Supply Chain Management Case Studies

Case Study #1 – Randall Corp.
1. What is the relationship between financial soundness and supplier performance?
Quality of product produced and shipped can become weaker when suppliers experience financial issues stemming from contractual performance. This happens primarily when flawed products are shipped to meet present currency requirements. Because of the fact that management is highly interested in cash flow, deliveries start to get behind schedule. Late deliveries or bad quality product is not acceptable so financial ratios must be monitored and acted upon professionally. 2. What action should Bill take?

Bill should try to work out fiscal issues with Qualco. He should also look into contract modifications that will meet everyone’s requirements. Qualco is a very strong supplier for the Randall Corporation and better performance could be achieved by strengthening relations between them. It would be in Bill’s best interest to help fix Qualco’s fiscal problems since he has 40% of his total subassembly volume invested in them. Bill will have to be careful not to offend Qualco management or any other vendor that may see his actions as favoritism towards a specific company. Bill’s alternative option would be to remove his funding from Qualco and redistribute to other qualified suppliers. He wouldn’t have to worry about losing money on his investment with Qualco if they went bankrupt. Case Study #2 – Blozis Company

1. If you were the Supply manager, what recommendations would have made?
There are several opportunities for improvement in this scenario. Currently roles and responsibilities in the supply organization are not laid out very well. Employees must know, understand, and be trained in their specific duties to achieve top performance. The supply organization has limited control over materials once arriving from the supplier. Receipts for supplies are not documented properly, and no paper trail is present for movement of merchandise. Supply management also needs improvement. They do not support requisitions, no interpretation of technical specifics are explained, outsiders are issuing purchase orders, time management of orders is subpar, payments have issues because of missing paperwork, receiving inspections are not in compliance with company standards, and all areas appear to be unorganized.

I would improve the supply processes at this company by defining the role and responsibilities of the expediter, which would be follow up and expediting orders. I would ensure all shipments are delivered to the receiving clerk. Another task should include keeping sufficient inventory on hand. Interpreting technical specifications should be handled by the supply department. Personnel should be trained and knowledgeable enough to answer basic questions to help achieve company goals. The supply manager should bear the responsibility for processing complex specification type requisitions. With regard to the expediter, he or she should perform follow-up services and expediting responsibilities as needed.

The receiving clerk should always receive incoming merchandise and provide inspection to ensure the products are within company standards. Verification of orders versus receipts should also be performed accurately and in a timely manner. The requisitioner is then responsible for picking up the goods and signing a receipt. Accounts payable should then receive a copy of all receipts to ensure timely payment is made. All receipts and supporting documentation should be kept on file for future reference or investigation. 2. At what points does this supply department exhibit weak control over materials and overall supply management performance?

The supply department exhibits weak control over materials where product is picked up and delivered from its suppliers. There is no consistency in receipt documents being created for receiving product from supplies or when the expediter picks up products from the supplier for delivery to the company. Additionally no paper trail exists to show delivery of product was ever received.

The department has weak control over supply management performance with the entire supply system. Examples include requisitions being submitted without management support, having outside personnel explain the technical specifications for complex orders, and the expediter is permitted to issue purchase orders, 3. How could these weaknesses be corrected?

Improvement of supply processes could be improved by defining the role and responsibilities of the expediter and ensuring all shipments are delivered to the receiving clerk. Proper inventory on hand is important as well. The supply department should be responsible for interpreting technical specifications. Training should be provided where needed. Complex orders should be done by the supply. With regard to the expediter, he or she should perform follow-up services and expediting responsibilities as needed.

The receiving clerk should always receive incoming merchandise and provide inspection to ensure the products are within company standards. Verification of orders versus receipts should also be performed accurately and in a timely manner. The requisitioner is then responsible for picking up the goods and signing a receipt. Accounts payable should then receive a copy of all receipts to ensure timely payment is made. All receipts and supporting documentation should be kept on file for future reference or investigation.

4. What activities should the expediter be responsible for in this organization?
With regard to the expediter, he or she should perform follow-up services and expediting responsibilities as needed. He should ensure all shipments are delivered to the receiving clerk. Another task should include keeping sufficient inventory on hand. 5. What is the supply department’s responsibility in establishing and interpreting technical specifications?

Supply management also needs improvement. They do not support requisitions, no interpretation of technical specifics are explained, outsiders are issuing purchase orders, time management of orders is subpar, payments have issues because of missing paperwork, receiving inspections are not in compliance with company standards, and all areas appear to be unorganized.

Interpreting technical specifications should be handled by the supply department. Personnel should be trained and knowledgeable enough to answer basic questions to help achieve company goals. The supply manager should bear the responsibility for processing complex specification type requisitions. Case Study #3 – The Big “O” Company

1. What are Barry’s legal obligations in this matter?
Contractual obligations should have been determined more clearly before the production was started. It must be known the amount of materials and completed product the customer should be responsible for. Some suppliers have the ability to produce large orders in one effort. Barry should understand the customer provided a six week forecast and that any amounts above that may be risky to produce. Legally, the customer is not bound to take anymore product than what was written in the contract.

2. Comment on the fact that Barry had already produced the full order quantity of 4,000

well in advance of actual delivery requirements.

Barry should have not jumped the gun on this production. He had the ability to produce all items in one run but it was not a good decision. Since the customer is not contractually obligated to take the entire product lot, Barry may suffer a financial loss. Barry should have made enough products to cover the six week forecast only. 3. What does the supply manager do now?

Barry could negotiate with the customer to take the best product since not all of them were defective. The new specifications could be implemented at a later date. Additionally Bog “O” does not know if the castings are actually the root cause of their problems, so this may be a good choice for both parties. Barry can wait and see the final determination of Big “O”s spec change problem and maybe not have to risk his product. Barry could also admit fault and resell as scrap metal to recover some costs. Case Study #4 – Julberg Inc.

1. What weaknesses are evident in the present supply management system?
Two problems are present material weaknesses in the current systems and the staffs’ resistance to change.

2. How can these weaknesses be minimized or eliminated by the use of a computer based operating system? Develop a plan.
The new computer based system can identify and reduce problems. Price comparison can be done more efficiently and timely, price negotiations are readily available, past performance information of previous and current suppliers to include pricing, history of quality, meeting delivery dates are available in the system. Benchmarking and file searching can be done much quicker and more accurately as compared to the old methods of hand researching through files etc…

A simple plan could include purchasing, receiving, inspecting, and store inventories. Purchases can be inputted in the department’s computer which creates and adds to the data file upon each new purchase order. Names, addresses, and full contact and business information could be stored with relative ease. When goods are received they could be entered into the computer to capture date and quantity of material received. To ensure purchasing specifications were being met, inspection results could be maintained in the computer for immediate reference. Finally, a database of current inventories can be established to provide quick reference and availability of product. 3. What is the basic problem confronting Robert Hanson?

Mr. Hanson’s biggest problem is convincing the staff that there is need for change and how the change to a computer based process will benefit the current company. 4. What should or could Mr. Hanson have done to improve communication with his subordinates?

Mr. Hanson can discuss the reasons about how changes can affect the current processes. He can explain that with the new computer-based system, savings in material cost and reduced labor will come about. 5. How could the supply personnel’s resistance to the computer be overcome?

Mr. Hanson can explain the good and bad points with regard to change with the computer based systems. He should offer the negatives as well as the positives to build the total picture. This may also build trust and confidence in Mr. Hanson from his employees. Mr. Hanson can also listen to his staffs’ concerns and issues. He should permit them to voice their concerns and converse interactively to iron out problems and concerns. This may keep everyone involved and more eager to move forward.