Case study IpexCo

Background to the designchain

IpexCo is a high-tech electronics manufacturer supplyingproducts to originalequipment manufacturers (OEMs), who bundle these products with other products and services for end-customer supply. Given the structure of this industry there are very few, very large OEMs. We typically refer to this type of supplier(IpexCo) as a tier1 supplier.

IpexCo had a significant engineering team who were responsible for product design.Engineering worked closely with these OEM customers in product design and qualification and also with tier 2 and tier 3 suppliers upstream who manufactured various components or parts and sub-assemblies that made up the product. Initial prototypes were made in the engineering laboratories with materials procured by Engineering. The next stage was small scale production managed by a new product introduction (NPI) group within Operations. There were a number of resources in the NPI team mainly Project Management and Buying. The NPI group was responsible for ensuring the product could be produced in volume and produced initial volumes for OEM customers. The process of getting information from Engineering was difficult one of these scenarios where the paperwork lagged behind the activity of design and supply. Different information systems used by each team did not help since Engineering used Agile as their system of record; this held detailed specifications, but Operations needed the information on their SAP Enterprise Resource Planning (ERP) system in order to drive demand through the supply chain.

Thus product design (i.e. new product development NPD) was largely the remit of Engineering and product launch (i.e. NPI) was largely the remit of the NPI team in Operations. Operations had established an Advanced Manufacturing Operations (AMO) to introduce new products. This unit had a capacity to assemble about 50 units/day. Once customer demand ramped-up, manufacture was then transferred to the large-scale production organization (capacity to assemble 100s of units/day).

Background to the supply chain

IpexCo employed a mix of own-production and contract manufacturing in supplying the products to its customers. Partsor components were suppliedby what couldbe considered as tier 3 suppliers. Some of these parts went to tier 2 suppliers for sub-assembly either printed circuit board assembly (PCBA) or mechanical sub-assembly and others directly to IpexCo for finished goods assembly. Hence a problem with one part would have a domino impact throughout a rather interdependent and thus complicated supply chain. A simplified schematic of IpexCos supply chain is presented in the following diagram.

New part, supplier, technology, and problems

In 2006, IpexCo discovered the importance of supply chain involvement in product design when a problem arose that significantly threatened current and future revenuesfor the company.The design of a $3 part from a tier 3 supplier (supplying mechanical sub-assembly contract manufacturer) using new technology (thixomoulding) went somewhat unnoticed in the product design process. The difficulty of getting a high volume of parts became apparent when problems arose with the initial supplier and the product volumes began to ramp from Engineering to Production volumes (i.e. from producing about 50 units/day to 100s units/day). This $3 part, in a product sold for $2,000 upwards, limited sales revenue for the company for a four-month period. More significantly, there was a huge risk that customers identified for the product would move to a competitors technology and the product would fail in themarket. This was avoidedonly by massivemanagement attention on recovering the situation.

The designers of the part were looking for a material with greater hardness and that would have less vibration than current designs. They sourced injection moulded magnesium (known as thixomoulded) parts from a supplier to the automotive industry. The design of the part was more detailed than parts produced in this process for automotive applications, but this was not considered further once initial parts were produced to meet specification. Through all these stages there was no SCM involvement just design engineers making the best design decision for product performance in the lab.

SCM became involved as the product moved from Engineering to Production stage in the product management process.Initial involvement was in determining the commercial aspectsof supply since the tooling and initial parts had already been approved by Engineering. Shortly after this transition, the supplier went into liquidation and this galvanised numerous activities to secure future supply at this critical stage in the product lifecycle. As this part was customised for IpexCo the tooling used to manufacture it also neededto be customised. This customised tool was owned by IpexCo.

Once it was determined that the current supplier would not be a viable option for the future, the identification of alternative suppliers began and so too did the SCM functions learning curve on the detailedtechnology used in the production of this part. Choices of alternative sourceswere limited to 3 in the whole of North America. Initialrepair of the tool by the new supplier suggested that the previoussupplier had not maintained the tool correctly. Subsequently it was discovered that the design of the part made it difficult to produce using this technology and one of the side effects was a build up of material on thetool leading to significant down time for cleaning and highpotential for tool damage.

The plannedproduction of new tools to supporthigher volumes was slowed down through this learning period since it was unclear if further changes to tooling should be made to address the issues arising in production. After two months at a new supplier it became obvious that the output expected from each tool for the part was much lower than initial expectations. IpexCo had to increase its plan for five customised tools to eight tools within the first 6 months of the productlife.

Discussion questions:

Identify and discuss the fundamental issuesthat this case highlights

What actions would you take to address these issues? Consider both short-term actins and long- term learning and reconfiguration of product design and supply processes.

Marking Rubric

Your reportshould be

Formatted per Case study report guideline

4-6 pages (11 pointer,1.15 spacing), excluding executive summary, background and conclusion.

The audience of this section are the busy executives.

Section	Mark
Executive Summary	/5
Background Description	/10
Product design - process issues	/20
Supply chaindesign - process issues	/20
Design chainand the supplychain interface	/20
Recommendations on design chain and supply chain design processes	/20
Conclusions	/5
Case Total	/100

Executive Summary

This section should containthe key issues,key findings, solutions, recommendation and conclusion.

Executives should be able to grasp all the key points without readingthe entire report

The length of this sectionshould be no more than 1 page.

Introduction / Background

Current context or situation analysis and/or background including objectives

Basic facts and numbers

Why the case studyis important / significant.

Analysis / Discussion

Analysis of relevant factsand numbers of the case

Identification of key issuesand root causesbase on the analysis

Theoretical implications, could include:

Assumptions / hypothesis

Justification/Predicted Outcome

Application / relevance of course material ability to apply course material to identify the root causes and analyze the key issues

Recommendations

Solutions should be based on analysis

Demonstrate the ability to apply course materialto recommend real solutions

Conclusion

Should be based on your analysis and recommendations

References

Refer to SenecasGuide to Research & Citation:MLA and APA Style

Appendices

All charts,tables, figures and other relateditems can be placed here and referenced in the report.

Style Format

Avoid using long paragraphs use short paragraphs, one paragraph, one idea.

Start a new sectionon a new page

Avoid widows and orphans

Use proper headers and footers, with page numbers

Font size 11/12 pointer, 1.15 line spacing

General Guidelines

The questions at the end of thecase study are meant for guidingyour thought process.

You should use the questions to:

Identify key issuesand root causes

Guide your analysis

Formulate your recommendations

You should NEVER write a case studyreport by answeringthe questions one by one.