Part 2 - Supply Issues Case
MGT147 31512 Principles of Supply Chain Management
Case 3) Don’t shoot the messenger
1. If you were in Jeff’s position, what would you have done to preserve relationships? If I were in Jeff’s position, I would first have thanked my suppliers and expressed gratitude to them for being willing to work closely with the company in not only designing the new product line, but in then reducing supply prices by the asked for 10 percent. I then would have tried to explain the position of the company and how the price decreases were essential to ensuring a successful product launch. Explaining why the additional cost reduction was requested may not make the actual price cuts easier to make, but it should help somewhat when it comes to maintaining the relationships with the suppliers. Hopefully Jeff has treated them honestly up until now and has a level of trust built up with them. 2. Describe the ethical issues involved.
It seems to me that the main ethical issue is in the letter that was sent to suppliers on July 5th. The implicit threat that business with suppliers would be cancelled if the cost demands were not met is not consistent with the type of relationship that Jeff had built with his suppliers, based on honestly, integrity, and hard work. In addition, Billing Equipment was asking for previously agreed upon contracts to be re-opened and re-negotiated in order to make the price cuts, essentially going back on their own word. 3. What is your assessment of the general manager’s approach to meeting target cost objectives? My assessment of the general manager’s approach to meeting target cost objectives is that it is not the right way to approach the issue. I don’t like the strong-arm tactics, with the thinly-veiled threat of cancellation if they don’t comply. The General Manager should have involved the suppliers and been more open with them on the need to reduce overall costs for the product line. He could have explained the long-term benefit of partnering with Billings Equipment, even if there were a financial sacrifice in the short term. As the case pointed out, in essence, the suppliers that complied and tried to work with the company were punished by being asked to cut prices even more.
Case 5) John Deere and Complex Parts, Inc.
1. Discuss the strengths and weaknesses of John Deere’s Achieving Excellence Program. Consider and discuss other criteria to include in the analysis. John Deere’s Achieving Excellence Program is designed to develop long-lasting supplier relationships through an evaluation process that promotes communication, trust, cooperation, and innovation. I think that overall this is a very good program. It encourages suppliers to work with John Deere and collaborate to improve cost, quality, and timeliness of delivery. It includes some objective ratings that can directly measure supplier performance, and could be used to help identify areas of improvement. It helps to form long-lasting relationships with suppliers, which is in John Deere’s best interests. Some of its weakness are subjectivity, that it has no concern for what is good for supplier, and may have a difficult entry level since you only receive training if you rate highly in the system. Subjective metrics like the Wavelength and Technical criteria are more difficult to measure accurately. Subjective measures leave things open to interpretation. Personal bias or even misunderstanding can result in an artificially low or high rating in a subjective measurement. The criteria would need to be very clearly defined. The AEP program is also benefits John Deere primarily, rather than the suppliers. Suppliers that rate highly do get additional John Deere training, but even that is in the best interests of the John Deere Company. While John Deere is a reputable company, and desirable to do business with, the main reward for performance excellence in the AEP program is a plaque, maybe...
References: Joel D. Wisner, K.-C. T. (2012). Principles of Supply Chain Management. Mason, OH: South-Western Cengage Learning.
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