What are the most likely benefits of forming strategic supply alliances with Sunspot’s key suppliers? A strategic alliance between Sunspot and its key suppliers will result in a relationship based on trust. It’s key for both parties to develop and manage this “Institutional” trust or the alliance will fall. Trust will facilitate communication which will lead to less errors and higher quality, faster development times, and lower costs. Synergies created by alliances result in reductions of direct and indirect costs associated with labor, machinery, materials, and overhead.
Other benefits are reduced time to market, improved technology flow from suppliers, and Improved continuity of supply. With strategic alliances, all parties have a stake In the success of Sunspot’s business. Instructor Comments: 2. What are the disadvantages or risks of such alliances? Alliances are a resource- intense approach to supply management with several disadvantages or risks. There’s a danger the supplier will act in an opportunistic manner over time; perhaps Sunspot’s electronic systems don’t allow for optimum Information sharing and communication with its suppliers.
Mr.. Bart Lyons will have to ensure he has a supply manager who is trained in managing alliance partnerships–if not, the alliance will fail. Sunspot will have to accept added risk associated with reducing the supply base. Both the supplier and buyer need be aligned In what their ultimate customer considers valuable and In their respective villous thus able to make long term commitments to each other. Sunspot must determine if the benefits of an alliance outweigh the effort, risk. And resources required. 3. How can these disadvantages be offset?
The three most important factors in a successful buyer-supplier relationship are two- way communication; the supplier’s responsiveness to supply management’s needs; and clear product specifications. To offset the risk and/or disadvantages actions can be taken to appoint an inter-film team that receives guidance and training in the implementation of practices. Additionally, the firms can develop a communication system that addresses risks and rewards openly. They can take actions to develop and measure trust, as well as, use negotiation as a trust-building opportunity.
Addressing the risk and disadvantages early will aid in the success of the relationship and both firms. Case u y e revel 1. Discuss the basic inventory problem confronting this firm. Mrs.. Glass made the decision to reduce cost by reducing inventories without considering the problems it would cause for other functions. This created a shortage of inventory causing increased cost by using air freight to meet demand while keeping the company’s commitment to the customer for prompt delivery. 2.
Air freight bills keep growing both in numbers and in total dollar value of freight reinserted. What are the factors that have contributed to the development of this situation? Do they reflect efficient or inefficient management of supply, inventories, and production in firms such as this one? Discuss. Air freight bills keep growing because of the lack of inventory on hand to run a complete production. One factor contributing to this situation is the company’s promise of prompt delivery without regard to what the company’s actual capability is.
Another includes decisions being made by one department without consideration of the how it would affect the entire Hahn or timely information on sales forecasts. It appears the company has not yet found an organizational structure and governance process that will allow the supply chain to function effectively and efficiently. Additionally, prior to this meeting it seems there was no cross-functional approach to supply management. Decisions are being made without team synergy, input from all affected functions, and effective problem resolution.
As materials gain in importance, becoming a larger proportion of the cost of goods sold, issues such as inflated inventories, poor quality, material tock-outs, long lead times, and miscommunication provide the impetus for a movement to capture control of materials under one individual. This gave rise to the materials management approach to structuring the material portion of an organization. 3. What should Joan Glass do? Joan must start with the basics of setting up the materials management organization to provide an integrated systems approach to the coordination of materials activities and the control of total material costs.
She also needs to evolve the supply chain management structure to encompass the planning and management of all activities involved in forecasting, sourcing, and procurement and all incoming logistics management activities. It will create integrated processes throughout the organization. Setting up a cross functional team will address many supply management related activities. In addition, policy will need to be established to ensure all parties know their respective roles and expected involvement. Snouts Glass suggest a materials manager Absolutely, she should suggest a materials manager to have control and responsibility for the purchasing, planning and scheduling, transportation, and warehousing functions. This will optimize the performance of the materials system resulting in improvements in inventory levels, customer service, and communications, ultimately improving the bottom line. However, she must also suggest organizing the cross-functional team so the materials manager will have broader information to make smarter decisions. 5.
Should Glass build up her inventories? Considering the facts known in this case, she should first determine if process improvements would resolve the issue prior to accepting additional cost of larger inventories. There are several areas to consider with regard to process improvements. The traffic manager stated that Joan spreads the small orders so he can never find a way to consolidate them to get volume rates. There is probably a more efficient way to combine the small orders know that Joan knows the issues. He also stated he is having problems with outgoing shipments.
He could probably negotiate with the transportation company on incoming and outgoing shipments which could also lower air freight costs. The marketing manager is promising customers prompt delivery but has he thought to promise what the actual capability is and many customers might accept that. Joan needs access to earlier sales forecasts. There may be a way for her to get real time access. By building up her inventory, Joan has not resolved the issues. I believe she should consider the many areas of process improvements shown in this case. Case Study #3 – Pacific Healthcare 1.
What alternatives should Barney Rubble consider when addressing the problem? Since Mr.. Howell had control over the supplier selection, it suggests that the company has a decentralized purchase authority policy. Mr.. Rubble should consider if centralized or decentralized authority is best for the company. Additionally, Mr.. Rubble must consider the total cost. If he stays with Kodak, then he benefits from the maintenance and service discount. If he chooses competitive bids from different sources, then he must find another company to perform the services.
If he chooses to negotiate with Kodak, he could try for a lower total cost with a more attractive procurement situation. Mr.. Rubble will need to analysis the cost, benefits, and risks involved with all situations. Finally, Mr.. Rubble should make decisions based off of Pacific Healthcare supply strategy for medical supplies to obtain the highest quality tit the best service at the lowest overall cost. 2 Snouts Pascal’s supply polices allow Tort any meal star personnel to control sourcing decisions?
There are advantages and disadvantages of decentralized purchasing authority. One Justification for decentralized purchasing authority is the purchase of unethical odds and ends which the X-ray film may fall into that category. However, partial decentralization of purchases may be the solution. Mr.. Rubble could change the policy so that he is involved in all sourcing decisions but allow the medical staff to do the actual purchasing. By using the cross-functional team concept, all parties can have input and make better purchasing decisions. 3.
What are the advantages and disadvantages of staying with Kodak – or changing suppliers? How would you evaluate these? By staying with Kodak, the price and quality is higher and the company benefits from the maintenance and service discount. By changing suppliers, the cost would be lower but an additional requirement for maintenance and service will need to be fulfilled. On the surface it would appear that competitive bidding could fill the requirement however I believe estimations is the best option since the maintenance and service will also be required.
Pacific Heather’s objective is to find a single-source supplier for a one year contract. Mr.. Rubble’s market research should show not only the quality and costs of the film but the service and maintenance quality and costs as well. If Kodak ends up being the best value meeting the company’s supply strategy and objectives, then he should pursue a long term alliance. 4. What action could Mr.. Rubble have taken prior to Mr.. Howl’s death to obtain reduced film prices? Mr.. Rubble could have encouraged top management to establish a better policy on the purchasing authority.
He could have created cross- functional teams to better understand the departments sourcing concerns, as well as, ensured collaboration and buy in. Supply managers cannot forget their internal customers. Mr.. Rubble could have also taken advantage of Mr.. Howl’s long standing relationship with Kodak to open the doors for negotiation. Case Study #4 – The Case of the Sleeping Dogs 1. Is it an ethical problem for a supply manager to buy something he or she knows is ad for the environment, or to avoid buying something known to be environmentally safe?