AsPurchasingManagerforaleadingmanufacturerofhighendwirelesssecuritymonitoringsystems,youvebeenchallengedbyVPofSupplyChaintoimprovethecostandreliabilityofsupplyforthecoredigitalcameradeviceforyourcompanyssecuritysystems.Recentcomplaintsfromyourtopcustomerhasescalatedsupplierperformanceasakeystrategyforthecomingfiscalyear.Comingoutofarecentoff-sitestrategymeeting,theexecutiveteambelievesthatakeystepinthesupplierimprovementprocesswillbetomorefullyevaluateandpotentiallyrationalizethenumberofsupplierscurrentlysupplyingthecameradevice.Youcurrentlypurchasecameradevicesfromfour(4)supplierstoensurecompetitivepricing.However,despitethesuccessyouverealizedinminimizinginflationforthesedevicesandrecognitionyouvereceivedfromyourmanager,inyourlastperformancereviewyouacknowledgedtoyourmanagerthatthenumberofcomplaintsyouvebeenreceiving(formalandinformal)hasincreasednotablyoverthelast6months.Attheconclusionofyourperformancereview,youandyourmanageragreethatamorerobustevaluationsystemisneededtomorecompletelyevaluatesupplierperformanceandultimatelythetruecostofdoingbusinesswiththem.Yourcompanyhasbeentrackingsupplierperformancemeasuresforyearsinthecategoriesofcost,quality,service,andinnovationthelast12monthsdataforthe4suppliersofdigitalcamerasisinthetablebelow.Withtheincreasedemphasisontotalperformance,youknowthetraditionalmetricsarentgoingtobegoodenoughtomakeafullyinformedassessmentofthesuppliersperformance.WiththehelpofoneofyourpeersintheCostAccountinggroup,youwereabletocalculatecostsofnon-performanceaswell.

Vision Plus 650,000 9.25 0.60 Supplier Digicam ICU Tech 550.000 450,000 8.95 9.80 0.75 0.70 Clearpic 350,000 10.05 0.85 1.0% 2.0% 0.5% 1.5% 8 11 41 9 9 12 16 8 10 Performance Criteria Non-Performance Costs (last 12 months) Purchase Volume (units) Unit Price ($) Delivery Cost ($/unit) 3-Year Price Inflation (annualized %) Defect Rate (per 1,000) Rework / replace cost $26 / unit Received Damage Rate (per Disposal / credit recover cost $18/unit 1,000) Order Fill Rate (%) Every 1% point below 99% adds stock-out recovery cost of $0.06/unit to all units (n/a if >= 99%) On-Time Delivery (%) Every 1% point below 96% adds expedite cost of $0.03/ unit to all units (n/a if >= 96%) Process Improvements initiated by supplier (#) Technical Advances initiated by supplier (#) % electronic purchasing transactions 95 93 97 92 92 891 95 91 4 0 2 1 5 2 4 0 85 60 75 30 Assignment Questions (50 pts) 1) Calculate the supplier performance index (SPI) for each supplier, inclusive of delivery costs - round to 3 decimal places. (15 pts) 2) Applying the SPI from question #1, calculate the total delivered unit cost from each supplier, adjusted for inflation - round to 2 decimal places. (10 pts) 3) Produce a weighted point system evaluation matrix for these suppliers. (10 pts) a) Use primary categories of Cost, Quality, Service, and Innovation - determine your own sub-categories. b) Determine your own weighting and scoring criteria 4) If your goal is to rationalize and consolidate your purchasing volume across only 2 suppliers, provide at least 3 reasons to justify which 2 supplier you would recommend keeping? Based on your adjusted (for SPI and inflation) pricing from Question 2, what will be your annualized savings $ (split the full volume 60/40 between your selected 2 remaining suppliers)? (10 pts) 5) For the 2 suppliers that you choose, identify at least 3 areas (for each of the 2 suppliers) in which you can challenge them for further savings and/or continued performance improvement? (5 pts) Vision Plus 650,000 9.25 0.60 Supplier Digicam ICU Tech 550.000 450,000 8.95 9.80 0.75 0.70 Clearpic 350,000 10.05 0.85 1.0% 2.0% 0.5% 1.5% 8 11 41 9 9 12 16 8 10 Performance Criteria Non-Performance Costs (last 12 months) Purchase Volume (units) Unit Price ($) Delivery Cost ($/unit) 3-Year Price Inflation (annualized %) Defect Rate (per 1,000) Rework / replace cost $26 / unit Received Damage Rate (per Disposal / credit recover cost $18/unit 1,000) Order Fill Rate (%) Every 1% point below 99% adds stock-out recovery cost of $0.06/unit to all units (n/a if >= 99%) On-Time Delivery (%) Every 1% point below 96% adds expedite cost of $0.03/ unit to all units (n/a if >= 96%) Process Improvements initiated by supplier (#) Technical Advances initiated by supplier (#) % electronic purchasing transactions 95 93 97 92 92 891 95 91 4 0 2 1 5 2 4 0 85 60 75 30 Assignment Questions (50 pts) 1) Calculate the supplier performance index (SPI) for each supplier, inclusive of delivery costs - round to 3 decimal places. (15 pts) 2) Applying the SPI from question #1, calculate the total delivered unit cost from each supplier, adjusted for inflation - round to 2 decimal places. (10 pts) 3) Produce a weighted point system evaluation matrix for these suppliers. (10 pts) a) Use primary categories of Cost, Quality, Service, and Innovation - determine your own sub-categories. b) Determine your own weighting and scoring criteria 4) If your goal is to rationalize and consolidate your purchasing volume across only 2 suppliers, provide at least 3 reasons to justify which 2 supplier you would recommend keeping? Based on your adjusted (for SPI and inflation) pricing from Question 2, what will be your annualized savings $ (split the full volume 60/40 between your selected 2 remaining suppliers)? (10 pts) 5) For the 2 suppliers that you choose, identify at least 3 areas (for each of the 2 suppliers) in which you can challenge them for further savings and/or continued performance improvement? (5 pts)