Dep/Gard Case Study

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MAIN PROBLEMS:

Richard Binish is the new purchasing manager at GARD, succeeding Mike O’Leary. If DEP are to continue supplying polymer products to GARD, changes will be required.

In 3 ½ years from now, DEP will be expected to provide exact day delivery to GARD from 10 days of when the order is placed, and this needs to occur 96.5% of the time.

Currently, DEP’s performance cycle ranges from between 9 and 20 days. DEP need to aim to reduce this performance cycle to 10 days and below to retain the business in the long term.

DEP is efficient with order collection and production, but builds unnecessary delays in warehousing and shipment/distribution because of an attempt to gain economies of scale.

There are sometimes delays in production, because various chemicals may be out of stock under DEP’s current supplier arrangements, as well their raw materials policy.

MAIN RECOMMENDATIONS:

1) DEP can change their criteria for determining chemical component suppliers based on performance delivery time and consistency as opposed to price. Alternatively, they could keep 9 days stock of each chemical, as opposed to 7.

2) DEP could look at utilizing the services of 3PL providers for their distribution to GARD in future.

3) Instead of taking steps 1&2, DEP can continue with their existing operations, but will need to keep finished goods inventory in their warehouse, ready to be shipped to GARD, when an order is placed.

EXPECTED BENEFITS AND POTENTIAL RISKS:

The obvious benefit for DEP by following any of the above recommendations is that they will continue to hold GARD as one of their long term customers, and through customer retention will most likely improve sales revenue because of Binish’s application of the 80/20 rule.

Recommendations 1 & 2 will allow DEP the additional benefit of minimizing the purchasing cycle and customer accommodation cycle. Taking such measures will provide insight into newer, quicker ways of streamlining...
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