Case study analysis: Supplier evaluation and supply planning

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Purpose

This assessment aims to equip the students with the capability to select, evaluate, and plan suppliers in a manufacturing supply chain. Thus, Assessment 2 aims to engage students in determining the best supply network for a product and to plan supply to satisfy forecasted demand according to the Sale and Operations Planning context. There are two steps in this assessment: (1) Evaluation and selection of appropriate supplier in the supply chain of a company and (2) Supply planning throughout the supply chain to match supply and demand. In this regard, Students are required to assess suppliers, calculate a decision matrix, and apply a multi-criteria decision-making approach to evaluate and select the supplier (according to the activities of Workshop 7). Afterwards, the students should apply Material Requirements Planning (MRP) (according to the activities of Workshop 6) to plan the supply and sourcing requirements for the selected suppliers.

Case description

Yukiaio Company is a renowned Japanese manufacturer of intelligent AI-based home appliances. The company is involved in a wide range of activities, including manufacturing, marketing, sales, and after-sales service. Its product line encompasses kitchenware, consumer electronics, and small appliances. Notably, it distributes its products to over 10 countries and has a workforce of approximately 8,000 employees spread across five manufacturing facilities. This workforce is supported by a global sales and marketing team. Furthermore, the company places significant emphasis on the development of environmentally friendly products and adheres to an environmental management system that complies with national and international legal standards. Yukiaio Company maintains close and high-level partnerships with its suppliers, highlighting the utmost importance of selecting the best suppliers for its business operations.

One of its recent products is the "smart robotic vacuum cleaner," which can contribute to sustainability and eco-friendly measures in several ways: energy efficiency through the use of sensors and mapping technology, scheduling features for optimized cleaning, precision cleaning in specific areas, reduced reliance on chemicals and water, enhanced indoor air quality, decreased need for manual cleaning, and integration with smart home systems for improved control. Yukiaio Company offers this smart robotic vacuum cleaner in the European market for $950. A typical smart robotic vacuum cleaner produced by Yukiaio Company is depicted in Figure 1.

Fig. 1. A typical smart robotic vacuum cleaner manufactured by Yukiaio Company.

The Yukiaio Company's supply chain is depicted in Fig. 2. The electrical components pack and the mechanical components pack are provided separately for assembly at the company's factory. The company has a long-term collaboration with a supplier of mechanical components. However, in accordance with Yukiaio Company's new sustainability policy, the company is now required to assess and choose the most environmentally friendly supplier for electrical components through a systematic decision-making process.

Fig. 2. Infographics of the supply chain by Yukiaio Company.

Several factors need to be considered when evaluating and selecting the right green electrical components supplier. The company engaged professional consultants specializing in home appliance manufacturing to identify the key factors. Their analysis led to the identification of four criteria: "Economical," "Technology and Management," "Environmental," and "Societal," along with their respective sub-criteria. The hierarchical framework for solving the green supplier selection problem is depicted in Figure 3. Additionally, Table 1.1 (in the attached MS Excel file) provides descriptions, units, and objectives related to the sub-criteria. As shown in Table 1.1, there are two types of sub-criteria in this problem: quantitative and qualitative. For qualitative sub-criteria, a scoring system ranging from 1 to 10 is utilized, where 1 represents the worst score, and 10 represents the best score.

The decision panel, which comprises both consultants and company managers, has assessed the relative importance of the criteria and sub-criteria for evaluating and selecting electrical suppliers. Based on the decision panel's input, the weights assigned to the criteria and sub-criteria are provided in the attached MS Excel file (Tables 2.5 and 2.6).

Fig. 3. The hierarchical framework of the case study.

For electrical components, the company collects information about 10 potential suppliers using three distinct methods: (i) reviewing their historical performance, (ii) analyzing statements found in their proposal documents, and (iii) seeking assessments from external experts. The Excel file, Table 2.1, contains estimates of the historical performance of green suppliers, covering data over a five-year period. Table 2.2 contains statements from green suppliers, as provided by the authorities of these suppliers. Table 2.3 lists the assessments of green suppliers made by external experts.

One of the primary challenges facing Yukiaio Company's supply chain is the coordination of its daily operations with its Green Electrical Supplier (GES) and Green Mechanical Supplier (GMS). Therefore, the Sales and Operations Planning (S&OP) team aims to align sales, operations, and financial activities to facilitate decision-making in order to balance supply and demand. S&OP involves integrating high-level strategic decisions with tactical and operational activities. Once the appropriate GES for the electrical components has been selected, Yukiaio Company's S&OP team must align the supply and manufacturing operations of GMS and the main company with the demand for the upcoming year.

The SO&P panel found that the supply planning of the smart robotic vacuum cleaner involves dependent demand inventory planning because its planning is directly tied to the production of electrical and mechanical components by GES and GMS, respectively. The procurement of these components should be carefully coordinated and aligned with the production and demand schedule of the main company. To address this challenge, the SO&P panel aims to implement Material Requirements Planning (MRP) throughout its supply chain.

In the periodic SO&P meeting, the marketing and sales team provided a demand estimation for the new robotic vacuum cleaner, as indicated in Table 3.2 (in the Excel file). Meanwhile, the finance team on the panel gathered information regarding holding and transportation costs, while the supply chain team presented lead time estimations throughout the chain. Tables 3.3, 3.4, and 3.5 illustrate the factors related to cost holding, production cost, lead times, production lot size, and minimum production quantity for Manufacturers, GES, and GMS.

In the periodic SO&P meeting, the marketing and sales team provided a demand estimation for the new robotic vacuum cleaner, as indicated in Table 3.2 (in the Excel file). On the other hand, the finance team in the panel gathered information regarding holding and transportation costs, while the supply chain team presented lead time estimations and production specifications throughout the chain. Tables 3.3, 3.4, and 3.5 illustrate the factors related to holding costs, production costs, lead times, production lot sizes, and minimum production quantities for the Manufacturer, GES, and GMS.

Task details

Each student needs to critically analyse the above case and address the following questions:

Task 1: Evaluation and Selection Process for Suppliers' Performance (Approximately 500 words)

Merge the values from the three evaluation tables in the Excel file to determine a final evaluation for the candidate suppliers of electrical components. This involves assigning a 20 percent weight to the historical performance of green suppliers, 30 percent to the statements collected from green suppliers, and 50 percent to the assessment provided by experts on green suppliers. Sum up these results to arrive at the rating for the decision matrix.

Utilize the criteria and sub-criteria weights to calculate the final score of candidate suppliers using the Simple Additive Weighting (SAW) method and identify the best supplier. You should also discuss the computations and results. Please refer to the activities of Workshop 7 and the related workbook on the SAW method for further details.

Task 2: Supply Planning (Approximately 500 words)

You got a procurement coordinator position on the S&OP panel, and you are aware of the estimated demand for smart robotic vacuum cleaners provided by Sale and Marketing team of the panel. Utilize this estimated demand and other data provided in Sheet 2 (supply planning) of the MS Excel file to coordinate the supply plan for two suppliers of mechanical and electrical components based on the estimated demand. You need to develop the MRP model in another sheet of the MS Excel file for the company, GES and GMS (refer to the activities of workshop 6 and related workbook materials about S&OP and MRP)
Utilize the holding and transportation costs for the company, GES, and GMS to compute the comprehensive costs of the MRP that was developed (refer to the MRP activities in workshop 6). Kindly include a comprehensive discussion of the calculations and their associated outcomes.

Task 3: Sensitivity analysis and discussion (Approximately 1500 words)

The company's expert panel acknowledges that the significance of environmental sustainability impact has been underestimated, and it should be increased by 20%. Additionally, the panel has identified inaccuracies in the statements regarding societal criteria from all candidate suppliers. These suppliers falsely claimed their performance to be 10% higher than their actual figures in all societal sub-criteria. Please rectify these errors in your calculations and analyze and discuss the implications of these inaccuracies on the supplier evaluation and selection process for the company.

The chosen supplier of electrical products has informed us that, owing to a labor shortage, they will need an additional month to produce and transport the products to the Yukiaio factory. Meanwhile, inflation has led to a 6% increase in transportation costs from the GES to our company. Evaluate and discuss the impacts of both inflation and the labor shortage on your proposed supply chain plan.

Instructions and Submission details

Students are required to submit their reports using only a single MS Word file, which should contain their analysis, results, and discussion. No other format is acceptable. Make sure that the final results of your MS Excel analysis (relevant graphs and tables) are integrated into your MS Word report using screenshots. Your MS Excel username and student ID, as indicated in your LMS account, should be clearly visible at the top of all these screenshots. Please be aware that students may be randomly selected to present their reports and analyses during online or face-to-face sessions after submission.

Solution

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