expedited deliveries. Complex Parts excellently internalized the Deere Quality
Plan components, took a lead Iunction in getting the components applied, and advanced value
presentation over the past year, but did drop behind in using the design in its new Iacility, now 5
months into operation.
Finally, Complex Parts` R&D department was very outstanding with some proposals
producing in new merchandise programs, but the provided components did not rendezvous cost
goals which decreased Deere`s projected earnings, and new components extracts were not being
obtained in a timely Iashion.
Using the data obtained Irom the AEP evaluation, Complex Parts should be classiIied as
a Key supplier. While there are numerous worrying localities, the outstanding presentation in
most localities oI the AEP will not be ignored. The supplier should not keep its Partner rank, but
it should be identiIied as an signiIicant provide string oI connections member.

Q3. If you were a member of the supplier evaluation team, what alternative courses of
action would you consider for complex parts? hat recommendation should the team
make to the project manager?

Ans. There are two major techniques oI activity that the evaluation group can address in
considers to Complex Parts. The supplier can be downgraded to a Key or an Approved supplier
or it can keep its present classiIication as Partner with a re-evaluation in six-months. Due to the
reduced Iacets in every class inside the AEP evaluation, Complex Parts should be downgraded to
a Key or an Approved supplier. The business was granted a presentation abstract every quarter
and should not be shocked that its classiIication has dropped. The best alternate course oI activity
would be to permit the business to hold its Partner grade with the provision that it will be re-
evaluated in six months to work out the Iuture oI the relationship. Included in each alternate
should Iurthermore be the appraisal oI the other two likely suppliers. Each business should
obtain an in-depth evaluation and classiIication Ior evaluation with Complex Parts.

The recommendation the team should give to the project manager is that, while Complex
Parts is actually a Partner supplier to Deere & Company, its Iuture rests in the hands oI the
supplier evaluation team. Complex Parts has presented amply over the past year, but dropping
Iacets show that the business may not be adept to reside up to anticipations in the approaching
year. With an evaluation oI other likely suppliers and by permitting Complex Parts to keep their
supplier classiIication with an interim evaluation in six months to work out their destiny, they
will either boost presentation or risk demotion.

Deere & Company strives to evolve long-run connections with its suppliers and a Iast
conclusion Iounded on only a year`s worth oI Iacts and numbers, and more expressly a low-
perIorming quarter, would be detrimental to the company`s goals. More data desires to be
encompassed in the evaluation in alignment to gain the Iull image oI how the supplier is
operating. With this added data, Deere & Company will be adept to IulIill its aim oI a better
supplier relationship.


Q. hat are the short-term and long-term implications of your recommendation?

Ans. There are both short-term and long-run signiIicances to these recommendations that
should Iurthermore be advised beIore producing a decision. In the short-term, Complex Parts
would be paid Ior its high presentation, but would identiIy the require Ior improvement. The
supplier would either enhance its worried localities or it would risk being downgraded or
replaced. Deere & Company stands to misplace incomes due to expanded charges in the short-
term iI the supplier does not rapidly advance its perIormance.

In the long-run, Deere & Company would display that the AEP is taken gravely and that
long-run supplier connections are a Iactual aim oI the company. It would Iurthermore veriIy how
dedicated the business is to accomplishing excellence and how proceeded enhancement is a
crucial part oI the company`s goals.




Case 2. C1 INDUSTRIES

Q1. hat are all the issues here, from both C1I`s and Caolinn`s perspectives, that need to
be researched by Ms.Stanley?


Ans. The Iirst issue oIIered Ior CJ Industries was its agreement with Great Lakes.
Though CJI had adequate surplus capability to ramp up output on the components to be provided
in the Great Lakes` agreement, they were not certain about the proIiciency or enthusiasm oI
Heavy Pumps to boost their output oI the bilge pumps. The diIIiculty is that CJ Industries had
marked the agreement with Great Lakes Iormer to any considerations about ramping up output
with Heavy pumps.

The next issue Ior CJ Industries was iI Heavy Pumps could assurance consignment oI 50 pumps
per month to one oI the CJI warehouses. This had been the one piece that had 'slipped through
the cracks on the agreement with Great Lakes, and it now loomed as certain thing that could
conceivably put the agreement in jeopardy. This could have been stopped by evolving and
holding value and presentation annals notes on Heavy Pumps supplier evaluation. Continuing,
there were Iurthermore not less than two other bilge propel manuIacturers.

Ms. Stanley had also not known speciIically about the quality history oI the bilge pump,
although he could not remember ever getting one returned by great lakes Ior any reason. Ms .
Stanley needs to research on the track record oI Caolinn Pumps as Iar as quality and capacity to
deliver are concerned . She also needs to study the two other suppliers to check on their
capability as Iar as business requirements are concerned . On the other hand, she needs to do a
comprehensive inventory oI the current competencies oI CJI`s production team



Q2. Should C1I continue to use Caolinn to supply pumps, should it make them in house,
should it contact one of the suppliers, or should it do some combination of this alternative?
Discuss the advantages, disadvantages, and risks of each of these alternatives.


Ans. CJI Industries could make the bilge pumps in-house. CJ Industries had the capability to
make this propel, but it would need a primary capital buying into oI approx. $500,000 as asserted
by the CJ Industries output supervisor, along with the clariIying out oI some space, and the
chartering oI three added employees. With this capability, a cost advantage investigation should
have been presented on the bilge propel the make or purchase conclusion is a strategic
decision. With only about nine months remain until the contract start date, it would be tight, but
the production manager had assured Chris that CJI could do this, iI needed. I think CJI should do
some combination oI these alternative they should contact with Caolinn Ior the supply oI pumps
with a Iormal agreement with them because this a $10 Million worth oI contract which deIinitely
impact on the Iinancial position oI the company.




The advantages are iI they signed a Iormal contract with Caolinn, CJI can easily meet the
demand oI Great Lakes Ior 5 years. The disadvantages are the company might have some extra
cost on their expansion which I think they should do some cost analysis in detail. The risks are
CJI is not sure whether Caolinn can supply 50 pumps per month and the CJI has not so much oI
quality history oI Caolinn.

Well what I think CJI should signed a Iormal agreement with Caolinn Ior the supply oI Pumps
on regular basis i.e. 50 pumps per months.


Q3. How can C1I assure continued contract compliance and additional contract business
from Great Lake in the future?

Ans. CJI can assure continued contract compliance in such a way they had a week or two to
hammer out a plan to assure contract compliance with Great Lakes. II CJI go Ior both options by
making pump s at home and signed a Iormal contract with Caolinn Ior the supply oI 50 pumps
per months. And additionally contract business Irom Great Lake in the Iuture can be enhance by
regular supply oI pumps Ior 5 years and should have a good aIter sales services without any
quality issues.








Case 3. DON`T SHOOT THE MESSENGER

Q1. If you were in 1eff`s position, what would you have done to prevent to preserve
relationship?

Ans. II I was in JeII`s position, I will conduct brainstorming with the suppliers so that cost-
cutting ideas would be created in such ways. I will also exchange ideas, discuss my view poins
with the suppliers, and give them importance. I will be a good listener and listen their ideas just
giving importance myselI. DeIinitely just investing $20 to $30 million in the plant is a big
investment and Ior that, I will give importance to the suppliers and give them a historic data oI
cost and the company Iuture plans Ior cost reduction so that according to it they make necessary
amendments to be cost eIIective Ior us and Ior their company too.


Q2. Describe the ethical issues involved.

Ans. The ethical issues were suppliers were pressurized by JeII just to do what he says i.e. Irom
cost-based reduction to a simple request Ior price reduction. JeII believed he would be violating a
trusted relationship based on the heroic collaborative eIIorts to meet demands over the past year.
By sending a letter to suppliers to reduce prices upto 10 is not applicable Irom my side, i.e.
suppliers should be inIormed at least 50 days beIore such price reductions.


Q3.hat is your assessment of the general manager approach to meeting target cost
objectives?

Ans. My assessment would be that general manager adopted an enterprise management style so
that all supplier should know the Iuture requirement oI the company and in this way general
manager can reduce their prices well beIore. DeIinitely, reducing 10 in 30 days would be
diIIicult Ior the company but most company had done this, which is 4 to 5 suppliers represents
80 oI the cost oI material he purchased and Iurther 5 additional price reduction in Iuture.

By implementing an enterprise management, style general manager can meet the target cost
objective by conducting a weekly meeting and discuss about the company Iinancial positions and
cost reduction strategies can meet the target cost objectives. This implied that suppliers had
padded prices and Iurther reductions could have done all along. In eIIect, the suppliers who had
complied with the Iirst request were to be penalized.




Case . Early Supplier Integration in the Design of the Skid-
Steer Loader

Q1: Suppose there are 100 potential suppliers, how many suppliers do you think should
ideally be integrated in the early skid-steer development process? hy that many or that
few?

Ans: iI suppose there are 100 suppliers, we must get only about 15-20 suppliers in the early
phase oI product development phase in the Deere Company. The rational behind it is that iI we
are involving a large number oI suppliers in the product development phases, then it would be
costly and it will delay the product because the consensus will be hard iI we get large number oI
supplier. Yes, large number oI supplier also will contribute but it will change the time period oI
launching oI a new product. Second rational is that all suppliers are not contributing equally as
beneIicial to the company. So we have to concentrate only on Iew suppliers that we know its
creativity and their contribution. In later stages we can incorporate some other to reIine our new
product with little discretion iI they are making but they would now that what our Deere
Company wants to make. So they will do what Deere mission and vision are going to achieve. So
there should be only selected suppliers in the early stages oI Skid-Steer development program.

Q2: Are there trade-offs in terms of the number of suppliers to integrate? If so, what are
the trade-offs?

Ans: yes, there is trade-oIIs in integration oI suppliers. As in the case, the suppliers are pretty
good contributing in the product development process and in manuIacturing process decisions. It
gets lower cost structure, Iaster product development cycle time and reduced operational
ineIIiciencies that get a company with a competitive weapon. So they contributes a large part in
the company success. But involving too many suppliers, it will delay the time oI the new product
process and the initial cost would be higher. it may happen that it can where we want to
contribute as competitive leader in the product, we may be Iollower due to delay in the Iight oI
new product development. So the trade-oIIs should be analyze to get the optimum suppliers that
could best contribute to our company.


Q3: Are there trade-offs among the identified criteria? Can you tell? hat do you need to
know to better answer this question?

Ans: yes, there are some other lacking in the identiIied criteria. It is only emphasize on the
internal good and bad but there must be some other Iactors to analyze like secrecy, mutual trust
and privacy. Suppliers are also the part oI competitive intelligence that are now called as
Corporate Intelligence (CI). So the company that lead the industry must also analyze the
suppliers on the basis oI privacy, good will in the market, Iinancials, employees morale,
contracts with other organizations, speed, delivery, productions, creativity etc . These are the
main criteria that to be analyzed in the selection oI suppliers integration.

Q: would you mandate weekly meetings as an inter-organizational policy to structure the
interactions? If not, how can you facilitate communication?

Ans: I would like to mandate the weekly meetings to structure the organizational policy that to
structure the interactions among the employees only as they are our own assets. They should
know about the organizational directions that where to go. While on the part oI suppliers, it
would depend on the situation and Iirst we needs to research internally and then proceeds to
create our own needs that what our goals are. Then we have to communicate to the suppliers. We
must also have a close relationship with the suppliers and we also have to direct them about our
needs and they must also have to work because they are our partners. So they our interactions
would be beneIicial. It would be two layers research Ior mutual upgrading. So here we can use
ERP/EDI and Internet to Iully communicate with our suppliers. Yet iI need to meet, we have to
meet with their delegations and share our policy inIormation that cannot harm. So there would be
an integrated supply oI parts and Iull cooperation among our partner.


Q: what role can information technology (IT) play or should it play in structuring these
interactions? hat concerns do you have with the suggested IT role?

Ans: InIormation Technology is now not new, but more than IT. Now it is on the gradual growth
with the Iast speed. The companies that emphasize on not ERP but on advance ERP will grab the
opportunities and will have a competitive advantage. Now ERP is a need not want. So the ERP
can play a vital role to have integrated inIormation system that collaborates with the customers,
marketing, production and suppliers. So it will keep all the necessary inIormation updated all the
time and so it will enhance the visibility oI inIormation also to the suppliers that what company
need now and when it would need what on certain time. It will also enhance the new product
development process at the company and would make pools oI new ideas.

Q: If the criteria you developed suggested that you integrate supplier X into the product
development process for the skid-steer loader, what reasons might lead you to choose to not
so or to reduce the convenience of doing so?

Ans: iI I selected a supplier X what Nolah have the criteria Ior the selection, ye I would get it.
but later when it cannot IulIill other criteria about the supplier relations with other like
employees strikes, creativity, slow delivery speed, privacy etc that I will like to kick-oII
Supplier X oI the integrated supplier list iI it cannot overcome on these lacking.

Q: hat do you think might be hurdles to overcome at Deere to integrate suppliers into
the early phases of the product development process?

Ans: Note: Question 7 is also solved in question 1 answer.

Case . Supplier Development at Deere & Company

Q1: Is Deere tactics is appropriate one?

Ans: the tactic that employed is appropriate only Ior the Deere Company and it is not appropriate
Ior the Excelsior. In simple words this tactics making the Excelsior to participate the
improvement oI manuIacturing process that would be very costly. It might harm the excelsior
and it might lose it business due to such capital investment. But on the other side, it is good Ior
the Deere that it would improve eIIiciency oI the product improvement in Deere Company. So it
will lead Deere to have lower cost oI product and it sale would increase in long run. So it is
beneIicial Ior Deere and risky Ior Excelsior.

Q2: what are the implications of this tactic and the consequences, positive and negative?

Ans: the tactic that can get positive are given as

1. Product improvement
2. Kaizen
3. Would increase eIIiciency at Deere and Excelsior
4. Would create long term mutual relationship b/w two partener companies
5. Would reduce the price oI Deere Company to 5 in raw material.
6. Deere would sell at lower price
7. It would gain competitive price and having higher share oI market
8. It would also increase the production at excelsior

The tactic that have the negative eIIect

1. It would be costly Ior Excelsior to implement
2. It would take a long time
3. It might lose business
4. It would create an signiIicant obstacle Ior Deere to develop a new supplier
5. It hurting the relationships with Deere that Excelsior will think that Deere
emphasize on selIishness.
6. Deere is making money at the cost oI Excelsior.

So these are the pros & cons oI the tactic that Deere is like to implement.

Q3: If this is not an appropriate one, then what are the other alternatives?

Ans: this is not an appropriate alternative. So Deere has to Iind some other alternatives that
create mutual trust. For that it has

1. To make a plan that helps Iinancially the Excelsior to improve its manuIacturing
process. It is the opposite oI the tactic.
2. It also has to send it eIIicient experts to analyze the system oI Excelsior and make
recommendations and make a plan that it make improvement with out lose oI
Excelsior business.
3. Deere can merge or invest in Excelsior.
4. Deere may Iind another supplier that equipped with greater eIIiciency and
advance manuIacturing system.

There are the three main alternatives that Deere can employ to get it partner with success
and support it own system with greater eIIiciency. So it will make a mutual trust between them
and will create mutual beneIits. It might lower Excelsior more than 5 in Iuture. Further more, it
will create their relationship Ior long time. The last option is also a good option but it will be
diIIicult to Iind an appropriate partener Ior Deere & Company. But Iirst it will take a long time to
Iind and then its total integration with Deere philosophies would be taking a long time. It might
Deere that not asking Ior lowering in price.

So the above alternatives and all their consequences are given. So now which best satisIy the
needs oI the Deere & Co would be the best. According to me, options one and three are best
options than other two options Ior the Deere Company.

Q: Is this an ethical approach?

Ans: On the beneIit level it might contribute to Deere Company, but it is not ethical. It is same as
Deere can increase its shares at the expense oI Excelsior Company, which already Iacing
diIIiculty due to its manuIacturing old process. So it will be an extra burden on Excelsior. There
is also a risk that Deere might leave it aIter it improvement. So Excelsior is in stagnant age.
Deere has to support its partner not exploit the Excelsior. So this tactic is not ethical.

Q: hat are some of the implications as far as human resource management is
concerned? How can the group members better manage the consensus building to present
an undivided front to Excelsior?

Ans: the problem that in perspective oI human resource as Iar as concerned that is they will think
that the company is not taking care oI partner. It creating itselI as a selIish company that
management is only interested in its own proIit. So it will loose the morale oI employees.

On the basis oI disagreement b/w the group members that Montgomery not wanting its
supplier anger, while Benjamin and Joshua Wilson are in Iavor oI the agreement. Here Robert
Jammone is relatively neutral about the agreement. But what atlast Benjamin thought that it
would eIIectively work? Now it has to be redesigned so as to make the agreement Ior mutual
beneIit. It will solve problem internally as well as externally with group member`s agreement at
all.

Case Analysis . Connecticut Circuit Manufacturers
Connecticut Circuit ManuIacturers was established in 1980 and specialized in Circuit
board design and assembly. It produce Contract product and Design product. It was producing
contract products Irom the start , in speciIied quantities. CCM expected to sell 4000-5000 units
and growth oI 10 and Ior next year too. Design product were started to manuIacturer six
months ago and sale Ior current year is expected to have 100-500 units and it would be 40 per
annum growth in its product line. Yet it has three local competitors and its own management
cares its employees
Production
CCM assembled circuit boards in batches, and production lot size was based on
conIirmed customer order. It is diIIerent due to customer order and material requirements.
Raw Material
Raw material include
1. Integrated circuits
2. Resisters
3. Printed circuit boards
4. Connections
5. Cable and
6. Fasteners

It is the responsibility oI buyer to ensure availability oI raw material. Recently the capacity is
utilized due to addition oI second shiIt Ior design products and in February, it would be increased to 7000
units.
Suppliers
Jack Vebers is the senior buyer and other two junior supporting him, at CCM. There are twelve
suppliers are in close relationship with CCM and now it want to increase it number oI suppliers. As he
want to keep the supplies at absolute minimum.
Customer
CCM had Iive customers in which three were Ior Contract Product and two were Ior Design
product. They have long time relationship with CCM and they are very sensitive Ior quality, on-time
delivery and price.
Design products were mainly conscious oI prduct quality and customer services and better relations. So it
was expected that design product would lead to additional contract product business.
The problem raised when Customer E and A both called for late delivery.

Analysis:
As what we have analyse in case is that there are Iive customers and here two customers are
complaining about the late delivery. Inventory is held when the customer order receives. So it creates a
slack in the supply operation. So the buying Iunction starts aIter conIirmed customer. As they have long
term relationship with CCM. Secondly CCM have only twelve suppliers that are not able to have accurate
deliveries at 100. So the main problems
Problems
1. Buying Iunction start when customer order received.
2. Suppliers are Iewer in numbers.
So through the analysis oI all the case, CCM needs to reengineer their supply strategy because iI
they are working on conIirmed customer orders then they need to have more suppliers at least. Because
then it would be price, quality and delivery bases more competitive and its customer will be satisIied at
all. Similarly iI the number oI suppliers are Iew, then it need to have saIety stocks in the inventory. So to
keep inventory at zero with Iewer suppliers, it is the main reason. So there are two choices that CCM
needs to get either saIety stock or increase the suppliers.
Solution
The best option here would be to increase the number oI suppliers that it would maintain JIT as well as
competition in suppliers with respect oI quality, price and delivery which will ultimately increase quality
at least 10, decrease price 5 and 100 oI on time delivery. So CCM needs to reengineer its supply
strategy.

Case Analysis : Abbey Paquette
Abbey was Iounded in mid 1920, a group by group oI Iive talented people. It process and
reIine extrude aluminum tube into continuous helical Iin tubing worked as extremely eIIective
component in large scale heat exchanger. The extended heat transIer surIace oI these tubes
enabled the group`s heat exchangers products to Iind applications in the pulp and paper, power
generation, electrical transmission and distribution and other process related industries.
Abbey Paquette, Purchasing Agent Ior Pentz International, has been instructed by the new
President to reduce annual inventory carry costs Irom two and a halI million to zero by year end.
Upon Iurther investigation, the Iirm`s database was Iilled with outdated, inaccurate inIormation.
Much oI the inventory still on the system was not actually in stock.


Analysis
From the case inIormation, Abbey Iound that the inventory is overload and there
is mismanagement about the inIormation related to the material that is required Ior the
production. There is also a signiIicant problem oI supplier relationship that is minimal
with its suppliers. There Iore the current system oI the inventory is not accurate and the
system is not tracking it careIully. There are also problem with the employees that they
are not trained. Similarly the quality is reduced without problem being Iixed. So that the
main basic problem that Abbey Iacing there are given as Iollowing problem

Problems with Abbey Paquatte
O How to cut inventory carrying costs?
O Lack oI internal and external inIormation systems
O Poor inventory controls
O Poor communication with employees
O No system to classiIy inventory
O No knowledge oI required inventory
O No Iorecasting
O May have resulted in unnecessary spending & stockout costs
O No analysis/system to measure carrying costs

Goals

On the other side the goal is given by the prisedent to the purchasing department that are
given
4 Immediate reduction oI inventory
4 Goal: Zero inventory
4 ReIrain Irom reordering, until it is absolutely necessary
4 Utilize J.I.T.

So in the existing system it could not be Iixed and the purchasing Iunction that top management
are always keep in eyes are not appropriate with the goal. To achieve the goal, the organization
needs to
Established ERP system having the Material Management Module
There must be a bare code reader system that track the record
The production and inventory should be integrated
The customer order and material management must be integrated that keep
the inventory at low position.
So in meeting with the president, the Abbey should discuss the existing problem and she
also have to give the related solution Ior the Iixation. So then the goal will be achieved.
Otherwise, iI these systems are not integrated then it would be very hard to reach the said goal.
Because there are various problems exist with the material management.


Case Analysis . Sedgman Steel

Sedgman Steel Inc, was established in North America had a diversiIied manuIacturing
based company, with annual sale oI $ 1.7 billion The Syracuse operation s employed 125 people
and supplied cut-length steel tubing and sheets to automotive and automotive parts companies.
Customer gives speciIications and the operation is on the basis oI JIT system. Steel
purchasing was a vital part and its responsibility was with the plant. The annual purchase oI raw
material was about $65 to $70 million. The material cost was reIlected in the selling price oI the
steel sheets.

Analysis:

As Sedgman steel have 15 suppliers and about dozen oI customers. There policy was to
have inventory Ior two weeks. It has also given responsibilities to Fehr Ior warehouse services
under the contract. The ware house was about 50000 square Ieet. Fehr was a third party.

Problems
O Two weeks inventory policy
O 20 Million on hand inventory
O Warehouse overloading ( some trucks were waiting Ior unloading)
O Shortage oI employees in ware house
O Loose material management
O Over production than the customer order
O Involving third party as Fehr services
O Fewer numbers oI suppliers
Goals
O To have production on JIT basis
O Cut oII inventory to minimum or zero
O To have accurate record oI the inventory
O Saving on inventory to get margin in sale

So Irom the analysis oI the above problem Iacing by Sedgman Steel is severe to its operations
and the availability oI the inventory. II Sedgman is taking action to solve these problems then
they need the Iollowing recommendations which are given
Recommendations

Eliminate the ware house
Integrate the material management with the operation and sale
The customer and material management is to be integrated Ior order.
For this they would need EDI/ERP to Iully integrate the organization with the suppliers.
Sedgman also needs to increase the suppliers to have minimum inventory and integrated
operation

So Alice has to make a Iull report to meet with the president and they have to take actions to
solve the material management problem.


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