Competency Analyze the external and internal drivers that influence supply chain principles.

Competency

Analyze the external and internal drivers that influence supply chain principles.

Scenario

You are a newly hired Analyst at Mitchell Consulting, a firm that specializes in providing managerial expertise in supply chain management. You are assigned as a support role to a senior consultant. Your role does not allow you to make selections for clients, but you will be evaluated for future promotion based upon your work in the analyst role. Your primary client is Johnson Motor Parts (aka Johnson). Your manager, Senior Analyst Andrea Sims, has directed you to work on this case and provide analysis and options to resolve the problems.

Johnson Motor Parts produces engines for their own brand of recreational vehicles just outside of Hammond, Indiana. They have recently experienced issues with the quality of their engines. After an internal review of inventory control processes, Johnson Motor Parts has requested an analysis of current supplier partnerships for the main drive engine bearing. They are also requesting a recommendation of the best purchasing strategy for engine bearings. Johnson Motor Parts places high priority on dependability, customer perception, and price. They are positioned at a mid-level price point compared to their competition. Value with quality is prioritized over lowest price in their industry.

Production over the last 3 years has averaged 32,000 units. The three-year projected range of demand is 28,000 to 40,000 units. Supplier communication system capabilities include the SRM-Link systems Dire and Matrix. Dire provides 24 forecasting and generates purchase orders daily. Matrix provides weekly forecasting and weekly order cycles.

Supplier Details are as follows:

Domestic Suppliers

• Barrett is a local manufacturer of high quality bearings located 4 miles from Johnson Motor Parts’ factory. Order requests are made by fax or phone and guarantee delivery within 48 hours of order receipt. They have been a supplier since 1988 of main engine bearings only.
• Dynaco supplies the main engine bearing and four other bearings to Johnson. They are ranked as the 3rd largest bearing supplier in US and do not currently sell to Johnsons competitors. Dynaco is recognized as a leader in sustainability and environmentally friendly manufacturing practices. Their CEO serves on congressional manufacturing council. They have been a supplier since 2005.

Foreign Suppliers

• Shinfu is the largest manufacturer of bearings in China and supplies to all of Johnson’s competitors. Growing at 30% annually for last 3 years, they manufacturer over 30 types of bearings. Shinfu has recently been accused of unfair trade practices by the international trade bureau. Reports have surfaced regarding labor conditions, shipping violations, and patent infringement. They have been a supplier since 2012.
• MBC is the 2nd largest bearing manufacturer in Mexico. They currently supply to Johnsons two fiercest competitors. After 10 years of sustained growth, revenues have decreased by 5% annually for last 2 years. NAFTA concerns and other political issues have resulted in negative reports regarding MBC quality and sourcing of raw materials. They manufacture ten types of bearings and have been a supplier since 2008.

Other important details:

Barrett

Dynaco

Shinfu

MBC

Cost-Delivered

$17.50

$16.00

$10.00

$13.00

Lead Time

2

4

12

7

SRM-Link Capability

Fax or Phone PO

Matrix

Dire or Matrix

Matrix

Quality

100%

95%

80%

85%

Minimum Order

50

200

2000

1000

Capacity

20,000

200,000

1 million

500,000

Location

Hammond, Indiana

Columbus, Ohio

China

Mexico

Instructions

Your manager, Senior Analyst Andrea Sims, has assigned you to recommend a purchasing strategy for bearings for Johnson Motor Parts. Prepare an executive summary that will be presented to the senior management team at Johnson Motor Parts with your analysis and recommendations.

• Describe the risks and vulnerabilities that currently exist in sourcing supplies.
• Analyze the external factors to consider in choosing amongst the current suppliers.
• Categorize the strategy of current suppliers in terms of lean, agile, or leagile. Include the benefits and risks of purchasing from each of the suppliers.
• Recommend a purchasing strategy including which supplier or combination of suppliers from whom to procure the bearings. Include your rationale for your recommendation.