Printed Circuits Components for a JIT Factory
Acacia is a major producer of graphic plotters
Marketing forecast estimated annual volume to exceed 60,000 units
Management determined that the newest unit, 440A, is an excellent choice for JIT process
Supply Managers w/ technical backgrounds were assigned new product development
Suppliers were requested to use bar-coded labels for inventory and kitting purposes
Delivery for most JIT parts = 1 week (instead of usual monthly delivery)
Parts considered for outsourcing = 4 integrated circuits (IC’s), 7 diodes, 3 transistors
Monitor Inc selected as single-source for 14 PC components
During the production process, Monitor was not able to comply w/ JIT requirements
Monitor-supplied components were mislabeled, out of spec and often behind schedule
5 diodes can not be resourced, Monitor is the sole manufacturer
2 alternate suppliers have been identified; capable of supplying 4 IC’s and 3 transistors
Alternate suppliers equipped to have deliveries ready in approx. 1 month
Alternate suppliers’ costs are 10% higher than Monitor, Inc.
Monitor Inc has struggled to meet required specifications and has not delivered shipments on time. (MAJOR PROBLEM)
Management realized that Monitor’s focus was on high-volume production.
Monitor is the sole source for a majority of the diodes needed.
Why was Monitor selected as a single source for all 14 PC components, when they’ve never supplied parts to a JIT customer before?
What are the risks of using other sources for the transistors and IC’s?
Deliveries MUST be highly reliable to prevent stockouts and line shutdowns.
If Monitor is a small biz, Acacia could consider entering into a Mentor Protégé agreement and assists Monitor with process development and lean manufacturing.
Acacia could transition a portion of the orders for the IC’s and transistors to alternate suppliers that are...
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