Northeastern Equipment Company Source for this case: World Class Supply Management 7th ed., Burt, Dobler, Starling. The Northeastern Equipment Company manufactures goods for the consumer, government, and industrial markets. The company is organized on a divisional basis according to product lines. Each of the four division managers reports to the executive vice president, as do the personnel director and controller. Each division manager is expected to operate his/her division as a separate business on a profitable basis (see Exhibit 1.). Each division occupied a separate building containing its entire production facility, home marketing office, and so on. The division plants are all within a 15-mile radius of the executive offices where the president, vice president, personnel department, and accounting department are housed. Supply Chain Management - Test Equipment Division The supply chain manager, who was very competent and had twenty years experience in production, engineering, and supply, reported to the production manager because the division manager felt that the supply chain manager's primary function was to "see that production had what it needed when it needed it." The production manager was held responsible by the division manager for keeping all production costs in line. On the other hand, the marketing manager exercised functional authority over the supply chain manager on all specialty products. These products, which were frequently large equipment installations such as automation devices and communication systems, were normally made on a job shop basis to customer specifications. Success in the sale of these products depended on the ability of the division to produce efficiently to tight customer specifications and to deliver more quickly than competitors. The marketing manager, therefore, could specify brands and suppliers for component parts, and he frequently negotiated directly with suppliers and supplier salespersons before placing an order through supply. The supply chain manager had repeatedly tried to eliminate these direct contacts between the marketing manager and the suppliers since several expensive duplicate orders and contract complications had arisen as a result of supply chain management's not being properly consulted or informed. Because of his resistance to the marketing manager's activities, the supply chain manager and the marketing manager were hardly on speaking terms. Whenever the marketing manager did want supply chain management's assistance, he always went to the assistant to the supply chain manager. This individual was a very competent engineer and former lawyer and was known to be able to obtain excellent cooperation from all suppliers. Because of frequent favors asked by the marketing manager in expediting and straightening out orders, the assistant to the chain manager had only one other set of assigned activities. These duties were keeping up with special features of government contracts in process or negotiation, government regulations concerning procurement, and government liaison. The internal organization of supply chain management is shown in Exhibit 2. The metal supply manager buys castings, bar, plate, and extruded stock for the four production groups. His responsibilities included all basic metals and alloys that were to be further fabricated in the division. The electrical supply manager bought meters, wire, resistors, capacitors, and all similar fabricated electrical parts, except tubes, for both the specialty products and mass production sections. The mass production parts supply manager bought all fabricated parts for the mass production section, other than electrical parts including tubes. The tube supply manager bought cathode ray and miscellaneous tubes for both production sections. These tubes ranged in unit price from a few cents to $8,000, some being off-the-shelf items and others special development jobs. The parts unique supply manager bought all fabricated parts other than electrical parts and tubes for the specialty products section. The MRO supply manager handled all operating and clerical supplies for the entire division. The government supply manager handled subcontracts and purchase orders placed under government prime or subcontracts. Government work was handled by both production sections and accounted for 40% of the division's sales. Because government work was carried on in the production section simultaneously with civilian orders, and because many parts were interchangeable, the government supply manager only placed orders for parts unique to government orders. For standard items that would be included in government orders, he merely ensured that the other supply managers included proper clauses in the orders they placed. The government supply manager worked closely with the assistant to the supply chain manager, with the marketing department, and with all other supply managers. He was well thought of by the entire division and handled government contract materials with a minimum of friction. The storekeeper kept all records on pre-production inventories and supervised the stock clerks in the various storerooms of the plant. The expediters helped the supply managers by following up on material orders until they were received in the plant and by picking up rush orders, and so on, on request. Once materials were drawn from stores, they became the responsibility of the production foreman who had drawn them from stock. Because some materials went directly from boxcars into production, rather than through stores, the receiving department was placed under the production manager. Engineers performed inspection. The engineering manager upon request by the supply chain manager assigned the engineers to the job. There was no full-time inspection department. The Test Equipment Division had been operating at a low profit ratio for several years. Inventories of raw materials, goods in process (WIP), and finished goods inventories were turning slowly, and orders were being lost because of high quoted prices and slow deliveries. A new division manager was appointed to clear up the situation - YOU!

1. As a manager, I will try to implement planning in advance and make a healthy relationship with each supply chain partner. Based on economic order quantity and management of safety level stocks, I will plan my supply chain activities.

I will appoint a dedicated team of experts who will keep a close eye on ensuring inputs availability to different production stages. Apart from this, finished goods will be distributed to different sales partners based on priority and deadline with each one of them.

All the staff involved in supply chain activities and operations will be offered training and development programmes so that they can offer efficient and effective business operations.

My focus will be to engage managers for joint effectiveness in devising any supply chain actions. Any process bottlenecks will be immediately removed on a priority basis.

2. As part of your solution, provide a new organizational chart for the Division.