SupplierQualityControl inACME

Acmeisa largeassemblerof domesticelectricalappliances. Inkeepingwitha policy ofsubstantially reducing its supplier base, Acmehadonlyonesupplier of component 149 used in the manufacture of domestic cleaner.The home and export sales amount to over 10,000 products.Component 149 is relatively cheap but has a high safety risk factor, one requirement being that the component should be adequately insulated to obviate any possibility of users receiving an electrical shock.

Component149issuppliedbyElstonElectricalIndustriesplc.Elstonwasselectedby Acme some six years ago from a shortlist of five potential suppliers.The selection criterion was that Elston was considerably cheaper in price than the nearest of its competitors. Additionally,ElstonhadrelevantBSENISOcertification,andathorough independent review of its quality system had been carried out by Acme's design and purchasing staff.Elston delivers 750 items of component 149 to Acme at 2 days' supply.AconditionofthecontractisthatthereisnoneedforAcmetocarryoutany independent inward inspection of component 149.

Until recently there has been no record of any failure in the quality of components supplied by Elston.Acme has therefore regularly renewed the contract on a yearly basis subject only to agreed price increases.Confidence in the quality of the componentsuppliedhasresultedinnoauditbyAcmeofElston'squalitysystemssince the placing of the original order.

Acme has recently started to receive complaints from retailers who have been approached by users of the cleaner who have had slight shocks.More seriously, a letterfromasolicitorhasthreatenedcourtactionbecauseitisclaimedthatthedeath of a user with a weak heart is attributable to the shock received.Adverse publicity regardingthecleanerhasalsoappearedinthenationalpressandtherehasbeenafall- off in sales.

Investigationshowsthattheshocksareduetocomponent149. Furtherinvestigation reveals that Elston, without notifying Acme, had decided a cheaper insulation might be used for component 149 thereby enabling Elston to maintain its price differential by reducing their costs. Even worse, the failure can only be detected after assembly.

Acme had decided to recall some 35,000 cleaners sold during the last four months. Elstonhasalsobeeninstructedthattheinsulationmustreverttotheoriginalstandards,but Elston states that it will be at least 14 days before its own supplier can meet this requirement and that a price increase will also be necessary.In the meantime, assembly at Acme will be at standstill.

Question:

1. IfyouarethePurchasingmanagerofACME,criticallyevaluatethecontributions that purchasing function of ACME can deliver with respect to the assurance of product quality?