Supply Chain Question
Course Project – Overview
The Course Project will cover a fictitious component part known as a Hydraulic Cylinder Assembly End Block on the path to being released.
Purchasing as a BUY part to select, evaluate and decide on the source of supply for the company.
The company requires you to have the part made to print and in inventory at our factory in 100 days at production volumes. A timeline of activities is necessary for you to be able to track progress against and ensure that the correct processes are followed by you and the Supplier. You will categorize this part, find possible sources of supply in Juarez, Mexico to evaluate the suppliers you find, submit the specifications, and take a bid. You will evaluate the bid, negotiate the price, establish quality standards, pilot, build the part, and submit samples to the internal quality group for confirmation. Then, you may award the business, start production, and determine the mode of transportation, ensure regulatory compliance with import, and have inventory in place by Day 95 of the 100-day task.
The estimated usage for this part is 20,000 units per year. Cost Management has given you a budgeted target price based upon known elements of steel type and price per pound, the perceived standard machine shop processes and tolerances and clear zinc plating process, typical machinery, labor, and profit totaling a purchase price of $9.75 USD each. This spend is worth $195,000. Your approval level is $50,000, requiring you to present your sourcing decision to the vice president of procurement in order to place the business. You must present a case to the Vice President that supports your decision to work with a given supplier and why.
Work on this every week, one entire section at a time.You will want to work ahead. This paper will take you 5 or more weeks to complete. The title page and executive summary is due by the end of week 5.
You will need to be creative and fill in the blanks. It is okay to pretend and make up the company names, quotations, scorecards, and whatever else you will need to make the recommendation to the company.
It is expected that you might not have any experience or familiarity with this activity. This is meant to be fun, informative, and challenging. This will take you through the book and the lectures for information. You may want to share ideas with each other. Just remember, weekly progress is a necessity, but there is only ONE final submission in Week 8.
Build it as you go!
Guidelines- Week 5
The content of the Sourcing Report should be divided into the sections corresponding to the Report Components shown below.
Title Page
Executive Summary
Note: Approximately 1.5 to 2 pages (not including the title page) single-spaced, 12-point font
You will use a real or hypothetical company that will need the use the hydraulic cylinder in its product.
You will need to be creative and fill in the blanks. It is okay to pretend and make up the company names, quotations, scorecards, and whatever else you will need to make the recommendation to the company.
Student is to realize that the bottom line is what the executive team is looking for. Their expectation from you is that you did your due diligence.
It is important to include all of the pertitant information in the executive summary (quality needed, price, etc). Remember, you are asking for $195K of company $ for this spend.
In the summary, you will explain the:
STRATEGIC FIT – Quality-Cost and Delivery
- How this decision helps us achieve current CORPORATE OBJECTIVES
- Allows us to meet BUDGET and MARGIN requirement
Any Critical Data
Note now of any known issues that can impact the company in the future.
- Additional items needed for the week 8 presentation:
- Milestone and Timeline of Activities
- Internal
- External
Sources of Supply
Outline an interview of prospective suppliers, including activities that will lead to a good decision.
- Check References
- – Understand testimonials.
- Visit plants and distribution centers to access their true capabilities.
- Review their Quality Standards.
- Access Management Skills and Experience.
Review Basic Financials.
Review Quality Programs.
Review their Operations and Technology.
Supplier Evaluation Criteria and Scoring Matrix (Develop this as a table.)
Capability- Machinery, Labor, Knowledge
- Financial Standing- Capacity and Hours of Operation
- Location of Transportation and Labor to Facility
Testing Capabilities
Storage – Warehouse
Quote Submission
- Your Quote Format can be fictitious, but it must include several elements.
- Spec
Volume
Terms and Conditions
Confidentiality
- Title Transfer
- Warranty
- Target Price (if you chose to share this)
- Dates
- Due Date of Quote
Due Date of Samples
Production Shipping Deadline
Date of Production
- Supplier Quote should contain all of the above, plus
- Price
- Discounts
- Packaging
- Any Other Terms and Conditions
Lead Times
Production Lot Size and Quantity Breaks
Any Special Handling Needed
Supplier Selection and Product Acquisition
- Completeness of Quality, Cost, and Delivery
- Certifications and Practices
- Agreements on Price of Cost Adjustments due to Raw Materials and Currency
- Preliminary Award
- Must Produce Sample Parts off of a Production Process
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