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1) Identify and discuss the major issue(s) in the case
Supply chain management is the coordination of all supply chain activities involved in enhancing customer value and achieve sustainable competitive advantage. It represents a conscious effort by the supply chain firms to develop and run supply chains in the most effective & efficient ways possible. Supply chain activities cover everything from product development, sourcing, production, and logistics, as well as the information systems needed to coordinate these activities. In that case, the issues that John Mower Company faces with their supply management part is regarding to get internal customers, whether in design engineering, plant engineering, administration and other in order to recognize and accept the advantages of early supply chain management and supplier involvement in the development of materials, equipment and services to be provided by outside suppliers. The keys are (1) the presence of professionals in supply management who will add value through their and their suppliers’ early involvement and (2) the use of marketing skills by these professionals to convince their customers and perhaps management of the necessity of early involvement. John Mower Company also faces a declining in market share of 10 percent. The consequences of this attributes to John’s ability to survive as a profit declined.
2) Prepare a list of advantages of the inclusion of supply management and prequalified suppliers.
Every organization is a part of one or more supply chain. Either a company provides a service, sells directly to the end customer, manufactures a product or even extracts material from earth, it is characterized within its supply chain. Earlier, organizations placed little emphasis on organizations within their supply chain network. However, supply chain management had become a forefront of management’s attention due to three major developments (Balsmeier 1996). First is the information revolution. Second is Customer demands in areas of service and product cost, delivery, quality, technology and concept of cycle time brought about by increased global competition and third is emergence of newer forms of inter-organizational relationships. These developments have nurtured the emergence and integration of supply chain approach. To remain competitive, small firms have to offer superior quality goods at the lowest prices possible. The need to minimize product costs makes effective supply chain management vital. There are costs involved in every process of the product life cycle, and it is the responsibility of management to ensure that these costs are kept low, so the company can continue to pass along these savings to the consumer. The advantage of including supply chain management and prequalified suppliers is include :
1) Reduces costs
2) Increase efficiency
3) Increased Profits
4) Reduces time to market
5) Improved quality
6) Much lower stocks and inventory
3) Prepare a list of disadvantages of excluding supply management and suppliers from the new product development process. The supply chains represents the complex relationships of an organization with its trading partners through whom it sources materials, manufactures products and delivers products or services to the customers. The supply chain links all the activities in the procurement, transformation and storage of raw materials and intermediate products, and sale of finished goods. Supply management personnel should be able to pass on information regarding new technologies and product that are available to the product design group. Supply management can aid source selection by discussing potential suppliers quality program, production capacity, lead time, delivery reliability, financial capability and management stability and strength. If the supply management and suppliers is excluding from the new product development process, hence there is some problem that may occur in the company such as:
1) Quality problem resulting in redesign, rework, retrofit and field failures
2) Cost overruns
3) Foregone cost saving
4) New product which are late to market
5) Failure in recognize problems in timely manner
6) Major scheduling problems
4) Assuming that the three executives agree on early involvement of supply management and suppliers, develop a plan to implement this new way of doing business. Integrating the supply chain to improve logistics efficiency is a key challenge. Rather than going from no involvement to high involvement on all projects all at once, many suppliers’ professionals would begin with a sample or showcase project. A member of the supply management staff who can add value, know his or her suppliers, and one who has exemplary people and team skills should be invited by Mr Steel and the new project manager or engineer to participate in a key project. This individual in turn should invite a carefully pre-qualified supplier to participate in the project at the appropriate time. Hence, for the supply chains to be successful, it should integrate the three individual business processes of procurement, manufacturing, and distribution by consolidating the sub components in each of every area.
This is one of the major cost drivers in the supply chan. Procurement cost is influenced by the way procurement decision is made, procedures adopted in the procurement process and relationship with suppliers. Procurement cost can be controlled through long-term relationships with suppliers by considering the supplier as an extension of the manufacturing facility. The philosophy of co-partnership is based on the sharing of resources and benefits on a long term basis. The major step in this process is reduction in supplier’s base and induction of a few reliable suppliers into the supply chain, who are ready to work for the firm and can align themselves with the policy framework and requirements of the supply chain.
For a lean supply chain the emphasis today is not on curtailing the processing cost through economies of scale, but by curtailing the huge inventory carrying cost resulting from mass production ahead of demand. In the past, the emphasis was on building mega capacity factories to produce standard products in millions in order to reduce manufacturing costs and flood the market with low priced products. This approach resulted in the build up of a large reservoir of finished goods, which remain unsold and dead due to its inability to respond to the changing needs of the customers. Hence, today firms instead of banking on cost reduction through economies of scale are thinking of strategies of reducing the total supply chain cost through manufacturing flexibility to rapidly respond to changing markets demands of products volumes and varieties.
Traditionally, the role of distribution in the business process is warehousing transportation. However, in the supply chain model, the major task of distribution is the management of demand. It is important to make available the right product, at the right place, at the right time, and at the least cost. Demand management covers all the activities involving anticipating the customer requirements of products and fulfill that requirements against defined customer service norms. Requirement fulfillment is done through proper distribution network. The first task in demand management is to forecast customer requirement accurately. This is done only if the firm is able to satisfy the customer as per the service level acceptable to the customer. Logistics play a vital role in understanding the demand through improved informational flow by way of quick response to customer’s demands.
5) What other suggestion can you make for improving the situation in the company? Management of The John Mower Company must be strongly committed to early supply management and early supply management involvement in all aspects of new product development. Suppliers can provide technical support technical support in the early stages of design that can decrease materials costs and improved product quality. Furthermore, early supply management and early supply involvement can reduce starts up problems and delay. When supply management join engineering in meetings with potential suppliers, it can address a price and discount issues, quantity and quality requirement, lead time and delivery schedules and financial capabilities. The supplier’s responses to this issue will allow supply management to further qualify the supplier. Besides that, management must stress standardization and limit engineering’s role in supply management issue.
The engineers should concentrate on designing a reliable and timely product; as they must work with supply management to meet that end. The engineers will be motivated to spend more time in designing and evaluation a new part. Training supply management personnel is a key to further success. The division must recognize that is needed to invest in a training program for its supply management personnel in order to receive a full benefit from its supply management system. This training such as individuals training at seminars, trade shows, or classes conducted by engineers on how to read blueprints and specification sheets. The division’s management must emphasize the important of this issue to the entire organization. With such commitment, the division will be able to develop new products in the shortest amount of time for the lowest amount of time for the lowest cost and still maintain the quality and reliability that give the company the leadership position that it once enjoyed.