You have recently been appointed as the Procurement lead role on the cross functional team at Alset conducting market research to source a new miniature data projector - a component in a new line of Alset multimedia device branded SPARKi's. The SPARKi combines the two functions of tablet PC and smartphone.

The engineering team visited the production site of the supplier (Matildas) and the observations are as below:

Matildas :

The local Australian supplier, a fairly large and reputable manufacturer of computer equipment, including digital data projector equipment, was located in Wollongong less than ten kilometres from Alset's facilities. About 65% of the company's sales came from the sale of data projectors, whilst the remainder was local assembly of video cameras for video conferencing. In fact, the firm was one of the largest producers of these devices worldwide (with almost 10% market share).

Upon entry at the administration office and while waiting to sign in to the premises as visitors, the Office Manager gave a brief safety induction and a company overview. He explained that the business espoused a high value of corporate social responsibility, which the team noted the number of plaques in the administration office recognising their year on year sponsorship of Clean Up Australia day, local sporting teams and local schools. The Office Manager also explained with pride that they had a strong association with a local not for-profit social enterprise which employed intellectually disabled people to support them in undertaking meaningful paid employment by having them complete all their repetitious sorting of recycling activities.

The Plant Manager introduced the team to the Supply Chain Manager who set out their proposal to simply have a blanket order for the two years, and then to provide rolling forecasts of expected production of SPARKis so that the Matildas plant could mirror the production and deliver in any batch size. This interested the team as the reduction in processing and administration of purchase orders would be reduced. They determined that Matildas would place only 1 invoice per month against this blanket order.

The Plant Manager also emphasized that because of their close proximity to Alset, they would have no problem delivering the product in daily lot sizes, "just-in-time," to Alset's facilities. The Plant Manager stated that they had priced their product as FIS stating that due to having other customers in the area they would be able to co-ordinate delivery without additional costs. They also had mini-vans that could deliver small to mid loads with their own lifting equipment meaning that the receiving costs at Alset's warehouse would be minimized.

The Plant Manager explained that they were extremely keen about gaining a large customer close to their premises as they could keep vendor held stock and simply deliver as required, rather than what they do for export customers which was to produce for weeks at a time, and then deliver batches. He stated that supplying batches for overseas caused their production to be "lumpy" and that they were keen to be able to smooth production and saw a local customer as being able to perform this, even if they did not receive all the business, it would be beneficial for their company just to utilize their existing capacity. He stated that the production lines they had had a capacity limit of nine million units.

The Supply Chain Manager pointed out that the company has committed significant resources to setting up a JIT production system for the data projector line. Indeed, the Alset team was impressed with the performance of the kanban signals and flow-through workstations. All operators wore high visibility shirts and safety shoes with helmets and glasses, and the Supply Chain Manager explained that the workforce was highly mobile utilising local labour providers, with many employees being on contract from labour providers which allowed them flexibility in workloads. This was why all the operating lines had very clear procedures and signs advising of requirements.

The Supply Chain Manager was able to show the team reports that backed their incredible delivery performance of 99.95% on-time delivery claim. Matildas had a solid reputation within the industry for working with its customers on supply chain efficiencies. Matildas's larger customers in Australia included CSC, Fuji Xerox, Telstra and HP.

Upon visiting the quality department, the Quality Manager seemed particularly preoccupied. When the Plant Manager left for a few minutes to answer a phone call, the group asked the Quality Manager if the company had experienced any significant problems recently. He confessed that the last shipment of data projectors had several quality problems, and the number of returns from large distributors had increased dramatically from the historical performance of 7,000 parts per million to a record high of 9,500 parts per million during the last two months. This was creating some fairly severe disruptions to production scheduling and delivery. The most serious problem was an annoying "clicking" sound made by the device as it engaged the data projector. However, he assured the Alset team that the design engineers were working full-time on the problem, thought it was a recent tooling implementation issues, and that it would be solved well before Alset placed an order. When the plant manager returned, the quality manager made no further mention of the problem.

The Plant Manager estimated that the ramp-up time for the first shipment would be very short, approximately 8 weeks. They would have people working full time on the implementation of the tooling machinery, and the estimate for the tooling would be approximately $1.8 million. When clarifying that this amount seemed high, the Plant Manager advised that labour was a shortage in the Illawarra area, and that he would need to compete with local businesses to secure machining, fabrication and installation providers to have the tooling completed in such a short time. This was the best estimate as a maximum cost that they would guarantee.

Relevant Matildas data from their tender response include:

FIS quoted price = $149 per unit Ramp up time = 8 weeks Delivery lead time = 1 weeks (for initial order, then on a weekly rolling forecast but could delivery with a days notice where required). They explained that much of the tooling time and ramp up time was reduced allowing more testing during the first week Frequency of Shipment = daily Estimated day of arrival = Any weekday, 9am - 10am Plant capacity = 9 million units per annum Current operating capacity = 92% On-time delivery record = 99.95% on-time Quality = recent performance 9,500 defects ppm as a historical high Minimum batch size = 1 unit - due to being so close and having their own courier system, they could deliver any number per day Price basis = FIS = Free In-store - unloaded Tooling cost = $1,800,000 Payment terms = monthly - pay on the last day of the month for all deliveries that month

QUESTION:

Based on the case study above give a rating (from 1 to 10) to supplier Matildas for each subcategories and make comments for each of the subcategories. Please fill up the table as below:

Criteria	Sub Criteria	Weight	Rating (1 to 10)	Comments based on the rating
Specification	Quality of Product - The quality of the miniature data projector against engineering specifications	10
	Quality Defect Rate - The quality performance of suppliers based on quality defect rate ppm	10
	Criteria Total
Manufacturing	Quality Systems - Commitment to quality processes and systems	10
	Capacity - Capacity to satisfy volume forecasts	10
	Capacity Increase - Capacity to increase supply by 25% on provision of 4 weeks' notice	10
	Criteria Total
Costs	Cost per Unit/Term - Manufacturers quoted total cost per unit	10
	Tooling Costs - Manufacturers ability to minimise total tooling costs	10

	Total Cost of Ownership - Minimise total cost of purchase including inventory holding and logistics	10
	Cost Reductions - Manufacturers ability to maintain or reduce costs over the term	10
	Criteria Total
Logistics	Implementation Schedule - Ability to meet tooling, ramp-up and lead time implementation schedule	10
	Lead Time - Lead time and ability to change requirements	10
	Delivery Performance - Delivery Reliability based on delivery performance and systems	10
	Order Processing - Ability to use forecasts and reduce administrative processing	10
	Criteria Total
Organisational Alignment	Customer Status - Priority customer status (ie high level of attractiveness of account to Supplier)	10
	Organisational Fit - Organisational fit with our mission statements and potential to build a strong working relationship	10
	Technological Innovation - Investment in research and development and commitment to continually improving and innovating	10
	Long term Partnership - An ability to have a potential long term partnering relationship	10
	Criteria Total
Corporate Citizen	Safety - Record and priority of safety	10
	Social Responsibility - Community perception of partnering with supplier	10
	Criteria Total
Management Capability	Supplier Reputation - Reputable Supplier (inc. staff) who possess a high level of knowledge, expertise and resources	10
	Financial Stability - Business is financially stable for future	10
	Information and reporting - Management reporting capability including market intelligence	10
	Criteria Total
TOTAL SCORE