Case Background
A supply problem with Heavy Pumps, a supplier that supplies a crucial component for their goods, is currently affecting CJI. This business specializes in the development of water treatment equipment. Heavy Pumps’ deliveries have been erratic, slowing CJI’s production. Mr. Ashby, a recently hired buying manager, has been tasked with investigating and providing a solution. CJI must keep its significant contract with Great Lakes to preserve and guarantee future business.
Major Problem
The fundamental issue is how CJI can preserve its contract with Great Lakes while ensuring a steady and dependable supply of pumps to prevent production delays. CJI’s inability to meet its responsibilities to its clients makes this issue crucial, as it could damage the company’s standing and financial results (Padiyar et al., 2022). It also presents a strategic problem because CJI must weigh the expenses and difficulties of managing multiple supplier relationships or producing the pumps internally against its need for a consistent supply.
Possible Solutions
Implementing More Control
Heavy Pumps might still be CJI’s supplier, but with stricter rules in place to ensure timely delivery. The benefit of this approach is that it preserves the current partnership and doesn’t necessitate a substantial adjustment to how things are done. The drawback is that Heavey might not accept the terms or be able to uphold them regularly. Careful negotiation and oversight would be necessary for this strategy to ensure that the new terms are being followed.
Internal Production
CJI might consider manufacturing the pumps internally. As a result, they would have total control over the pump supply. However, this approach would demand a significant investment in tools, instruction, and a workforce. Additionally, it can take attention away from their primary task of making water treatment equipment. This option would also require rigorous cost-benefit analysis to ensure that the investment in in-house production would be financially viable over the long term.
Changing the Vendor
CJI might consider getting the pumps from a different vendor. Investigating and screening potential suppliers for quality, dependability, and price would be required. The benefit is that it could resolve the supply problem. The drawback is the time and money needed to locate and switch to a new supplier. This system would also require a backup strategy if the substitute supplier encounters the same problems Heavey did (Padiyar et al., 2022).
Combined Solution
CJI may consider combining the options above. For instance, to guarantee a steady supply of pumps, they may use several suppliers, including Heavey. While managing numerous supplier connections would be necessary, it may serve as a fallback if one provider is unable to deliver (Padiyar et al., 2022). This varied strategy might give CJI’s supply chain the most flexibility and security, but it must be carefully managed to assure efficacy and cost-effectiveness.
Choice and Rationale
The suggested course of action is D, which combines using several vendors. This strategy provides a backup plan and mitigates the risk of relying on a single source. Additionally, it introduces a competitive factor among suppliers, possibly motivating them to enhance their services and continue receiving orders from CJI. The possibility of production delays brought on by a lack of supply is greatly minimized. However, it can require more monitoring (Padiyar et al., 2022). With this option, CJI may continue working with Heavey while exploring other potential suppliers. Additionally, it allows CJI to leverage supplier competition to negotiate better terms with all of them.
Adopting this multi-supplier approach also enables CJI to innovate and continually improve. Working with numerous suppliers provides CJI access to a wider variety of concepts, tools, and methods, which can enhance the effectiveness and quality of its own products. This plan may also enhance CJI’s ability to recover from unexpected setbacks, such as a supplier going out of business or a crisis in the global supply chain. In essence, this strategy not only resolves the immediate supply issue but also positions CJI for long-term success in a business environment that is becoming more complex and uncertain.
Implementation
To implement this approach, CJI must first investigate potential suppliers and evaluate them based on cost, dependability, and quality. Once contracts have been agreed upon with one or more suppliers, they should ensure they include penalties for late deliveries. CJI should continue to work with Heavey while revising the agreement’s parameters to incorporate more stringent delivery requirements. Lastly, CJI should establish a system for managing relationships with multiple suppliers, which includes monitoring delivery performance and routinely assessing and adjusting the supplier mix as necessary.
In addition to taking these actions, CJI should consider establishing a reliable supplier performance management system. This system monitors and assesses each supplier’s performance based on key parameters, including delivery time, product quality, and issue responsiveness (Padiyar et al., 2022). Supplier performance would be reviewed regularly to identify any issues and address them promptly.
Reference
Padiyar, S. V. S., Vandana, V., Bhagat, N., Singh, S. K., & Sarkar, B. (2022). Joint replenishment strategy for deteriorating multi-item through multi-echelon supply chain model with imperfect production under imprecise and inflationary environment. Rairo-operations Research, 56(4), 3071–3096. Web.