Supply Chain Management and Raw Materials

Case Study 8. 1 Sedgman vane * Background * Sedgman Steel Inc. * North American Co. (diversified) * Annual Sales of $1. 7 billion * Syracuse Plant * Produces cut to length steel thermionic valve and steel tatters to the automotive industry. * Customers provide specs for orders (eg. chemical comp. , thickness, diameter, etc. ) * naked Materials supplied from 3 sources. * Tubing from sister co. (internally sourced. * Steel coils used for steel sheet production multisourced (2 Co. * Physical Distribution * JIT (Just In Time) to customer base. * Policy * Materials involve 2 weeks prior to production * Procurement headed by Director of Materials vigilance (Isaac Theisen) * Alice McKenzie is the Production Material Control Supervisor * Resposibilities be * Incoming/outcoming rapture * Inventory control * Production planning/scheduling * Fill rank Asked to investigate large amount of current on hand peeled materials inventory * Purchase spend made by Syracuse kit and caboodle wa s$ 65-75 million/year * Purchasing manager facility was conclusionly touch on with sales to ensure sales pricing was in line with get costs. * Inventory of raw materials on hand is $20 million * Issues * as well much raw materials inventory on hand * Inventory is cumulus up rather than beign used as constant rate of production. * data Analysis * $20 million in raw materials inventory Warehoused adjacent to facility in 50,000 sq ft building * Fehr Logistics Company (FLC) needed to shape inventory and logistics (3PL) * Contract specified of staff to be employeed and working hours * Alices visit * Warehouse is full with both types of raw materials * Trucks waiting to be unloaded * 5 staff working when 8 typically was the repair staff running warehouse operations * Delivery of Raw materials was to be at least 2 weeks prior to production * Customer orders establish manufacturing Fehr logistics controlled inbound transportation * Decision Criteria * Lowering Cost * Lowering cen ter of inventory * Maintaining production flow * Meet while frame open * Compliance with poilicies * Alternatives * Do nothing * Ensure 8 staff are working warehouse at all times fulfilling FLCs contract obligations * Suspend buying of raw materials for a short period of time until a good chunk of raw material is used up. ca-ca new purchasing processes for forcasting and shipping requirements from suppliers * Refuse shipments of current POs so surplus raw materials can be used up. * exculpate contract with FCL due to lack of competancy and hire a new 3PL to renew of FCL. * Request Return of Good approval from suppliers to get inventory close to optimum production standards. * Assumptions * FLC is not fulfilling their contract obligations * Purchasing has not forcasted decent or purchased demand amounts in line with production schedules.