Assignment Task: Gadgets was a manufacturer of highly technical equipment. The company's $16 million gross sales consisted primarily of units designed to customer specifications by the engineering department and produced on a job-shop basis by the production department. The engineering department also designed highly complex control equipment for general industrial applications to be sold by Gadgetise on an off-the-shelf basis. The supply department consisted of the supply manager, a buyer, and two clerks who handled typing and filing. Although many of the items purchased were highly technical, the supply manager had no technical training. Through the years, he had picked up a fair grasp of the engineering terminology used in the field but had not attempted to keep up with the specialized design problems of the company. The buyer was a woman who was known in the trade as "hard-boiled but big-hearted" and was generally considered a competent general supplies buyer. Without great ingenuity, the buyer also successfully handled technical items if detailed specifications were supplied by engineering or production. An expediter was attached to the production. He formerly had been one of the technicians in the production shop and had picked up some technical training in the Army. Because he could understand verbal descriptions of items needed by engineering and production, these groups often contacted him on ordering problems before submitting a requisition to supply. He frequently would suggest substitute components that could be drawn immediately from the stock room; or he would convert the oral description into a commercial specification, type a requisition, and submit it to the supply department. The expediter had two primary responsibilities: picking up rush orders and supervising the stock room. He spent about 50 percent of each day picking up items at nearby suppliers, at truck terminals, or airports, or carrying materials to subcontractors, platers, or various carriers for shipment. In the stock room, a clerk kept up the facilities, issued supplies to engineering and production personnel, and kept stock records. The clerk reported to the expediter, who reviewed the stock records, prepared requisitions for items at their reorder points, and disposed of items that were turning too slowly or had deteriorated. Frequent problems had arisen when suppliers claimed long overdue payments on materials that had been received by Gadgets. In these cases, it always developed that someone had forgotten to make up a receiving report. Since supply passed bills for payment only after receipt of the receiving report, several sizable discounts had been missed and the company had been substantially tardy in meeting the net date on several bills. In these cases, the expediter was always sure that the item had come over the receiving dock, and the receiving clerk was just as sure that the expediter had brought it into the plant in the back of his station wagon. A particularly unfortunate incident occurred when two special micrometers disappeared within the plant after Gadgetise had waited six months to receive them. The supplier could prove receipt by the bill of lading signed by the receiving clerk. The receiving clerk claimed the expediter had picked up the micrometers on the receiving dock to carry them to the engineers as quickly as possible. The expediter claimed he had never seen the micrometers. The production and plant maintenance managers had fully backed their respective men. No disciplinary action had been taken since there were no signatures on the receiving reports to prove either case. The expediter periodically typed up purchase orders for rush items. In other cases, he picked up the desired items and informed the suppliers that they would receive "confirming orders" from the Gadgets supply department. When the expediter forgot to ask supply for confirming the order, the supply department was occasionally distressed to be processing invoices for which it had no corresponding orders. Some suppliers were also mildly petulant when a promised purchase order was not forthcoming. Although suppliers had been warned not to honor an order from Gadgetise unless it bore the supply manager's signature, it was considered poor business to penalize the suppliers who had honored the expediter's request in good faith. Consequently, purchase orders were often made up to match invoices if the material had been received from the supplier. The president liked to operate "informally" and allowed anyone in the company to initiate requisitions. The only approval signature required on orders up to $10,000 was from the supply managers. Orders over $10,000 required the president's approval on requisitions, but, in practice, all orders for more than $10,000 were approved by the president either in the materials budget or the capital budget long before requisitions were made out. The president had heard something of the micrometer incident from his brother, but had dismissed the whole matter as "one of those unfortunate interdepartmental squabbles." However, when his engineering manager and his production manager began to complain about the difficulties of staying within the materials budget, he looked further into the matter. In subsequent talks with both men he drew up the following summary list of complaints: 1. The managers did not know what materials were being charged to their departments until the monthly accounting statement came out. 2. The engineering and operating personnel were not notified when materials came in unless the expediter dropped the material on the desk of the requisitioner. 3. The supply department was entirely too slow in processing orders. It took almost a full day just to get the order to the telephone. 4. The supply department did not understand technical specifications and the expediter were being overworked by handling all technical orders. The president presented these complaints to the supply manager and asked him for a solution.
After reading the Gadgetise In case, let's take a look at the case analysis from the supply chain manager mindset: Issues
What are the immediate and basic issues in the case? List and provide a brief description what are the factors that Gadgetise Inc should address.
Analysis:
Understanding more about supply chain management performance and the material flow, provide your observation of the case.
What role does quality and technical training play in the supply department? What are your thoughts on the current Gadgetise roles?
Recommendation:
Provide a list of possible alternatives and what recommendations would you make to the president regarding the current state and why?