1. One reason OEM uses several tiers of suppliers is to rapidly communicate demand and ensure delivery commits are received in a timely manner. This reduces the risk of product shortages. Requiring suppliers that specialize in a certain component allows the highest quality products in a short amount of time. This gives them the opportunity to require suppliers to produce special models or specifications of a component as well. Another benefit of using multi tiers is less supply chain risk. OEM requires JCC to deliver the completed chassis. JCC manufactures the frame from steel tubing but must also attach the front forks, handlebars and wheels. This process is more difficult for JCC but makes it easier for OEM because they don’t need to be in
…show more content…
JCC is in a difficult position because it must arrange delivery of all the parts to attach to the frame they manufacture. This requires great communication and management skills as the process can be complex and confusing. Since JCC operates according to Lean principles they must ensure that deliveries are met on time. The quality of the purchased parts is crucial. Both of these requirements must be satisfied because they have production demands from the OEM and any delays are costly to the company. The supplier of the handlebars is also a subsidiary of the company that owns JCC gives priority to external customers. JCC at times has had to purchase parts from outside suppliers at a higher cost. Using the Lean principles does, however, reduce the amount of inventory of work in process and finished goods. This process eliminates waste because it prioritizes which activities create value and which lead to waste. This allows them to dedicate more area in the building to retooling operations. JCC must ensure that packaging on deliveries is acceptable because they can’t afford to have any components arrive damaged at the site as this will cause delays in production. JCC must also check the components before and after assembling them on the manufactured frame. They have had to purchase additional equipment and have someone spend the time testing the quality as well. This has been an issue in the past as JCC had to deal with a complaint from the OEM about a vibration and poor handling qualities in the bikes. JCC traced the problem to the tire manufacturer. The wheel/tire combination must be balanced and JCC has had to purchase a wheel balancing machine. OEM refuses to increase the contract price to offset JCC’s additional costs of equipment and
JCC is in a difficult position because it must arrange delivery of all the parts to attach to the frame they manufacture. This requires great communication and management skills as the process can be complex and confusing. Since JCC operates according to Lean principles they must ensure that deliveries are met on time. The quality of the purchased parts is crucial. Both of these requirements must be satisfied because they have production demands from the OEM and any delays are costly to the company. The supplier of the handlebars is also a subsidiary of the company that owns JCC gives priority to external customers. JCC at times has had to purchase parts from outside suppliers at a higher cost. Using the Lean principles does, however, reduce the amount of inventory of work in process and finished goods. This process eliminates waste because it prioritizes which activities create value and which lead to waste. This allows them to dedicate more area in the building to retooling operations. JCC must ensure that packaging on deliveries is acceptable because they can’t afford to have any components arrive damaged at the site as this will cause delays in production. JCC must also check the components before and after assembling them on the manufactured frame. They have had to purchase additional equipment and have someone spend the time testing the quality as well. This has been an issue in the past as JCC had to deal with a complaint from the OEM about a vibration and poor handling qualities in the bikes. JCC traced the problem to the tire manufacturer. The wheel/tire combination must be balanced and JCC has had to purchase a wheel balancing machine. OEM refuses to increase the contract price to offset JCC’s additional costs of equipment and