Complex Parts, Inc. has been a supplier of specialized parts to Deere & Company for the past 10 years, with annual sales of $3.5 million. Over the past year the supplier has fallen behind in its ability to satisfy the guidelines outlined in Deere’s Achieving Excellence Program (AEP), a supplier evaluation process that promotes communication, trust, cooperation, and continuous improvement. Due to this decline, one of Deere’s supplier evaluation teams, consisting of four employees, has to make a quick recommendation about the future relationship between Deere & Complex Parts.
The Achieving Excellence Program (AEP) evaluates, on a yearly basis, key parts of how a supplier is performing. It focuses on five key areas: quality, delivery, cost management, wavelength and technical support. The program classifies each supplier, from best to worst, as either Partner, Key, Approved or Conditional. AEP effectively assesses the supplier’s commitment to its relationship with Deere in such areas as enhancing communication, lowering costs, and improving design. The biggest drawback to the AEP is that it does not consider the full history of the supplier’s relationship to the company. The evaluation only focuses on the past year and not the historical highs and lows of productivity. The program also does not take into account the current economic conditions and how the market is performing. It examines what the supplier is doing to increase profits for Deere, but does not explore what Deere could be doing to help the supplier, beyond training, plaques and honors. The Achieving Excellence Program is an ideal way to analyze how a supplier is functioning, but it would be beneficial to include an assessment of how or what Deere & Company could do to aid the supplier. Historical information of how the supplier has performed, its current financial situation and the current market state or trends should all be considered as part of the appraisal of a supplier.
Using the AEP...
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