Spartan Heat Exchanger Inc

Topics: Supply chain management, Inventory turnover, Supply chain management terms Pages: 8 (2603 words) Published: January 31, 2013
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* This assignment cover sheet needs to be included with each assignment. Please complete all details clearly. * If you are submitting your assignment on paper, please staple this sheet to the front of each assignment. * If you are submitting your assignment online, please ensure this cover sheet is included in front your assignment. * Please check your course information booklet for assignment submission deadline and information.| Family Name| Lim| Given Names| Hao Sheng Houson|

Program/Intake| | Student/ CT No.| CT0168067|
Module’s Name| Purchasing Management| Lecturer’s Name | Mr Victor Hoon| Assignment No. | | Assignment Due Date| |
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Name : Lim Hao Sheng Houson
Student No. : CT0168067
Class Intake : FTDipLM8
Purchasing Management
Spartan, who was a leading designer and manufacturer of specialized industrial heat transfer equipment earns sales revenues of $25M. The company has prided themselves on creating a Make-to-Order system that allows customers the option of customizing their orders to their needs. Customization is what gives Spartan the competitive edge over their competitors. Meanwhile, however, countries like Korea and Europe are currently changing industry standards. Korean firms have a low cost base and compete primarily on low cost. European firms have begun to focus on standardizing their product lines to a few high-volume products and compete on delivery lead times and price. Rick Coyne, Materials manager for Spartan, is faced with a proposal of “renewing” Spartans business strategy. Spartan would like to reduce customer lead times for finished products from 14 weeks to six weeks. Second, Spartan would like to move from an inventory turnover rate of 4/year to 20/year. Third, Spartan would like to include some form of standardization in hopes of lowering costs for purchased goods. Issues to be addressed in this procurement project

The Materials Department headed by Rick Coyne has to take a   lot of initiatives internally to incorporate various implications of the new strategy, and submit his report to his boss Max Brisco of the changes suggested by him within a week. His major challenges are change from responsive to anticipatory model, keep-up with the increased competition in the industry, inventory turns from present 4 times to 20 times, eliminate material shortages & stock outs, reduce cost of Purchase goods by 10% & Reduction in the custom lead time from 14 weeks to 6 weeks. * Raw materials procurement.

The customization strategy required the presence of many vendors and a high level of inventory in the warehouse. On the contrast, the new corporate strategy reduces variety to 3-4 basic lines for each product category will require less variety of raw material but in higher quantity in respect of each variety, but with a lower inventory average level in comparison with the present situation. This will bring down administration cost, overhead expenses and ordering costs. It will also give the company a higher negotiation power for better overall conditions, including delivery time, transportation cost, price, quality and budget. * Job shop to flow operation

The new corporate strategy implies re-engineering from a job shop method of production to...
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