The Global Sourcing Wire Harness Decision pg 837

1. Introduction: a brief overview of the case.
2. Case Facts
3. Root Cause of the Problem
4. Calculate the total cost per unit of purchasing from Original Wire.
5. Calculate the total cost per unit of purchasing from HLS.- The total cost per unit for the purchase from lucky assemblies= $29.25
6. Based on the total cost per unit, which supplier should Sheila recommend?- With the total cost being $29.25, Sheila should recommend a single wire harness.
7. Case 3. Managing Supplier Quality: Integrated Devices

Bill Edwards is a quality engineer assigned to the Injected Molding Commodity Team at Integrated Devices. The commodity team is responsible for evaluating, selecting, and negotiating agreements with plastic-injected molding suppliers to be used throughout Integrated Devices. The team is also responsible for improving service quality and material that Integrated Devices receives from its suppliers. Bill's role after supplier selection involves working directly with suppliers that require training or technical assistance concerning quality control and quality improvement.

The company spends about 70 percent of each sales dollar on purchased goods and services, so suppliers have a major impact on product quality.

Bill just received a call concerning a recurring manufacturing problem at Integrated Devices' Plant No. 3. The plant buyer said the plant is experiencing some quality variability problems with a key plastic-injected molding component supplied by Trexler Plastics. The component is sometimes too short or too long to fit properly with other components within the finished product. On occasion, the bracket snaps, causing end-product failure. Although the unit cost of the plastic-injected molding component is only $1.55, these quality issues (length variability and snapping) are creating production problems that far exceed the component's purchase price.

The local buyer announced he was having difficulty resolving the problem and asked for support from the corporate commodity team. The buyer said, "You corporate guys selected this supplier that we all have to use. The least you can do is to help us out of the jam your supplier choice is causing." The buyer's comment surprised Bill, although Bill would soon come to understand that plant personnel resented not being able to select their own suppliers.

After investigating the problem during a tension-filled meeting with Plant No. 3 personnel, Bill determined he would have to visit the supplier directly. He would work with Trexler's process engineers to address the manufacturing variability caused by the nonconforming component. Bill went back and reviewed his team's actions when selecting a single supplier to provide an entire family of plastic-injected moldings.

Trexler had quoted the lowest price of all competing suppliers and had provided samples that passed Integrated Devices' engineering tests.

Upon his arrival at the supplier, Bill learned that Trexler did not have a dedicated process engineer. One engineer, Steve Smith, was responsible for plant layout, process, quality, and industrial engineering. This individual, who was hired only two months previously, was still becoming familiar with Trexler's procedures. When Bill asked to review the supplier's quality control procedures, Steve had to ask several people before he could locate Trexler's procedures manual.

Bill decided that his first step should be to understand the process responsible for producing the defective component. At an afternoon meeting, Bill asked Steve for actual output data from Trexler's process. Steve explained they did not collect data for process capability studies or for statistical control charting of continuous production. However, he did say that sometimes "things don't seem to be operating well" with the equipment that produces the component. Trexler uses an inspector to examine every finished item to determine if it should be shipped to the customer.

After explaining the basics of process capability to Steve, Bill asked him to collect data from the process that produced the bracket component. Bill requested that Steve take exact measurements periodically from the process so they could draw statistical conclusions. Bill said he would return in three days to examine the data.

Upon his return three days later, Steve shared with Bill the details of the data collection effort (see Exhibit 1).

Exhibit 1

4.01	4.02	4.00	3.99	3.98	4.00	4.00	4.03
4.04	4.02	4.07	3.95	3.98	4.01	4.03	4.00
4.00	3.96	3.94	3.98	3.99	4.02	4.01	4.00
4.05	3.98	3.97	4.03	4.07	4.04	4.02	4.01
3.99	3.96	4.00	4.00	4.01	4.02	4.02	4.01
3.98	3.99	3.94	3.93	4.00	4.02	4.00	3.97
3.99	4.02	4.04	4.00	3.96	3.97	4.00	4.01