Case Study Mid Term$-$Aneya Inc

Senora Dey and James Mifflin, procurement managers at Aneya Inc., sat across from each

other and reviewed a troubling performance report concerning a key supplier, Femby

Technologies. The report detailed the deteriorating performance of Femby Technologies in the

areas of material quality and on$-$time delivery.

Senora: I don$$t believe what I am seeing. This supplier was clearly a star when we performed our

supplier visits before awarding the contract for the new Armby product line.

James: I$$m not pleased. I was on the team that performed the audit and site visit. Femby$$s

management was so smooth$$they indicated they could meet all our requirements. I feel

like we$$ve been misled by this supplier.

Senora: Didn$$t you look at their processes and quality systems?

James: Sure we did. Everything checked out fine. But now every other shipment has some problem,

and the delays are hurting our ability to get our product to our customers. What really struck

us about this supplier was how innovative they were. Femby$$s biggest drawback was their

size$$they lacked some depth at key manufacturing engineering positions. Maybe that$$s

why they are having problems. It could be that someone has left the company.

Senora: We are going to have to address these problems quickly.

James: I$$ll tell you what I am going to recommend. We should begin immediately to look for

another supplier. I never was a fan of these single$-$source contracts. They leave us open to

too much risk.

Senora: But won$$t that take a long time?

James: Sure. We$$ll have to perform another supplier search with team visits. New tooling could

really cost, too. This could take months.

Senora: Has anyone talked with the supplier about these problems?

James: Kernel went over personally today and talked with the production manager. He didn$$t have

much time to explain, but he indicated on the phone that Femby$$s production manager said

we should accept responsibility for a good part of the problems that are occurring!

Senora: Why should we$?$ I think they are just trying to shift the blame for their poor performance.

At this point, Kernel O$$Donnell$,$ another procurement manager, entered the room.

James: Kernel, glad you$$re here. We were just discussing how Femby is trying to blame us for

their problems. I think we should dump them fast!

Kernel: Yeah, well, I$$ve got news for you two. I think Femby$$s production manager is correct. I

think I would be frustrated with us$,$ too!

Senora: What are you talking about?

Kernel: I spent a good part of the day over at Femby and learned some interesting things. For

example, do either of you remember what we told Femby the monthly volume

requirements for the product would be$?$

James: I remember exactly. The volumes were projected to be $2,500$ units a month. So what$$s

the problem?

Kernel: We need to talk with our production group more often. The monthly volumes are now

over $4,000$ units a month! And not only that, our production group now wants material

within $10$ days of a material release rather than two weeks. We have also been changing

the final material release quantities right up to the last minute before delivery.

James: Uh oh$.$ I remember on our site visit that the most their production system could handle

was $3,500$ units a month. And a two$-$week lead time was about as low as they could go$.$

Senora: But why didn$$t they inform us that these changes were causing problems? They still have

some explaining to do$.$

Kernel: Apparently they tried. What did your team tell this supplier about communicating with

us after you finished negotiating the contract?

James: We said that any operational problems or issues have to go through our materials

management people. The team was responsible for evaluating and selecting the supplier,

and then negotiating the agreement.

Kernel: Femby$$s production manager produced a log detailing seven memos and letters outlining

the impact of our production and scheduling changes on their operation. He also called

us several times with no response. Each of these inquiries received little attention on the

part of our materials group. I$$m not sure how fond Femby is of us as a customer. I think

they are anxious for this contract to wind down so they can dump us$!$

Senora: What do we do now?