Case Study 1: Blozis Company
MKTG 444: Supply Management
Statement of Problem:
The president of Blozis Company must find a way to unify communications between the supply, engineering, and production departments on setting up standard requirements for keeping better track of ordering and sending out materials to suppliers.
Overdue payments on materials that have been received by Blozis Company-no receiving report made up and supply only passes bills for payment after receipt of the receiving report. Processing invoices for which there are no corresponding orders-no “confirming orders” from the supply department being requested by the expediter.
The Blozis Company was a manufacturer of highly technical equipment. The $16 million gross sales of the company consisted primarily of units designed to customer specifications by the engineering department and produced on a job-shop basis by the production department. The engineering department also designed highly complex control equipment of general industrial application to be sold by the Blozis Company on an off-the-shelf basis.
The supply department consisted of the supply manager, a buyer, and two clerks who handled typing and filing. Although many of the items purchased were of a highly technical nature, the supply manager had no technical training. Through the years, he had picked up a fair grasp of the engineering terminology used in the field, but had made no attempt to keep up with the specialized design problems of the company. The buyer was a woman who was known in the trade as “hard-boiled but big-hearted” and was generally considered a competent general supplies buyer. Without great ingenuity, the buyer also successfully handled technical items if detailed specifications were supplied by engineering or production.
An expediter was attached to production. He formerly had been one of the technicians in the production shop and had picked up some technical training in the Army. Because he could understand verbal descriptions of items needed by engineering and production, these groups often contacted him on ordering problems before submitting a requisition to supply. He frequently would suggest substitute components that could be drawn immediately from the stock room; or he would convert the oral description into a commercial specification, type a requisition, and submit it to the supply department. The expediter had two primary responsibilities: to pick up rush orders and to supervise the stock room. He spent about 50 percent of each day picking up items at nearby suppliers, at truck terminals, or airports, or carrying materials to subcontractors, to platers, or to various carriers for shipment. In the stock room, a clerk kept up the facilities, issued supplies to engineering and production personnel, and kept stock records. The clerk reported to the expediter, who reviewed the stock records, prepared requisitions for items at their reorder points, and disposed of items that were turning too slowly or had deteriorated.
Frequent problems had arisen when suppliers claimed long overdue payments on materials that had been received by the Blozis Company. In these cases it always developed that someone had forgotten to make up a receiving report. Since supply only passed bills for payment after receipt of the receiving report, several sizable discounts had been missed and the company had been substantially tardy in meeting the net date on several bills. In these cases, the expediter was always sure that the item had come over the receiving dock, and the receiving clerk was just as sure that the expediter had brought it into the plant in the back of his station wagon.
A particularly unfortunate incident had occurred when...