Key supply management issues
My boss was hired as Vice President of Supply Management for the company and was told by the CEO that he had been selected specifically to quickly initiate a supply management strategy and process.
We are an old and well established supplier to the plumbing industry that manufactures finished cast brass plumbing fittings. Their customers are wholesale plumbing re-suppliers and discount homeowner superstores such as Lowes. The company operations, as well as our supply process, appears to be fragmented. I told my friend Jack, "Supply had evolved haphazardly to meet purchase requirements."
Jack has also discovered that no single person or function seems to be responsible for any particular supply function. As far as he can determine, there are over 85 suppliers just for the raw brass castings, and many of them provide the same casting. The reason for this large quantity of active suppliers cannot be accurately determined but seems related to a mentality of "more suppliers equals lower prices". It appears that other purchased materials or commodities are managed through multiple suppliers with fragmented processes.
The Finance and Accounting office told Jack that even though supplier lists exist, it would require several weeks to provide a current spend analysis. Similarly, there is not a systematic process in place to evaluate or track supplier performances. Jack was also told that the records that do exist are old and or unorganized.
Jack has to develop an initial supply management strategy for the CEO. His meeting is in two weeks. While the CEO does not expect a completed plan he does expect an overview of what the current process is and an initial plan to accomplish at least two goals: 1) reduce costs, and 2) understand who the suppliers should be. Jack has asked me to take a first stab at it since he is new.
My Questions:
1. What are the key supply management issues to understand in the next two weeks, before Jack's meeting with the CEO?
2. What recommendations might be made to improve the supply management function and what challenges will Jack probably face in doing this?