need help on Purchasing & Vendor Management homework

need help on Purchasing & Vendor Management  homework 

Unit 3: Discussion – Case Studies

5

Discussion (Case Study Discussion – Ch. 11-13) 

Read the 

“Case Study: The Lear Seating Plant”

 and 

“Supply Chain Management at Bose Corporation”

 case studies. Select two questions per case and post answers in 100 or more words to the selected case study questions in the discussion area below (do not attach a separate document).

Make sure you do BOTH case study discussions. In addition, read your peers’ answers and provide three substantial comments in the discussion area below. You only need three peer comments, NOT three per case study.

Your case study questions are worth 30 points total and the peer comments are worth 30 points total (10 points each).

See the Assignment and Grading page in the Course Information Module for more information on grading and discussion expectations.

Case Study: The Lear Seating Plant

Questions:

1. What are the major changes required for Lear Seating to apply a JIT replenishment model for Chrysler? Think about the following areas:

· Product Design

· Process flow

· Production Scheduling

· Communication with customer

· Inbound receiving

· Sequencing and loading

· Transportation scheduling

2. What are the risks associated with direct shipping? What contingency elements are required to overcome these risks?

3. Can direct shipping be achieved without collaboration with customers and/or suppliers? What does it take to make this happen?

4. An important consideration that allowed Lear to succeed was proximity to its customers and suppliers. Should suppliers to Lear consider co-locating closer to its automotive customers and suppliers as well? Why or why not?

5. What does it really take to become a lean manufacturer with direct shipping capabilities?

Overview

Lear ships JIT to Warren, Michigan Chrysler truck division – located 38 miles from the plant. This is a UAW plant – but relationships with management have always been very good. This was evident as we walked through the plant – Bob, one of the general managers at the plant, has been working in the automotive industry for 37 years, previously at GM and now at Lear. He has an outstanding relationship with the workers, keeps track of all happenings that occur, and knows every associate on a first-name basis.

New Product Development

Lear has a very close relationship with Chrysler. Lear Romulus 1 is the feeder plant exclusively for Chrysler, producing seats for the Dodge Ram, Dodge Dakota, Dakota Extended Quad Cab, and Dakota AN 84. Lear sales representatives and engineers are in daily contact with Chrysler people – and many of them reside full-time in Chrysler plants. For example, design for manufacture is a critical element in seat design, which has major implications for ergonomics and efficiency (and cost) at this plant. As such, many design engineers from Lear reside permanently at the Auburn Hills design center. This is where they go to work every day! They are there to ensure that manufacturability elements are well understood by Chrysler designers – and work to engage Chrysler in value analysis and value engineering suggestions that can take cost out of the seats and make them easier to manufacture.

One section of the plant is devoted exclusively to prototype development – building future seat models for the Ram and Dakota models. Worker input is used as feedback to Chrysler regarding how easy a seat cover is to work with, and this is used to input suggestions regarding which seats are selected. This area is also used to prototype the process to assemble seats – using actual tooling. A miniaturized seat assembly process is put together – essentially a prototype plant that will be used to produce the product on a broad scale. This is also used as a big input into the upfront design process.

A big concern with seating has to do with the torque controls for bolts used to assemble seats. This is a big safety item that is of concern to the federal government automotive safety agencies. As such, all torque settings are controlled by using an automated torque gun that not only automates the process, but collects real-time electronic data that is fed into an SPC system. This data is stored in real-time to a database, that allows complete traceability of the actual torque applied to every seat produced in the plant. Because every seat is barcoded with the VIN for the truck it is going into, this allows complete traceability of failures in Failure Mode and Effects Analysis studies that may be required down the road.

Strategic Initiatives

A number of strategic initiatives are current priorities in the plant.

· Ergonomics – A number of lockout assembly fixtures are also used for all foam and frames. These ergonomic tools prevent injuries stemming from muscle fatigue and repetition within the plant. Plant-wide job rotation is also used – workers are cross-functionally trained, and move to different parts of the assembly line on a periodic basis.

· Six Sigma was implemented two years ago – and has become a way of life within the plant. It is now engrained as a way of thinking – with a focus on internal workers using it as well. Even the hourly union representatives are routinely part of six sigma improvement teams – with results documented throughout the plant.

· Supplier partnership programs are important. The foam supplier – Woodbridge – is co-located across the street. With the exception of the cut and sew operation in Saltillo, Mexico– 68% of Lear’s Romulus 1 suppliers are within a 300 mile radius of the plant. Although this was not by design – it is a critical element that improves the response time for the facility.

· The plant was built originally to supply the General Motors H-car (Caprice / Oldsmobile), but switched over to a Chrysler supply plant in ’93-94. Although GM decided to transfer their H-car production to Arlington, Texas during this period, the Chrysler contract was won at almost the same time – and the plant was idled for only one week during which time it was completely transitioned over to the Chrysler product! This was a very hectic time, to say the least.

Plant Operations

Plant operations are fairly stable:

· 254 hourly workers – 39 salaried – running 2 ten hour shifts. Recently, Chrysler indicated that the Dodge Ram volume will be increasing by 30% this year – which will be accommodated by running an additional shift on Saturdays. A third shift is not yet required.

· 57 suppliers to the plant – 68% are located within 300 miles. This is a big selling point for additional business to Chrysler – as this can significantly avoid disruption.

· Plant ships 10-15 trucks worth of outbound materials to Chrysler per shift – with 7 trucks rotating on this schedule. Vinyl supplier to the plant is Sandusky – fabric supplier is Guildford.

· Lear receives 12 weeks advance build requirements from Chrysler – with a 10 day frozen schedule of firm requirements. However, this 10 day frozen schedule can vary by sequence – and the plant receives 862 ship schedules direct from the Chrysler assembly line daily.

· The plant has 13 receiving docks – with trailers full of completed seat covers from Saltillo, Mexico arriving every day, and trucks leaving for the Chrysler plant located 38 miles away. Inventory turns about every two days – for annual turns of approximately 140. The plant can product about 1200 assembled seat units (front and back) per day – the Chrysler usage is on average 1100, providing a little extra capacity. However, the assembly line’s start and stop times are completely aligned with Chrysler’s plant times – “When they run weekends, we run weekends – if they start early, we start early”.

· There are 408 components in the seat – the plant generally has a two day supply of trim covers, and 1 days’ worth of other components. However, the plant has less than 1 shifts’ worth of foam on-hand, as it receives foam from the feeder plant directly across the street. Inventory turns are at 145 – with about 2-4 hours of finished goods inventory on-hand.

· Fabric arrives in trailer loads from Saltillo, while frame assemblies and other components are drop shipped and located in racks (see Figure 2). Material flows to one of two assembly lines – front seats or back seats. In the first part of the operation, the frame is assembled into the foam, the fabric/vinyl stretched over the foam/frame, and the different seat elements (seat, back, attachments, etc) assembled in the electronic torque area. Various custom fixtures and tooling make this part of the operation ergonomically safe.

· Next, the seat components are inspected for defects – and placed into a repair/rework area if required. Product that is perfect proceeds to a baking/steaming operation – then is married, assembled, and palletized, and packaged for shipment. The pallet proceeds to an overhead area for sequencing.

Production Scheduling, Sequencing, and Delivery

· The plant receives an electronic broadcast of vehicles coming through the Chrysler plant in Warren – which specifies the leather options, vinyl options, fabric options, style, etc. With 852 shipments arriving, this amounts to one vehicle identification number (V.I.N.) every 53 seconds. There is a 5 hour delivery window from the time the scheduled order is received, during which time the plant must build, sequence, and deliver the seats to the feeder location on the Chrysler assembly line (see Figure 1). There is no finished goods warehouse – they ship direct from the plant to the Chrysler assembly line, with all of the seats sequenced in the right order every time.

· Travel time from Lear’s dock to the Warren Truck assembly is on average 1 hour and 15 minutes – faster if the truck driver goes quickly through the 38 miles! However, traffic and accidents in the Detroit Metropolitan area are frequent – and there is always the danger that an accident or traffic snarl will hold up a delivery.

· A contingency measure is to have a total of 7 trailers in rotation – with 54 seats loaded in sequence on the truck. Sequencing is done on the second story automated sequencing material handling equipment. Seats come off the line, and are transported to the second floor in a lift. The sequencing is done using a “last in – first out” logic. Seats are sequenced in reverse order – from number 54 at the back of the trailer, with number 1 at the front – so that when they are delivered to Chrsyler, the first seat coming off the trailer is number 1.

· As seats come off the line, a barcode on each palletized seat identifies where it is in the V.I.N. sequence provided by Chrysler – and an automated material handling system positions each completed palletized seat assembly (front and back seats on the same pallet for Quad trucks) onto a set of rollers that are exactly the size of a trailerload. When a full trailerload is complete, they are all moved automatically down to the first floor and loaded onto one of two trailers waiting on the dock. Thus, if one seat must be taken off the assembly area for a quality discrepancy or re-work at one of the poka-yoke inspection areas, it is quickly repaired (or another produced if the problem cannot immediately be fixed in time), and sent up to the sequencing operation without disrupting the scheduled trailer shipment. With the Quad front and back seats on a single pallet, the back seat must be manually attached to the front seat with a fixture. All pallets are plastic and recycled from the Chrysler plant.

· The plant has not been late for a shipment to the Chrysler plant in over three years. This can be a very tricky situation. In most situations, the truck drivers can radio ahead to one another to monitor traffic conditions to take alternative routes to Warren. However, it is a constant juggling act. For example, two weeks ago a truck full of seats was stuck in traffic on I-94 due to a major accident. As a contingency measure, the plant went into an emergency mode and began duplicating the seat sequence that was on the truck. They were over half-way through this process when traffic began moving again – and the truck arrived at the Chrysler plant with 20 minutes of supply before shutting down the plant. However, the plant manager ascertained that “shutting down Chrysler is “not allowed”.

· The production rate is 68 trucks per hour, or approximately 1200 per day (1160 in a ten hour shift).

Fabric and Vinyl Input Requirements

· There are a variety of truck models, as well as various styles for each model, that must be sequenced.

Dakota – 1 trim style X 2 colors

Dakota Extended Cap – 1 trim style X 2 colors

Dakota AN84 – 2 trim styles X 2 colors

Ram – 6 trim styles X 3 colors

· This is a total of 26 different SKU’s that must be sequenced on the plant. By comparison, this is actually a relatively simple plant to run. Some other Lear plants that support GM run multiple models, and within each vehicle there are multiple types of different seats with different styles and colors. In general, GM tends to have a proliferation of different styles compared to Chrysler. This represents a big opportunity for simplification. A major issue that is coming to the forefront of OTD with GM, as well as with Chrysler, is to create opportunities for simplification and “design in” through greater collaboration in the product development process.

· Fabric styles are an important consideration in the design process. In general, Lear prefers fabric that stretches in both directions, not just one direction. In the latter case, the product tends to “knuckle” in the seams. As such, the circular knits are the preferred fabric. After the final assembly, the seats must go through a steaming and baking process. The steaming causes the fabric to stretch tight, then lay flat, removing seams. The baking process does the same thing for the vinyl/leather. Both processes are optimized to a temperature that does not negatively affect the properties of the fabric or vinyl/leather.

· Another important issue is the napped fabrics. Naps are sensitive to touch, and sit-up when handled. This is often perceived by customers as a defect, as the darker colors in particular appear to be a different color when the nap is sitting up. Customers often think this is a “stain” and complain to the dealers.

· Because of these issues, Lear is increasinglyu trying to “design in” the fabric during the design process. This is very difficult to do – the people in the design studio at Chrysler are very particular about having suppliers influence their design decisions – but “at least we are now talking to them about the handling properties of the fabric and vinyul”. However, the plant manager also noted that the Chrysler design staff “try to pit us against one another (other suppliers)”.

· A major property of automotive fabric is the wear factor. Thus, quality of fabric is an extremely important element. In general, the plant wants to work with fabric that is easy to pattern and work with – understanding that plushed fabric is generally required for the higher end vehicles. Sewing properties are also important – another consideration often overlooked by design people.

Supply Chain Design

· Fabric is produced by Guildford, vinyl by Sandusky (Ohio) – with then shipped to a laminator. Travel time for vinyl is 3 days to Southwest Laminators, located in El Paso, Texas.

· From there, it is shipped same day to Saltillo in Mexico, where the fabric is cut and sewn. Another 3 days of shipping time and it arrives at Romulus. The fabric arrives in packets of ten similar seat covers, tied together in a bundle. Each truck contains 1 ½ days of supply for the plant. Each truck contains enough seats to cover the requirement projected through the Chrysler frozen schedule – which requires a bit of scheduling on the part of downstream suppliers.

PAINTSHOP

Point of use

Seat Assembly

Truck comes

off assembly line

5 hours1.5 hours

Vehicle Scheduling –Dodge Trucks

Broadcast V.I.N

To Lear Romulus 1

Build and

Sequence

3.75 hours

Ship to Warren

1.25 hours

Staging
Loading
Sequencing
Inbound -Holding
Outbound -Trailers
Re-work
Prototype
Shop
Front Seat and Trim Assembly
Back Seat Assembly
Steaming
& Ovens
Final Assembly
& Back Seat
Marriage

_1104178947.ppt

PAINTSHOP
Point of use
Seat Assembly
Truck comes
off assembly line
5 hours
1.5 hours
Vehicle Scheduling – Dodge Trucks
Build and
Sequence
3.75 hours
Ship to Warren
1.25 hours

_1093458965.ppt

Inbound – Holding
Outbound – Trailers
Re-work
Prototype
Shop
Front Seat and Trim Assembly
Back Seat Assembly
Steaming
& Ovens
Final Assembly
& Back Seat
Marriage

Unit 3: Discussion – Case Studies

5

Discussion (Case Study Discussion – Ch. 11-13) 

Read the 

“Case Study: The Lear Seating Plant”

 and 

“Supply Chain Management at Bose Corporation”

 case studies. Select two questions per case and post answers in 100 or more words to the selected case study questions in the discussion area below (do not attach a separate document).

Make sure you do BOTH case study discussions. In addition, read your peers’ answers and provide three substantial comments in the discussion area below. You only need three peer comments, NOT three per case study.

Your case study questions are worth 30 points total and the peer comments are worth 30 points total (10 points each).

See the Assignment and Grading page in the Course Information Module for more information on grading and discussion expectations.

SUPPLY CHAIN MANAGEMENT AT BOSE CORPORATION

Bose Corporation, headquartered in Framingham, Massachusetts, offers an excellent example of integrated supply chain management. Bose, a producer of audio premium speakers used in automobiles, high-fidelity systems, and consumer and commercial broadcasting systems, was founded in 1964 by Dr. Bose of MIT. Bose currently maintains plants in Massachusetts and Michigan as well as Canada, Mexico, and Ireland. Its purchasing organization, while decentralized, has some overlap that requires coordination between sites. It manages this coordination by using conference calls between managers, electronic communication, and joint problem solving. The company is moving toward single sourcing many of its 800 to 1,000 parts, which include corrugated paper, particle board and wood, plastic injected molded parts, fasteners, glues, woofers, and fabric.

Some product components, such as woofers, are sourced overseas. For example, at the Hillsdale, Michigan, plant, foreign sourcing accounts for 20% of purchases, with the remainder of suppliers located immediately within the state of Michigan. About 35% of the parts purchased at this site are single sourced, with approximately half of the components arriving with no incoming inspection performed. In turn, Bose ships finished products directly to Delco, Honda, and Nissan and has a record of no missed deliveries. Normal lead time to customers is 60 working days, but Bose can expedite shipments in one week and airfreight them if necessary.

The company has developed a detailed supplier performance system that measures on-time delivery, quality performance, technical improvements, and supplier suggestions. A report is generated twice a month from this system and sent to the supplier providing feedback about supplier performance. If there is a three-week trend of poor performance, Bose will usually establish a specific goal for improvement that the supplier must attain. Examples include 10% delivery improvement every month until 100% conformance is achieved, or 5% quality improvement until a 1% defect level is reached over a four-month period. In one case, a supplier sent a rejected shipment back to Bose without explanation and with no corrective action taken. When no significant improvement occurred, another supplier replaced the delinquent supplier.

Bose has few written contracts with suppliers. After six months of deliveries without rejects, Bose encourages suppliers to apply for a certificate of achievement form, signifying that they are qualified suppliers. One of the primary criteria for gaining certification involves how well the supplier responds to corrective action requests. One of the biggest problems observed is that suppliers often correct problems on individual parts covered by a corrective action form without extending these corrective actions to other part families and applicable parts.

Bose has adopted a unique system of marrying just-in-time (JIT) purchasing with global sourcing. Approximately half of the dollar value of Bose’s total purchases are made overseas, with the majority of the sourcing done in Asia. Because foreign sourcing does not support just-in-time deliveries, Bose “had to find a way to blend low inventory with buying from distant sources,” says the director of purchasing and logistics for Bose.

Visualizing itself as a customer-driven organization, Bose now uses a sophisticated transportation system—what Bose’s manager of logistics calls “the best EDI system in the country.” Working closely with a national less-than-truckload carrier for the bulk of its domestic freight movements, including shipments arriving at a U.S. port from oversees, Bose implemented an electronic data interchange (EDI) system that does much more than simple tracking. The system operates close to real time and allows two-way communication between every one of the freight handler’s 230 terminals and Bose. Information is updated several times daily and is downloaded automatically, enabling Bose to perform shipping analysis and distribution channel modeling to achieve reliable lowest total cost scenarios. The company can also request removal from a terminal of any shipment that it must expedite with an air shipment.

This state-of-the-art system provides a snapshot of what is happening on a daily basis and keeps Bose’s managers on top of everyday occurrences and decisions. Management proactively manages logistics time elements in pursuit of better customer service. The next step is to implement this system with all major suppliers rather than just with transportation suppliers. In the future, Bose plans to automate its entire materials system.

Perhaps one of the most unique features of Bose’s procurement and logistics system is the development of JIT II. The basic premise of JIT II is simple: The person who can do the best job of ordering and managing inventory of a particular item is the supplier himself. Bose negotiated with each supplier to provide a full-time employee at the Bose plant who was responsible for ordering, shipping, and receiving materials from that plant, as well as managing on-site inventories of the items. This was done through an EDI connection between Bose’s plant and the supplier’s facility. Collocating suppliers and buyers was so successful that Bose is now implementing it at all plant locations. In fact, many other companies have also begun to implement collocation of suppliers.

Assignment Questions

The following assignment questions relate to ideas and concepts presented throughout this text. Answer some or all of the questions as directed by your instructor.

1.
Discuss how the strategy development process might work at a company like Bose.

2.
What should be the relationship between Bose’s supply management strategy and the development of its performance measurement system?

3.
Why is purchased quality so important to Bose?

4.
Can a just-in-time purchase system operate without total quality from suppliers?

5.
Why can some components arrive at the Hillsdale, Michigan, plant with no incoming inspection required?

6.
Discuss the reasons why Bose has a certificate of achievement program for identifying qualified suppliers.

7.
Bose is moving toward single sourcing many of its purchased part requirements. Discuss why the company might want to do this. Are there any risks to that approach?

8.
Discuss some of the difficulties a company like Bose might experience when trying to implement just-in-time purchasing with international suppliers.

9.
Why does Bose have to source so much of its purchase requirements from offshore suppliers?

10.
What makes the JIT II system at Bose unique? Why would a company pursue this type of system?

11.
Why is it necessary to enter into a longer-term contractual arrangement when pursuing arrangements like the one Bose has with its domestic transportation carrier?

12.
Why is it important to manage logistics time elements proactively when pursuing higher levels of customer service?

13.
What role does information technology play at Bose?

14.
What advantages do information technology systems provide to Bose that might not be available to a company that does not have these systems?

15.
Why has Bose developed its supplier performance measurement system?

16.
Do you think the performance measurement systems at Bose are computerized or manual? Why?