PROGRAMME: POSTGRADUATE DIPLOMA IN SUPPLY CHAIN MANAGEMENT

MODULE: PURCHASING AND SUPPLY CHAIN MANAGEMENT

Total Marks: $70$

QUESTION ONE $[50]$

Read the scenario below and answer the following questions:

Managing Supplier Quality: Integrated Devices

Bill Edwards is a quality engineer assigned to the Injected Molding Commodity Team at

Integrated Devices. The commodity team is responsible for evaluating, selecting, and

negotiating agreements with plastic$-$injected molding suppliers to be used throughout

Integrated Devices. The team is also responsible for improving service quality and material

that Integrated Devices receives from its suppliers. Bill$$s role after supplier selection involves

working directly with suppliers that require training or technical assistance concerning quality

control and quality improvement.

The company spends about $70\%$ of each sales dollar on purchased goods and services, so

suppliers have a major impact on product quality.

Bill just received a call concerning a recurring manufacturing problem at Integrated Devices$$

Plant No$.3.$ The plant buyer said the plant is experiencing some quality variability problems

with a key plastic$-$injected molding component supplied by Trexler Plastics. The component is

sometimes too short or too long to fit properly with other components within the finished

product. On occasion, the bracket snaps, causing endproduct failure. Although the unit cost

of the plastic$-$injected molding component is only $$1\mathrm{.}55,$ these quality issues $($length variability

and snapping$)$ are creating production problems that far exceed the component$$s purchase

price.

The local buyer announced he was having difficulty resolving the problem and asked for

support from the corporate commodity team. The buyer said, $$You corporate guys selected

this supplier that we all have to use. The least you can do is to help us out of the jam your

supplier choice is causing.$$ The buyer$$s comment surprised Bill, although Bill would soon

come to understand that plant personnel resented not being able to select their own suppliers.

After investigating the problem during a tension$-$filled meeting with Plant No$.3$ personnel, Bill

determined he would have to visit the supplier directly. He would work with Trexler$$s process

engineers to address the manufacturing variability caused by the nonconforming component.

Bill went back and reviewed his team$$s actions when selecting a single supplier to provide an

entire family of plastic$-$injected moldings.

Trexler had quoted the lowest price of all competing suppliers and had provided samples that

passed Integrated Devices$$ engineering tests.

Upon his arrival at the supplier, Bill learned that Trexler did not have a dedicated process

engineer. One engineer, Steve Smith, was responsible for plant layout, process, quality, and

industrial engineering. This individual, who was hired only two months previously, was still

becoming familiar with Trexler$$s procedures. When Bill asked to review the supplier$$s quality

control procedures, Steve had to ask several people before he could locate Trexler$$s

procedures manual.

Bill decided that his first step should be to understand the process responsible for producing

the defective component. At an afternoon meeting, Bill asked Steve for actual output data from

Trexler$$s process. Steve explained they did not collect data for process capability studies or

for statistical control charting of continuous production. However, he did say that sometimes

$$things don$$t seem to be operating well$$ with the equipment that produces the component.

Trexler uses an inspector to examine every finished item to determine if it should be shipped

to the customer.

After explaining the basics of process capability to Steve, Bill asked him to collect data from

the process that produced the bracket component. Bill requested that Steve take exact

measurements periodically from the process so they could draw statistical conclusions. Bill

said he would return in three days to examine the data.

Upon his return three days later, Steve shared with Bill the details of the data collection effort

$($see Exhibit $1).$

Component: #$03217666$ Description: Bracket

Design specification: $4\backslash$pm $0\mathrm{.}06$ inches

Once Bill calculated a preliminary process capability from this data and examined the training

and quality control procedures at Trexler, he realized he had some serious work ahead of him.

Questions:

$1\mathrm{.}1$ Provide an overview of Integrated Device's purchasing function. What is the role of

purchasing in the company's overall operations, and how does it contribute to achieving

business objectives? $(25)$

$1\mathrm{.}2$ Analyse the criteria Integrated Device uses to evaluate and select suppliers. Outline the

key factors that the company should consider when choosing suppliers for its purchasing

needs. $(25)$

QUESTION TWO $[20]$

Explore the role of cost reduction as one of the key objectives of purchasing and supply

management. How can o