Question: The Course Paper will cover a fictitious component part known as a Hydraulic Cylinder Assembly End Block on the path to being released.
Purchasing as a BUY part to select, evaluate and decide on the source of supply for the company.
The company requires you to have the part made to print and in inventory at our factory in 100 days at production volumes. A timeline of activities is necessary for you to be able to track progress against and ensure that the correct processes are followed by you and the Supplier. You will categorize this part, find possible sources of supply in Juarez, Mexico to evaluate the suppliers you find, submit the specifications, and take a bid. You will evaluate the bid, negotiate the price, establish quality standards, pilot, build the part, and submit samples to the internal quality group for confirmation. Then, you may award the business, start production, and determine the mode of transportation, ensure regulatory compliance with import, and have inventory in place by Day 95 of the 100-day task.
The estimated usage for this part is 20,000 units per year. Cost Management has given you a budgeted target price based upon known elements of steel type and price per pound, the perceived standard machine shop processes and tolerances and clear zinc plating process, typical machinery, labor, and profit totaling a purchase price of $9.75 USD each. This spend is worth $195,000. Your approval level is $50,000, requiring you to present your sourcing decision to the vice president of procurement in order to place the business. You must present a case to the Vice President that supports your decision to work with a given supplier and why.
In the summary you will explain the
1. STRATEGIC FIT - Quality-Cost and Delivery
2. How this decision helps us achieve current CORPORATE OBJECTIVES
3. Allows us to meet BUDGET and MARGIN requirements
ii. Any Critical Data and a Final Recommendation
b. Make note now of any known issues that can impact the company in the future