John Deere and Complex Parts, Inc.
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1. Discuss the strengths and weaknesses of John Deere’s Achieving Excellence Program. Consider and discuss other criteria to include in the analysis.
Having examined the criteria used by John Deere in its Achieving Excellence Program, I could say that the formula being used to determine quality rating is the best of all. Determining the rejects over the units of supplied products is a good measure to determine the quality of the products supplied, which tells us that the higher the quality rating, the better the quality of the products being supplied. The delivery rating though, in my point of view, is somewhat problematic. I think it would be best to deduct both the late and over deliveries from the early delivered products. It would also be better if on-time deliveries will be added in the formula because being able to deliver on-time is an indictor that the supplier is able to meet the customer’s expectations. The role of the early deliveries here is to strengthen the result because these exceed customer’s expectations. If the formula will be revised into: [(# early + on time – late - over deliveries) / delivery instances] x 1,000,000; a more realistic and objective delivery rating will be obtained. Other weaknesses observed are on the ratings used to measure cost management, wavelength and technical support.
These areas are measurable, thus using a five-point scale to measure them is not a very good strategy. This will lead to results that are more subjective and less objective. A good way of measuring cost management, for example, is recording the number of times a supplier failed to employ cost efficiency measures and the like then assign an equivalent rating. By doing this, more biases will be avoided. The forms of recognition given to suppliers, who were able to obtain big scores, are also not very attractive. Rebate system can perhaps be used to recognize the achievement of the suppliers, who were classified as partners. The rebates need not be in large amount though. Since this is in monetary form, it will be more attractive among the suppliers and it will make them strive more to be classified as partners. Changing the performance level cut-offs yearly is not also very advisable. Though continuous improvement is important, changing it every now and then or yearly in the case of Deere will not allow the suppliers being measured to prove its worth and make the necessary improvements. As Deere’s partners in business, the suppliers should also feel that Deer is concerned with their welfare as partners for growth.
2. Do you think Complex Parts has performed adequately over the past year? Why or why not? Which of the Deere supplier assessment classifications should be assigned to Complex parts?
In my opinion, I think Complex Parts has performed adequately over the past year. In terms of quality improvements and technical evaluation results, Complex Parts was able to meet expectations. Their problem though is on the late deliveries and this greatly influenced the ratings they obtained in terms of cost management and wavelength. Their on time deliveries were not also accounted in the formula used to obtain the delivery rating thus, the result is not a very good determinant of their current classification. I believe that a fair classification for Complex parts, having taken into consideration the above findings, is Approved.
3. If you were a member of the supplier evaluation team, what alternative courses of action would you consider for Complex parts? What recommendation should the team make to the project manager?
If I were a member of the supplier evaluation team, I would recommend that instead of giving this long term supplier’s business to other suppliers, it would be worth it to give them another more year to prove their worth. This is to give credit to the 10 solid years that they have spent working with John Deer. It would also be best that the criteria be reviewed based on the identified weaknesses to obtain a more objective result. To protect Deere’s business though, it would be better if some of the less critical assignments that are currently given to Complex Parts be reassigned to another supplier. This will surely hurt them financially and challenge them to work really harder in order to improve the areas where they scored low. This strategy is also fair enough because they are still given the trust to continue handling the more critical projects. In addition, they should be evaluated quarterly and if unable to cope with the set standards within the next six months, awarding the business to other more capable suppliers would already be a best move and management decision.
4. What are the short term and long term implications of your recommendations?
Short term implication with the above recommendations would be assuming minimal risk to the business in case complex parts will be unable to perform and meet the set standards. Long term results would be building a stronger relationship with Complex Parts in case they are able to meet or exceed the requirement while under probationary period. They will be more customer focused because during the trying times, they were given a second chance to prove their worth. This would mean lasting and more profitable business relationship among the two.
Case Study 2
1. What are all the issues here, from both CJI’s and Caolinn’s perspectives, that need to be researched by Ms. Stanley?
Ms. Stanley needs to research on the track record of Caolinn Pumps as far as quality and capacity to deliver are concerned. She also needs to study the two other suppliers to check on their capability as far as business requirements are concerned. On the other hand, she needs to do a comprehensive inventory of the current competencies of CJI’s production team to be able to determine if they are indeed capable of producing the required bilge pumps.
2. Should CJI continue to use Caolinn to supply pumps, should it make them in house, should
it contact one of the other suppliers, or should it do some combination of these alternatives? Discuss the advantages, disadvantages, and risks of each of these alternatives.
Should CJI continue to use Caolinn to supply pumps?
Advantage: Quality of the bilge pumps are 90% to 100% guaranteed since this has been CJI’s supplier since their business began its operations.
Disadvantage: There’s a possibility that Caolinn will not be able to meet the foreseen bulk of bilge pump requirements as soon as the contract between CJI & Great Lakes takes effect. They have been used to producing and delivering under normal scenarios but the expected bulk of orders will be a lot higher than the current. There’s also no guarantee that Caolinn will really deliver as required in the absence of the contract. If contract will be put in place and as soon as Caolinn recognizes its critical role in the expected business venture, it may charge higher cost per unit due to anticipated increase in freight cost.
Risk: On time delivery may be a great issue.
Should it make them in house?
Advantage: Being able to deliver on time wouldn’t be an issue since bilge pumps will already be directly produced by CJI.
Disadvantage: There’s a big possibility that quality of the said pumps will be not be as good as the expected because they haven’t tried producing it yet. This move will also cause CJI to incur more operating costs in terms of production and labor.
Risk: Quality of the bilge pumps might be sacrificed and this might also cause the current production team to burn out if precautions are not taken into consideration ahead of time.
Should it contact one of the other suppliers?
Advantage: Getting in touch with one of the other suppliers will help CJI to benchmark on the best practices of both suppliers as far as bilge pump production is concerned. It will also help CJI identify and compare the strengths and weaknesses of both suppliers, thus aiding it in making a sound decision.
Disadvantage: There’s a possibility that the new supplier will not be able to meet CJI’s expectation by the time they start working together. There’s a possibility that whatever positive things promised during the agreement will not be carried out as expected.
Risk: The track record by means of actual experience in doing business with this supplier was not yet proven by CJI, thus establishing alliance with them in this big project with Great Lakes is a risk.
Should it do some combination of these alternatives?
Advantage: Combining the first and third option can be done. In case the bulk of orders will really be too much for Caolinn to handle upon assessment, the new supplier can be a good fallback.
Disadvantage: There might be quality issues on the part of the new supplier, which might jeopardize the project.
Risk: Using the new supplier as a fallback will be of lesser risk though as far as quality is concerned.
3. How can CJI assure continued contract compliance and additional contract business from Great Lakes in the future?
CJI can ensure continuous business with great lakes by giving priority to quality products and on time delivery. If the latter is a concern on the side of Caolinn being an alliance, CJI could engage in a written contract with them this time, even if it would mean a slight increase in the current price of bilge pumps. In this way, a win-win solution is obtained. They could also order from time to time from a new supplier and sell it to another client of theirs that is of smaller impact in the business. This way, they could have an actual test on the new supplier’s track record, in case Caolinn will not be able to make it. In the long run, they could manufacture their own bilge pumps once they are ready financially.
Case Study 3
Don’t Shoot the Messenger
1. If you were in Jeff’s position, what would you have done to preserve relationships?
If I were Jeff, I would suggest to the General Manager that requesting for an additional 5% reduction immediately after the recent request for 10% reduction would not be a very healthy approach for the time being. The suppliers, who have been working with Billings Equipment, Inc. all these years, will not view this change as a win-win scenario, and this might destroy the currently existing harmonious and collaborative working relationship.
2. Describe the ethical issues involved.
The suppliers, who have been religiously backing Billings Equipment, Inc., in all its business transactions, were not given the chance to be heard. Though what happened was a management decision, consulting and soliciting the suppliers opinion in the matter could have helped a lot in coming up with a win-win solution. Surely, the suppliers know the current difficulties experienced by the company as far as raw material prices are concerned so they would understand if there is a need to reduce the prices. Their inputs could have helped a lot instead of just relaying to them, through the buyers, the bad news. An option to look for a substitute raw material, of a lesser cost, but almost the same quality, could have helped, rather that passing the burden entirely to the suppliers.
3. What is your assessment of the general manager’s approach to meeting target cost objectives?
In my opinion, the approach employed by the general manager in this case was rather drastic and unhealthy. She conveyed a negative message to the suppliers, making them view Billings Equipment, Inc., as selfish. She did not weigh properly the advantages and disadvantages of pushing the suppliers to their limits. She did not even seek the opinion of those who worked directly with the suppliers for a more sound input, the buyers.
Case Study 4
1. Suppose there are 100 potential suppliers, how many suppliers do you think should ideally be integrated in the early skid-steer development process? Why that many or that few?
I think integrating 25 suppliers out of the potential 100 or 25% is a good approach. Trimming it to 10% would even be better provided that this 10 are really the best among the 100 initially identified potentials. The lesser the suppliers involved in the early skid-steer development process, the better and the more manageable. It would be easier to monitor results and progress, as well as to identify improvement areas if you are dealing with a smaller group.
2. Are there trade-offs in terms of the number of suppliers to integrate? If so, what are the trade offs?
Of course there are trade offs. The suppliers not included would probably be disappointed of the decision, with them not being chosen as part of the pioneering team. There is also added responsibility since the team involved is of a lesser number.
3. Are there trade-offs to the identified criteria? Can you tell? What do you need to know to better answer this question?
The new product to be developed will surely require a lot of investment as far as marketing is concerned. Since this is a new product, it has to be pushed in the market and this would entail greater effort and money. The challenge of producing a multi function product at less production cost, without sacrificing quality will also be another trade off to look into. The team should be able to research on better alternatives as far as raw materials are concerned to be able to use parts that are cheaper but of equivalent quality, at least. Research on target market needs would also be a good strategy to avoid mismatch.
4. Would you mandate weekly meetings as an interorganizational policy to structure the interactions? If not, how can you facilitate communication?
I will not suggest weekly meetings since this will be a lot costly. Monthly meetings will be better to facilitate needed communications such as progress reports. However, emergency meetings can be done as the need arises.
5. What role can information technology (IT) play or should it play in structuring these interactions? What concerns do you have with the suggested IT role?
Since geographical location is an issue as far as information dissemination is concerned, IT can play an important role to ensure that information needed are transmitted to the designated location accordingly and on a timely manner. Information security though is an issue considering that Nolan’s team will be developing a new product for the market, and this valuable information might be stolen along the process.
6. If the criteria you developed suggest that you integrate Supplier X into the product development process for the skid-steer loader, what reasons might lead you to choose not to do so or to reduce the convenience of doing so.
I think the supplier’s technical competence and reliability would be my primary reasons.
7. What do you think might be hurdles to overcome at Deere to integrate suppliers into the early phases of the product development process?
I think the hurdles that need to be overcome are management’s willingness to spend or invest on this breakthrough project. This would really entail a lot of cost especially in the R&D stage.
Case Study 5
Supplier Development at Deer & Company
1. Is Deere’s tactic an appropriate one?
I think the tactic was appropriate; this would enable Deere to ensure long term profitability in the business. The discount they could get from Excelsior’s current price reduction can help fund the planned technological improvements and this could yield long term profit.
2. What are the implications of this tactic and the possible consequences, positive or negative?
This would mean that for the time being, Deere will not be able to generate the profit it desires but eventually, once the project has been completed, profit will surely soar as customers’ needs are already met without doubt.
3. If it is not an appropriate tactic, what are some other alternative?
For me, this is already an appropriate tactic because looking for other suppliers to provide most of Deere’s needs would require a lot of initial investment.
4. Is this an ethical approach?
I think yes. Business is called such because with it comes trade offs and the need to assume the risk. If a supplier refuses to give in to what will improve the business, then it is just a right decision to look for a better and more profitable option.
5. What are some of the implications as far as human resource management is concerned? How can the group members better manage the consensus building to present an undivided front to Excelsior?
As far as HR management is concerned, it would be easier to get people’s support on major changes that the company will undertake if there is an observed and felt management support and if there is high level of job security. This could foster true support among the organization’s members. I think there would be a better consensus if each member’s opinion was solicited in the meeting so that a more solid tactic will be made and a stronger and more convincing argument will be presented to Excelsior.
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