Case
10 H e a r t l a n d & C o m p a n y 1
Introduction
On April 19, 2008, Walter A. Walsh, Supply Management Manager for Heartland &
Company, met with one of his buyers, Olivia Newcomb, in his office. They discussed her
Heartland & Company cost reduction goals for bearing #B02326620. After the meeting
Mr. Walsh began wondering if changes should be made to the way suppliers were being evaluated, if price premiums should be paid to suppliers for performing at a higher level and how business should be allocated among suppliers performing at different levels.
These were issues needing further consideration.
Founded in 1875, Heartland & Company is one of the U.S.’s oldest industrial organizations. It manufactures agricultural and construction equipment as well as commercial and consumer lawn care equipment. Today, Heartland & Company does business in over
100 countries and had sales in excess of U.S. $12 billion in 2007.
Bearings2
Bearings are devices that allow constrained relative rotation or linear movement between two parts. The purpose of bearings is to allow motion with a minimum of friction. Friction creates heat and wear of adjoining parts. Bearings are commonly found in furniture drawers, all types of engines and at the intersection of moving mechanical parts.
An example of primitive bearings is the use of tree trunks laid down under heavy stones in prehistoric times. Two common types of bearing include roller (cylindrical roller) bearings and ball (spherical roller) bearings. Bearings can range in size from nearly microscopic
(watch bearings) to very large (wheel bearings on large earthmovers).
Many of Heartland & Company’s products require bearings. Consequently, they spent approximately U.S. $90 million on bearings in 2007. Applications of bearings at
Heartland included small (approximately 0.75 inches/19 mm) in lawn care equipment through large (over 15 inches/384 mm) in large agricultural and construction equipment.
The firm has a
Introduction
On April 19, 2008, Walter A. Walsh, Supply Management Manager for Heartland &
Company, met with one of his buyers, Olivia Newcomb, in his office. They discussed her
Heartland & Company cost reduction goals for bearing #B02326620. After the meeting
Mr. Walsh began wondering if changes should be made to the way suppliers were being evaluated, if price premiums should be paid to suppliers for performing at a higher level and how business should be allocated among suppliers performing at different levels.
These were issues needing further consideration.
Founded in 1875, Heartland & Company is one of the U.S.’s oldest industrial organizations. It manufactures agricultural and construction equipment as well as commercial and consumer lawn care equipment. Today, Heartland & Company does business in over
100 countries and had sales in excess of U.S. $12 billion in 2007.
Bearings2
Bearings are devices that allow constrained relative rotation or linear movement between two parts. The purpose of bearings is to allow motion with a minimum of friction. Friction creates heat and wear of adjoining parts. Bearings are commonly found in furniture drawers, all types of engines and at the intersection of moving mechanical parts.
An example of primitive bearings is the use of tree trunks laid down under heavy stones in prehistoric times. Two common types of bearing include roller (cylindrical roller) bearings and ball (spherical roller) bearings. Bearings can range in size from nearly microscopic
(watch bearings) to very large (wheel bearings on large earthmovers).
Many of Heartland & Company’s products require bearings. Consequently, they spent approximately U.S. $90 million on bearings in 2007. Applications of bearings at
Heartland included small (approximately 0.75 inches/19 mm) in lawn care equipment through large (over 15 inches/384 mm) in large agricultural and construction equipment.
The firm has a