pw operations management unit 4

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University of the People BUS 5116-01-AY2024-T2 Operations Management Dr. Robert Shepherd (Instructor) Due December 13 th , 2023

There are times in Operations Management when critical decisions must be made to help advance the company in its operations and profitability. These decisions do not come easy but with proper analyzation, data gathering, one can make the best-informed decision. The following paper is a proposal on behalf of a procurement analyst faced with a decision to identify the best supplier to outsource a complex part of our company supply chain. We will first describe the case and identify major issues, provide depth and scope of the analysis, reveal solutions and strategies from the analysis, and conclude with a summary of what was learned from the decision-making process. Working for a large company as a procurement analyst, the task of identifying the best supplier to outsource a complex part of our value chain. A value chain can best be described as a series of steps that go into the creation of a finished product. The chain will identify each step in the process at which value is added (Tardi, 2023). Our series of steps first involves the price, in which we need to compare the price quoted by the supplier vs. the outsourcing company target price. The second series involves quality, or parts accepted vs. parts delivered. Third, the delivery method, parts delivered on time vs parts delivered. We finally have other outside factors to consider, such as lead time, and the integrity of the suppliers. Gathering this data from the 3 potential suppliers, we have come up with this table to help us make the best decision.

As we evaluate each supplier, we must remember that the role of supply chain management is managing the flow of goods and services to and from a business involving every step from turning the given initial materials into final products and getting them into customer hands (Fernando, 2023). With this in mind, we must go beyond the factors of price, quality and delivery and consider other factors. As we see from our table each supplier has other factors beyond the three to consider as well. Supplier B can be eliminated. Despite the full 100% of numbers the factors of financial issues are not worth risking entrusting a vital part of our supply chain to them, especially with a 3-year commitment. Imagine several months into this endeavor and they declare bankruptcy or do not honor the agreement due to their financial issues. This leaves us with Supplier A and C. Both suppliers give a delivery rate of 95% but supplier A can give 90% to price and quality. However, the lead time of 3 weeks tells us that we are working with an overseas supplier. Supplier C gives 85% to price and quality, but their proximity as a supplier with 3-hour lead times must be considered. Though Supplier A has slightly better metrics, the need for proximity and 3-hour lead times is worth the 5% change in price and quality and Supplier C will be the company we will choose for this part of our value chain. Remember our company operates in a mature market and the factors at play are quality and time. The time factor in Supplier A is too grave of a lead time to adjust to the needs our company has, which is why we must go with Supplier C. If our company factors changed to price and quality changed, then we may reconsider Supplier A. As a company, if we can increase efficiency and re-calculate the numbers, creating a lower exponential mark for Suppliers A and C, there would be a breaking point. I would still not consider Supplier B due to their financial struggles, but a percentage under 75% while other supply options stayed above 85% would have to be considered even with lead times of 3 weeks

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versus 3 hours. At this point I would change my election, but with the current data provided, Supplier C will be getting our business. It’s vital in supply management strategy to always be analyzing and re-analyzing decisions that were made. Today we have made the decision to go with supplier C, but that supplier may not be our best avenue or direction when it’s time to renew the outsourcing contract. We are content with supplier C now, but we must never stay content in operations management. In conclusion, the supply management field relies heavily on care planning and accurate forecasting. It’s rare for every aspect to go as planned, but supply chains must be flexible, analyze the challenges and find the best solutions possible within the value chain of your distribution line (Reiland, 2023). We find that with supplier C, our transport lead times give us the best flexibility without severely hindering the quality and price of the product. Future factors and supplies quality could be a factor in choosing Supplier A in the future, and who knows what will occur in the next three years, but when that time comes, another analysis in our operations will need to occur to make sure the right supplier will benefit our company supply chain the most.

References Fernando, J. (2023). Supply Chain Management (SCM): How it works & why it’s important . Investopedia. https://www.investopedia.com/terms/s/scm.asp Reiland, M. (2023). What is supply chain management? common courses and degrees . Forbes. https://www.forbes.com/advisor/education/what-is-supply-chain-management/ Tardi, C. (2023). Value chain: Definition, model, analysis, and example . Investopedia. https://www.investopedia.com/terms/v/valuechain.asp#:~:text=A%20value%20chain%20is %20a,marketing%20stages%20of%20its%20production.

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