Avion, Inc. Case Essay
Avion, Inc. Case
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?
They are Foster Technologies as the supplier, and Avion, Inc. as the buyer. To maintain a smooth flow of material, it is the supplier’s responsibility to comply with the buyer’s requirements and standards, and provide the correct quality and quantity of product and service in a timely manner. On the buyer’s end, responsibilities include: to work internally within organization to determine organizational needs, to develop requirements and standards for the supplier, to select the right supplier, to comply with the supplier’s requirements (making on-time payment etc.), and to overlook the supplier’s performance. What initially appears to be the problem? What really is the problem(s) in this case?
The problem initially appears to be lacking of material quality and delayed delivery caused by the poor performance and communication from the supplier, Foster Technologies. The real problem in this case is caused by extremely poor planning, ineffective communication, lack of alternative supplier sources and unsuitable organizational structure within Avion, Inc. How easy is it to switch suppliers? What could complicate a firm’s ability to with to a new supplier? It is not easy to switch supplier at all, especially when a firm has never prepared any alternatives/candidate suppliers.
Depending on the type and quantity of products needed, and required delivery time, it might be less easy for a firm to switch. For example, time constraint and/or large demand will significantly narrow down possible suppliers to switch to; and a special product that requires customized machinery or tools in the production process, will also complicate the switch. What does it mean to get to the root cause of a problem?
It means to not only to fix the problem at the moment, but also to develop a solution and strategy to prevent the problem in a long run. For this case in particular, it could mean a redesign of the organizational structure of Avion, Inc., changing management and consolidating procurement, production and materials management teams. What does it mean to be a good customer? 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. I think a good customer gives clear and consistent instructions and expectations of the products and service receiving, is active in communicating with the supplier to ensure accurate delivery of the instructions, and comply with the supplier’s requirements.
Between suppliers and buyers, credibility goes both ways. Like discussed in class, it is not buyers’ world anymore. There is no longer only competition between suppliers, but also between buyers as well. To be a good supply chain customer, a firm must be making payment on-time and meet any other requirements of the supplier, convey the firm’s wants and needs clearly and consistently to the supplier, and perform measurements on supplier’s performance and maintain an open and consistent communication. Explain the role of performance measurement in managing supply chain activities. Performance measurement in managing supply chain activities is extremely important.
1. The results are fact-based rather than subjective. They are clear and quantifiable, which means they are easy to follow, to evaluate upon, to communicate, and to support an objective decision making. 2. When suppliers know that they are monitored, and what they are monitored upon, it can help them to make better performance. 3. The results can easily be used to compare performance of suppliers. Why can changes within a supply chain disrupt the normal flow of goods and services within a supply chain? Organizations within a supply chain are linked together, and a supply chain is composed of interrelated activities. Goods and service, finance, and information flow in a set direction and sequence. Each step is necessary for the next step to happen. Therefore, any change within a supply chain can affect the normal flow of goods and services.
Why might Avion want to reduce the lead times on its purchased materials and components? I think one reason is to reduced the time of cash invested in purchased materials and components, hence to increase Avion’s cash flow. Just as they are a customer to Foster Technologies, there must be customers on the other end of Avion, Inc. that might be demanding after delivery. Why do firms single-source contracts?
Single-source contracts can be cost effective. It will be lower cost to source a high volume of supply from one vendor, rather than source less volume from several vendors. Another benefit of single-source is that, it is easier and requires less resources in maintaining a relationship with a vendor. I assume firms that choose to single-source contracts are usually smaller in size, and they use this way to be conserve resources. Develop an action plan for Avion that addresses the issues presented in this case. Be prepared to fully explain your recommendations.
1. Susan Dey should work with Avion’s production group regarding monthly projected volumes, delivery time frame, and requirements about altering final material release quantities. 2. Bill Mifflin should begin identifying alternative suppliers, in case contract with Foster does not continue. 3. Kevin O’Donnell should work with Foster’s production manager, firstly, to establish a sincere communication; secondly, address issues written in the memos and letters from the production manager and seek solutions; thirdly, discuss about next step to take and future production volume. 4. Avion, Inc. should redesign management and structure within its organization, to prevent similar problems in the future.