Agile Electric: Quality Issues in a Global Supply Chain
1. Case Introduction (Sairam)
1.1. High level information (the story)
1.2. Supplier tiers (show through diagram who the players are)
1.3. Process through tiers (what’s the manufacturing process and where do the players fit in the process)
2. Issues - Chapter 7 (Roberto), 8 (Priya), 9 (Dennis)
2.1. Should Automek pass on its losses (incurred due to failures and delays) to the supply chain? To what extent?
2.2. Should Automek invest in a knowledge transfer process to its Tier 2 (Agile) and 3 (ECPL) suppliers?
2.3. Who should manage the PCB assembly supplier?
2.4. Should Automek increase the margins for its tiered suppliers so they feel improving processes would be worthwhile?
2.5. Should Automek just source locally in North America? This process will take a year (and other resources)--how should this be managed?
3. Final Recommendations (Roberto)
Chapter 9 Key Points
· Supplier management involves the continuous measurement, evaluation, and analysis of supplier performance using tools to measure, manage, and develop the performance of its supply base
· An organization must decide which performance criteria are objective (quantitative) and which are subjective (qualitative)
· What to measure:
· Delivery performance
· Supplier meeting quantity and due-date commitments
· Quality performance
· Evaluated against previously specified objectives, track trends and improvement rates
· Comparing similar suppliers
· Cost reduction
· Comparing a supplier’s cost against other suppliers within the same industry or against a baseline or target price
· Using the last price paid in a year as the baseline price for comparisons during the next year
· Supplier Scorecard Example
· Five different qualitative factors (assume equal weighting for simplicity) along a five-point scale
· Scorecard adds the five scores and divides by the total possible points to arrive at a percentage of total points
· Suppliers are ranked by the percentage of total possible points earned
· Routine reporting of supplier performance relative to goal should happen monthly or quarterly
· Buyers should also meet with suppliers on at least an annual basis to review actual performance results (past-due supplier receipts) and identify improvement opportunities
· Supply base rationalization is the continuous process of identifying how many and which suppliers to maintain
· Often involves eliminating those suppliers that are unwilling or incapable of achieving supply management performance objectives, either currently or expected in the near future
· Organizations must develop supplier evaluation and measurement systems to identify the best-performing suppliers and then develop stronger business relationships with those suppliers
· Advantages of a Rationalized and Optimized Supply Base
· Buying from World-Class Suppliers
· Use of Full-Service Suppliers
· Reduction of Supply Base Risk
· Lower Supply Base...