The supply management department of Eagle Mfg Co has not been functioning at the optimum level, morale is low, co-ordination between departments slows and supply of materials to different departments such as operations and maintenance inefficient.
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The management of Eagle is paying its Supply Manager Ted Jones a hefty salary and expects its supply department to run smoothly. As a result pressure on the Supply Manager is high to reform processes and pull up his socks.The department has been having particular problems in the co-coordinating supply of materials for the 5.5 million robot project.
Statistics show that the department’s performance has improved in August. There were a few rejection rates and a reduced percentage of late deliveries. However, there is still massive room for improvement and department performance still has to improve if it has to meet the high expectations set by management.
The Morale of Ted’s team employed in the supply department is low. Employees are not motivated enough to perform in their current jobs or feel frustrated with the current procedures and processes. Bill Wilson one of Ted’s Senior Buyers has already resigned and accepted a higher offer in another company. John McCauley has also expressed frustration with inaccurate information presented by other departments to the supply department.
There is a poor level of communication between departments which creates supply bottlenecks and misinformation. (Burt, Petcavage and Pinkerton, 2010).
There needs to be better communication between the supply departments and other departments to ensure that requests are processed on time and misinformation is avoided.
The supply department needs to check the quality of the materials procured before dispatching to the departments.
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When negotiating contracts between suppliers and the company terms should be explicitly worded to avoid quality or service issues late on.
Estimates given to the supply department need to be accurate to avoid bottlenecks in procuring supplies of essential materials necessary in manufacturing and production.
There is a great need to build the morale of employees in the supply department to avoid an increased incidence of staff turnover and absenteeism. (Burt, Petcavage and Pinkerton, 2010).
Develop a computerized supply management system that links together the databases of all the departments within the company. This will make it very easy for employees of different departments to place orders accurately and since everything is now available on a computerized system it would be easy for managers to track these orders and co-ordinate between departments. The computerized database system would also have a module that will contain budgets input by the relevant departments. Before these figures are input they will be checked for accuracy by department managers. The purpose of a computerized supply chain management system is to provide accurate records and data for management.
This will make it easy for departments to coordinate with each other and also schedule when expected shipments of supplies are expected to come in. Re-ordering levels can be set automatically in the system and departments can prevent shortages of essential material by programming the software to automatically re-order materials when a certain level is achieved. The sourcing time for each material will be input into the system and taken into account when choosing a re-order level. Supply Department can also create an inventory database which will readjust the company’s inventory each time a department order supplies of the required material.
Set up a Quality control function within the supply department and appoint a Quality control officer. Each department will provide this officer with the quality specifications of the materials that they require. The job of the quality control officer is to check that all materials purchased against these specifications before delivering them to the department. This will include materials procured for manufacturing as well as office use. The officer will report to Ted and inform him of any discrepancies before it becomes a crisis. Order periods for materials and supplies will be evaluated and set 15-20 days to allow for the quality control function
It is very important to train, motivate and communicate with staff when implementing the new computerized systems. Staff should be trained on how to accurately operate the database system and also how to interpret data and generate reports. Quality Control should also be trained on how to detect discrepancies in quality control.
It is also essential to have clearly defined organizational practices such as reward and recognition procedures to value employee contributions. This will foster motivation and encourage staff to work together as a productive team. These rewards may include negotiating with management to raise staff salaries or grant bigger bonuses. It may also include awards given to specific staff members to recognize their contribution and commitment
To operate efficiently the data fed in the management system needs to be accurate. It needs to be checked by a validator for accuracy before it is input into the system. Inaccurate data would lead to the generation of inaccurate management reports which could result in misinformation and loss for the company.
Developing a computerized system is an expensive and time-consuming process. The company would have to spend a lot of money and re-engineer several processes to implement this computerized supply management system
The company would also have to employ more people to conduct the Quality control function in the supply department which is a further expense.
Establish clear communication channels between the concerned departments. Have weekly supply meetings between the relevant staff members of each department to go over re-ordering schedules and ensure that bottlenecks and late deliveries are avoided.
To build motivation, members of staff are given gift certificates in appreciation of their work and commitment to the team. They are also recognized in front of other team members and honored by the management for improved performance.
Negotiate contracts with those suppliers which follow stringent quality standards. Communicate quality specifications beforehand to suppliers and ensure that these can be followed by suppliers on delivery. If supplies are found to not follow quality specifications contracts should be terminated.
Before negotiating, contracts with suppliers discuss specifications with relevant departments and see if they are in line with their requirements.
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Budget requirements have to be communicated formerly at a Managerial level and should always be written reports and specifications. Buyers should not take into account budget estimates which are communicated to them through unofficial channels. Only officially published estimates which have acquired management approval should be considered by buyers when making their purchasing decisions.
Will probably be more cost-effective and not result in a lot of expenditure for the company.
Will help increase co-ordination between departments and reduce the incidence of supply bottlenecks and misinformation.
Will still not be effective in monitoring the quality of materials before they are delivered to the various departments.
Though employees are now recognized there is no increase in their salaries and hence they may still leave the company for opportunities offering higher salaries like Bob.
The company might also loose established vendors in its strategy to enforce quality control measures. The loss of established vendors with whom the company had build relationships spanning many years could affect the price of materials and also the flexibility of delivery.
Implementation of Best Solution
The company feels that Solution 1 has a greater chance of long term sustainability. The management also feels that though it will cost the company now it will also result in greater productivity and profitability in the Long run. The implementation of Solution one will take 10 months. It will involve the following steps:
- Mapping all the processes involved in the ordering processes between departments and creating a process flow chart for the programmers
- The programming phase in which the computer experts set up a database and program the interfaces between departments. Initial data is also fed into the databases
- The testing period in which people from different departments work on the test module to see if it is performing the required functions.
- The system is then checked and fixed to accommodate the requirements of all the users
- Users are trained to work on the system before going live
- The system goes live for a test period of two months. If operations proceed smoothly the test period is then terminated and the system is now online for all users permanently
- A quality control department consisting of three people is formed in the supply department. Each employee is trained in quality specifications and is required to inspect each supply component before it is dispatched to the relevant department. Materials found deficient in the quality inspection test will be returned to the supplier.
- All employees of the department are given a minor raise and also given more important-sounding job titles which increase the prestige and power associated with their job. For example, the post of the senior buyer is now given the new title “purchase manager”.
- To prevent data corruption all data input into the system by the initial employee is checked by their supervisor and validated before being accepted by the system. The system will be programmed to not accept data which is not validated by the supervisor Budget data which is very important needs to supply decisions need to be validated by both supervisors and managers.
Burt David, Petcavage Sheila, Pinkerton Richard. Supply Management; McGraw-Hill, New York, 2010.