Kuiper Leda Supply Chain Defense Graded A
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Running head: KUIPER LEDA SUPPLY CHAIN DEFENSE
Kuiper Leda Supply Chain Defense
University of Phoenix
February 18, 2008
Kuiper Leda Supply Chain Defense
The constant changes in the international economy create an environment where organizations today need to understand the need for an effective supply chain management system to sustain a competitive advantage in the global marketplace while creating wealth maximization for shareholders. The unstable international economic environment, fluctuations in fuel oil prices, constant changes in the exchange rates, and political unrest in various parts of the world create unprecedented challenges for many organizations throughout the world today. Consequently, creating an effective supply chain management system, understanding the global economy, various interactions between suppliers, manufacturers, distributors, and consumers are the key elements to survival. Any company and especially Kuiper Leda must learn to exploit products and or services to ensure continued growth, prosperity, and the ability to be successful in the ever changing international marketplace. Kuiper Leda must apply the supply chain management strategies outlined in this paper to be an agile manufacturer in to the next decade.
Kuiper Leda Supply Chain Defense
Kuiper Leda located in the Republic of Novamia is an electronic components manufacturer that specializes in Electronic Control Units and sensors for the automotive industry. (University of Phoenix, 2008) The company recently received a growth opportunity that will exploit a new product line of Radio Frequency Identification Tag System (RFID). This growth opportunity is the result of a strong technology base which has allowed the company to grow. Kuiper Leda has been producing the electronic control units for the last 10 years whereas the company has only been producing the RFID for the past six months. In the simulation, Kuiper Ledas production capacity is approximately 1,250 units of electronic control units (ECU) and 250 units of the radio frequency identification tag systems. Midland Motors an American original equipment manufacturer recently received a large order for power train assemblies through a leading car manufacturer. Consequently, this is an increased demand for company products. Midland is a channel distributor with a significant customer base which means that Kuiper Leda may experience unprecedented growth with this order. Midland placed an annual order of 250,000 electronic control units which is a necessary component for power train assemblies. Plus, Midland placed an annual order of 35,000 RFID tags to facilitate inventory control. As a result of this increased demand for Kuiper Ledas products, the company needs to reexamine the supply chain management process to ensure satisfied and repeat customers. This means that Kuiper needs to confirm that the existing supply chain process is efficient, streamline, capacity to handle bottlenecks and effective. “Supply chain management is the process of planning, implementing, and controlling the operations of the supply chain with the purpose to satisfy customer requirements as efficiently as possible.” (Supply Chain Management, 2008) “Supply chain management the production process for Kuiper Leda provides all the necessary materials to produce both the electronic control units and the radio frequency identification tags internally however, with the Midland order the company will no longer be able to produce efficiently both products. Kuiper Leda is not geared to produce large quantities of either product. The company leaders need to decide if to accept the Midland request for products, how to manage manufacturing volume, and maintain quality. The company needs to determine whether global sourcing is feasible or producing internally would be most cost efficient and advantageous to Midland Motors. Kuiper Leda needs to know how global sourcing, outsourcing, and or other strategies would impact the supply chain process. If the company decides to change the current production plan, Kuiper Leda needs to make modifications to the delivery schedule, production process, and staffing, while attempting to anticipate potential increases in error along with defect rate, and ultimately customer satisfaction.
Kuiper Leda needs to explore creative supply chain processes to meet the increased demands based on the Midland Motors customer order. One way to improve the supply chain operating efficiency is through a process called global sourcing. The concept of global sourcing provides an opportunity for a company like Kuiper Leda to bid out product needs on a worldwide basis therefore, allowing the company to obtain lower prices by searching the international marketplace for best quality and best prices for products. The procurement strategy for global sourcing will allow Kuiper Leda to offer quality products at a lower price, decrease cycle time, inventory levels and improve efficiencies in production. Another approach available to the company is outsourcing which goes beyond purchasing this allows activities to be transferred to include people, facilities, equipment, technology, assets, and “the responsibilities for making decisions over certain elements of the activities are transferred as well.” (Chase, Jacobs, & Aquilano, 2005) Both of these processes would allow the company to reduce risk, increase resources and vendors, and control costs while maintaining a competitive advantage. Kuiper Leda does not increase cost in technology and or equipment to produce the products requested by Midland since the obligation and decisions relating to production are transferred to the global resources. This allows Kuiper Leda to focus on core competencies, customers and expanding in to more markets. Based on the cycle time, Kuiper Leda will need to outsource the production of the RFID tags because the company does not have sufficient capacity to produce RFID tags. To outsource the electronic control units would require at least three weeks while producing the electronic control units internally would only require two weeks. Outsourcing would facilitate reducing costs of goods sold and allow for achieving production targets. Consequently, outsourcing a key new product line would be in the best interest of the company, vendors, suppliers and ultimately the customers. Outsourcing the newest product line allows the company to sustain working with the more familiar product line of the electronic control units.
Regardless of the fact that Kuiper Leda is planning on outsourcing one of the product lines the company