You have just been hired as the director of process improvement, a new position, by the VP of Operations for the ABC Manufacturing Company. ABC has been plagued by both internal and external vendor issues; the vendor issues involved repeated late deliveries and poor quality, while internally poor deliveries to customers resulted from both vendor issues, as well as quality and scheduling issues. The CEO’s instinct is that the factory could benefit from some wide-reaching process improvements.
The VP of Operations has decided that a far greater focus on vendor quality and internal process improvements must be taken. The VP of Procurement, prior to your coming on board, had already met with the CEO’s of ABC’s 4 major vendors and alerted them that he expected them to begin turning around their quality performance. About a month prior, he had sent each a letter suggesting several formal overall quality programs that they may embark upon, which included the following:
The VP has already received the following responses from each of the main vendors, and he asked you, in coming months, to work with each vendor as they implement their quality initiatives.
In addition, you know that as far as internal processes and overall supply chain management goes, that there may be opportunities for improvement. Currently, the following internal opportunities exist for possible process improvement:
o Currently, every step in this entire supply chain is scheduled, monitored through some kind of MRP system, reported throughout the day, and seems to take an inordinate amount of system updating.
· Transportation Planning
o ABC continues to use its own fleet to deliver finished goods all over the country and to have common carriers deliver parts from its vendors, also located all over the country.
· Process Control, Performance, and Variability
o ABC’s own internal process seem to all of a sudden go in and out of quality specifications; the company always seems to find out too late to avoid massive amounts of scrap, rejected parts, or labor costs to rework parts.
· Negative and Positive Cash Flow
o The company goes through frequent swings from positive to negative cash flows as inventory purchases for large lots create negative cash flows, but then using up these materials occur at a slower rate, and with less outgoing, cash flow becomes positive. The CFO really struggles with managing these cash flow swings.
Before you begin to put together a vendor visitation schedule together, your boss, the VP of Procurement, advised you that the CEO expects a comprehensive report, in about a month, covering the following specific topics:
Finally, and most importantly, all these operational improvements could create a strategic advantage for ABC because most of its competitors have similar internal and vendor quality challenges, as well as internal operational challenges.