QUESTION: Implementation Timeline or Issues (What would you recommend be done now, within 2 weeks, within 1 month, 3 months, 6 months, 1 year? What types of barriers or risks might the company face during the implementation of your recommendations? How might they best address those risks? What resources will be required in order to implement your proposed solution?)

BEARING CHANGES Late on October 17, 2020, the Deere commodity team for bearings consisting of Mickey Laferty, Moline, Illinois based International Supply Base Manager for Deere & Company, Mark Linear, Strategic Sourcing Manager for Deere Power Systems and Gerry Dately. Purchasing Director for the Engine Group were looking at inspection reports on a test run of bearings from a proposed Russian supplier. They knew there was resentment and some strong resistance against using Russian parts. They also knew that he had to find ways to cut supply costs. They wondered what the next step should be. Background Deere & Company, a 163-year-old, Fortune 500 company, manufactures, distributes, and finances a full line of agricultural equipment, and a broad range of construction and forestry equipment, along with commercial and consumer equipment. The breadth and scope of its operations required 59 distinct manufacturing operations scattered around the globe, ranging from Davenport, Iowa, to Jiamusi, China. The company was decentralized by design. In order to facilitate production flexibility and adaptability to regional, industry, and competitive circumstances, decision making was handled at the local levels, reflecting corporate goals of decentralization. Each business unit embraced the underlying values placed on quality products, and was actively involved in supplier development in areas of cost, value and trust. Every plant, however, was measured on its individual performance, producing attitudes of self-interest and self-preservation. The combination of a worldwide decline in agricultural equipment purchases and the Asian economic crisis resulted in a significant decrease in Deere's profits. This, accompanied by a realization that world-class manufacturing required increasingly efficient supply chain management, led management to issue a challenge to the company: reduce supply costs by $1 billion (approximately 15 percent) over a five-year period, while improving quality. Each plant, therefore, was actively seeking ways to meet their individual cost/quality targets. While information was shared, efforts were neither coordinated nor collaborative. Opportunity Corporate personnel such as Paul, served to disseminate information, but lacked the authority to control purchasing decisions. The mandated cost reduction targets served as an incentive to increase coordinated purchasing efforts. In April, 2017, the team met with Jim Zrust, executive vice-president of BBRZ, a manufacturer's representative for several bearing manufacturers from eastern Europe. The ensuing discussion revealed that BBRZ had been supplying bearings to Deere's lawn equipment division. The team saw an opportunity for potentially significant cost savings, not only for the Waterloo and Coffeyville facilities, but also for other Deere plants. Encouraged by Jim Zrust's contention that he could deliver 25-30 percent cost savings, the four traveled to Russia to meet with BBRZ's two principal suppliers; Moscow Bearing Factory (MBF) and Vologda Bearing Factory (VBF). While MBF was found to be unsatisfactory, VBF appeared to have the potential to meet Deere's stringent requirements for supplier qualification. Its production equipment was new, and its production process appeared to be effective and efficient. Furthermore, it had a high level of technology, talented personnel, and appropriate testing capabilities. VBF was already producing ball bearings under OEM contracts for well-known western European and Scandinavian manufacturers. Soliciting Interest within Deere Returning from Russia, Mickey, Mark, and Gerry discussed their trip, their impressions of VBF, their current supplier situation for bearings, and whether or not there was potential for cost savings. They discussed VBF, reflecting on the process typically used to introduce new suppliers. First was the promise of significant savings. That appeared plausible, in fact, the possibility of 25 percent cost savings was the sole reason they had been willing to travel to Russia. The second step was investigating the supplier's production quality, which was frequently a long and involved process. If the first two stages were successful, the last step was to evaluate the firm's credibility - its ability to deliver. This involved both the likelihood of commitments being honored and the ability and willingness to work with Deere's personnel. This was as important as price, if not more so. For years, Deere had been thoroughly entrenched with three bearing suppliers; Trring, NNT, and Skiff, of which Trring was the primary source. Being an internal component that was both buried inside the machine and needing to precisely match adjacent parts, a unique design could serve as a barrier to Deere's changing vendors. Thus, once a supplier such as Trring was approved for a specific set of bearings, designs were coordinated with the engine's designs and production standards, making it difficult for another supplier to furnish a replacement component. Beyond being locked-into a specific product design that might be proprietary to a supplier, purchasing agents relied upon a personal relationship with their vendors. Sometimes, the suppliers would take advantage of their sole-source position, becoming increasingly less responsive and not as conscientious in maintaining the relationship as when they sought entrance. The team reasoned that beyond the mandate to find ways to cut purchasing expenses there were two other solid reasons to pursue further investigation of VBF as a potential bearing supplier. 1) Deere's strategy required a more comprehensive and global approach to supply, and 2) VBF could be used as a competitive wedge, providing bargaining leverage with present suppliers. In addition, each of them was individually comfortable with the quality they had observed. The discovery that VBF made balls for other European bearing manufacturers led them to realize that they were as impressed with VBF as they had been with any other bearing manufacturer they had ever visited. Realizing the potential for corporate wide advantages stemming from other facilities involvement, the three decided that Mickey should issue a report. They reasoned that corporate authorship would result in better distribution than a report from either Coffeyville or Waterloo. The report was issued by Mickey, and subsequently distributed to the purchasing manager in each of Deere's 59 worldwide production facilities. Receptivity From Managers The final report was a multi-page summary. In addition to providing a background of the reasons for considering a non-traditional supplier, the summary findings discussed in some detail. While the report showed that potential savings were almost double the five-year targeted overall savings for the company, reception from the other plants was lukewarm. It was neither overwhelmingly supportive, nor overwhelmingly negative. Even Paul Berius, Corporate coordinator of bearing purchases, had a lukewarm reaction. While the Waterloo and Coffeyville plants had initiated the search and remained strong supporters, as word began to circulate, dissention emerged within the plants. One senior engineer was adamant;_"I won't put a Russian bearing in my tractor it'll be over my dead body!" In spite of this, team members remained convinced of the potential benefits to their own plants and to the company as a whole. Because of this conviction, they elected to continue the supplier qualification process. Both factories issued purchase orders to VBF (through BBRZ) for a limited production run and testing. Based on Deere's customary quality-proving process for supplier development, Testing was performed by VBF, with the test report analysis and comments provided by Deere's engineers making comparison to their present sources of supply for comparable bearings. The introductory statement identified the purpose of the testing as: "to confirm that the VBF bearings, supplied by BBRZ would last as long or longer than the bearings currently used for production. Favorable test results allowing us to use them for production would provide a significant cost reduction. Several different sizes of bearings were tested in test fixtures." As the team scanned the pages of diagrams, glancing at the descriptions and diagrams of the testing equipment and reviewed the test procedure, they noted: "...there appears to be some inconsistency in the test life of bearings from the same manufacturer. This may be attributed to the fact that radial load was being calculated from a pressure reading on a pressure gauge. The sensitivity of the gauge used would easily allow one to have a 10 percent or more variation in load from one test to the next..." They continued thumbing through pages of tables and numerical results, noting that some of the VBF bearing readings were superior to competitor's, others not. Some indicated passing, some failing. The conclusion from Deere's engineers stated: They continued thumbing through pages of tables and numerical results, noting that some of the VBF bearing readings were superior to competitor's, others not. Some indicated passing, some failing. The conclusion from Deere's engineers stated: "Overall, we find the tests to be insufficient to permit making a recommendation. The test fixture testing results indicate acceptable levels of quality; however, the tests performed are not the same as those used by our current suppliers. Furthermore, field testing is limited, and does not provide sufficient indication of field-condition durability." As they finished the report, they pondered the situation. The Waterloo and Coffeyville plants had been anxious to develop a relationship, yet there was resentment and strong resistance, ostensibly because the potential supplier was Russian. The test reports in front of them were inconclusive. Was this because of a problem with the bearings or with the tests? Were the tests intended to cast VBF unfavorably? Team Analysis At this point, the team needed to identify at least three underlying (root) problems and their associated symptoms, generate and analyze (including pros and cons) a list of at least four alternatives to address each of those root problems, develop/propose recommendations, outline an implementation strategy and timeline and identify barriers that may come up as well as addressing ways to overcome them. Their analysis report was due in 3 hours