Scribd
Upload
4 views

Assignment 2

The document outlines an assignment focused on supply chain management, analyzing two cases: Avion, Inc. and the Global Sourcing Wire Harness Decision. It discusses supply chain components, problems faced, supplier switching challenges, performance measurement, and cost calculations for different suppliers. The assignment emphasizes the importance of effective communication, supplier relationships, and strategic decision-making in supply chain management.

Uploaded by

Mian Faiq
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
4 views

Assignment 2

The document outlines an assignment focused on supply chain management, analyzing two cases: Avion, Inc. and the Global Sourcing Wire Harness Decision. It discusses supply chain components, problems faced, supplier switching challenges, performance measurement, and cost calculations for different suppliers. The assignment emphasizes the importance of effective communication, supplier relationships, and strategic decision-making in supply chain management.

Uploaded by

Mian Faiq
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
You are on page 1/ 5

ASSIGNMENT #2

COURSE NAME: Advance Supply Chain Management

INSTRUCTOR NAME: Sir Abdullah Ather

STUDENT NAME: Mian Faiq Sultan

STUDENT ID: 14787


Case 1: Avion, Inc.

1. What parts of the supply chain are most closely involved with the situation? What
is their responsibility?

 Parts Involved:
 Procurement and supplier management.
 Materials management.
 Production planning.
 Responsibilities:
 Procurement: Evaluate and maintain supplier performance.
 Materials management: Ensure timely and clear communication with
suppliers and address changes in demand effectively.
 Production planning: Align supplier capabilities with demand forecasts
and lead times.

2. What initially appears to be the problem? What really is the problem(s)?

 Initial Appearance:
 Foster Technologies is unable to meet quality and delivery expectations.
 Actual Problems:
 Overestimated supplier capacity.
 Miscommunication and lack of responsiveness to supplier concerns.
 Significant changes in production demand and lead time requirements
without adequate supplier updates.

3. How easy is it to switch suppliers? What could complicate this?

 Challenges:
 Time for supplier identification and audits.
 Cost of retooling and contract renegotiations.
 Potential delays in production and customer delivery.
 Loss of trust and established relationships.

4. What does it mean to get to the root cause of a problem?

 It involves identifying the underlying issues rather than addressing symptoms,


such as understanding capacity limitations, communication gaps, and internal
process inefficiencies.

5. What does it mean to be a good customer?

 A good customer communicates effectively, respects supplier constraints,


provides timely feedback, and ensures fair expectations. Examples include
transparent production schedules and fair lead times.
6. Explain the role of performance measurement in managing supply chain activities.

 Regular monitoring of quality, delivery times, and responsiveness ensures


alignment with expectations. It allows early identification of issues and corrective
action.

7. Why can changes within a supply chain disrupt the normal flow of goods and services?

 Supply chain changes (e.g., demand fluctuations, shortened lead times)


create mismatches in planning, leading to bottlenecks, overburdened
suppliers, and quality issues.

8. Why might Avion want to reduce the lead times on purchased materials?

 Shorter lead times improve production flexibility, reduce inventory costs, and
respond faster to customer demands.

9. Why do firms single-source contracts?

 Benefits include stronger supplier relationships, consistent quality,


simplified management, and potential cost savings. However, it
increases risk.

10. Action Plan for Avion:

1. Immediate Measures:
 Meet with Foster Technologies to address issues and implement
corrective actions.
 Provide updated demand forecasts and improve communication protocols.
2. Long-Term Steps:
 Develop dual-sourcing or backup supplier options.
 Introduce performance metrics and regular reviews.
 Train internal teams on better supplier collaboration.
Case 2: The Global Sourcing Wire Harness Decision

1. Calculate the total cost per unit of purchasing from Original Wire.

 Unit Price: $30


 Packing Cost: $0.75/unit
 Tooling (spread over 3 years, monthly 5,000 units): $6,000 ÷ (36 months ×
5,000 units) = $0.033/unit
 Freight Cost: $5.20/100 lbs → $0.52/unit (each weighs 10 lbs)

Total Cost per Unit = $30 + $0.75 + $0.033 + $0.52 = $31.30

2. Calculate the total cost per unit of purchasing from Happy Lucky Assemblies.

 Unit Price: $19.50


 Packing Cost: $2/unit
 Tooling (spread over 3 years): $3,000 ÷ (36 months × 5,000 units) = $0.017/unit
 Freight Costs:
o Inland Transport: $200/container ÷ 1,500 units = $0.133/unit
o Ocean Freight: $4,000/container ÷ 1,500 units = $2.67/unit
o Port Handling: $1,200/container ÷ 1,500 units = $0.80/unit
o Marine Insurance: $0.50/$100 × $19.50 = $0.10/unit
o Customs Duty: 5% × $19.50 = $0.975/unit
o Transportation (Seattle to Detroit): $18.60/100 lbs → $1.86/unit
o Warehouse Cost: $1/unit (estimated)
o Other Costs: Administrative ($0.02/unit), Currency Hedge ($0.08/unit),
Visits ($0.11/unit)

Total Cost per Unit = $19.50 + $2 + $0.017 + $0.133 + $2.67 + $0.80 + $0.10 + $0.975 +
$1.86
+ $1 + $0.02 + $0.08 + $0.11 = $29.26

3. Which supplier should Sheila recommend?

 Based on cost, Happy Lucky Assemblies is cheaper ($29.26 vs. $31.30/unit).


 However, factors like lead time (8 weeks), potential risks, and demand
fluctuations must be considered.

4. Are there other issues besides cost to evaluate?

 Risks: Longer lead time, currency fluctuation, supply chain disruptions.


 Relationships: Proximity of Original Wire allows closer collaboration.
 Strategic Fit: Anticipated reduction in harness demand due to new technology
may favor domestic sourcing.
5. Is international purchasing more complex than domestic?

 Yes, it involves managing logistics, customs, communication, and geopolitical


risks. It requires careful planning and might be worth the effort for cost
savings or strategic benefits.

You might also like