Cyber Logic SystemsSupplier Relationships Cyber Logic Systems is a U.S. company that specializes in cyber security. It recently expanded its operations to Europe and South America. During this expansion, Rhonda Mendoza was promoted from director of operations to vice president of supply chain management. Although Cyber Logic Systems primary product is software, often new hardware is required to support the robust software. Because the regulations and specifications for hardware differ in each market area, Rhonda instituted a supplier certification process. She felt this was crucial to ensure supplier compliance with the applicable regulations and specifications. Because new cyber security systems must be in place as quickly as possible to avoid further damage to customers databases from hackers, any new hardware must be ready for immediate use. Therefore, to guarantee suppliers can meet this requirement, a weighted criteria evaluation system is utilized as part of the supplier certification process. Rhondas department collects performance data on all suppliers. A weight is assigned to each element of the performance criteria based on its criticality to the customers needs (service specifications) and the emphasis placed on it in the applicable regulations. This information is monitored and the suppliers are graded based on their performance. Suppliers who fail to meet the standards set by Cyber Logic Systems are immediately replaced. The following Supplier Scorecard shows how suppliers A, B, C, and D are performing on the specific performance measures. SUPPLIER RATINGS SUPPLIER FINAL VALUE PERFORMANCE MEASURE SUPPLIER A SUPPLIER B SUPPLIER C SUPPLIER D WEIGHT SUPPLIER A SUPPLIER B SUPPLIER C SUPPLIER D Cost 80 85 70 78 0.10 Delivery 85 80 85 82 0.15 Environmental 75 85 65 88 0.10 Quality 95 93 90 89 0.20 Responsiveness 80 90 95 84 0.25 Technology 92 90 87 98 0.20 Total scores Vendors are classified based on their overall performance. Unacceptableless than 60the supplier is dropped from further business Conditionalequal to 60 and less than 70supplier needs development to improved performance and may be dropped if performance continues to lag Certifiedequal to 70 and less than 90the supplier meets intended purpose or performance Preferred90 or highersupplier will be considered for involvement in new product development and opportunities for more business However, Rhonda realized that although suppliers must meet the standards of her supplier certification process, Cyber Logic Systems has a responsibility as well to the suppliers. To support quality-focused suppliers, Rhonda established a supplier development process to complement and enhance the supplier certification process. One very important aspect of the supplier development process was to create a cross-functional supplier development team. This team is composed of Cyber Logic Systems personnel and supplier personnel. The objective is to discuss strategic alignment, performance expectations, and measurement. The communication and relationship functions of the cross-functional team provide a winwin situation that helps improve the suppliers performance. Rhonda believes in the carrot-and-the-stick approach to supplier relationships. In addition to the supplier evaluation and certification processes, she has also introduced a supplier recognition program. The suppliers are recognized annually for outstanding performance in several areas such as on-time delivery, quality, responsiveness, cost savings, and much more. Administering supplier relationships is a huge task for any organization; therefore, to enhance Cyber Logic Systems ability to manage supplier relationships effectively and efficiently, Rhonda launched a supplier relationship management (SRM) system. She chose an analytic SRM that allows her to analyze her entire supplier base. Rhondas focus as vice president of supply chain management is on long-term procurement strategies. Analytic SRM provides her the capability to assess the past state of supplier relations, the current state of supplier relations, and determine the best direction for Cyber Logic Systems to go in the future. The SRM system provides Cyber Logic Systems the capability to integrate both internal users and external partners into the system; thus, providing everyone a view of the supply chain. Furthermore, it allows increased collaboration through information sharing. Since some information is sensitive and cannot or should not be shared with everyone, SRM systems can be customized by role, for example, suppliers and internal users. Rhonda explained to her team that the obvious benefit is information visibility. Internal users and external partners have access to information pertinent to their roles. Finally, for Rhonda, it allows optimization of decision-making.

Discussion Questions 1. Based on the supplier scorecard, what classification does each supplier fit into? 2. Are there any suppliers Rhonda should be concerned about, that is, replace, give additional business to, or place into her supplier development program? Why or why not? 3. Assuming Cyber Logic Systems recognizes suppliers at the annual awards banquet if they meet the preferred classification standard for any of the specific performance measures, would any of the four suppliers qualify for an award? If so, who and for which performance measures?