Analysis of Supplier Development Strategies

Analysis of Supplier Development Strategies ABSTRACT OF THE THESIS Any activity undertaken by a buying firm to improve supplier performance, supplier capabilities, or both and to meet the buying firms short and/or long term supply needs can be termed as supplier development activity. A study by the Harvard Business School concluded that a primary reason for declining US competitiveness is that US companies invest less than foreign rivals in intangible investments such as supplier development. Half of the companies fail in this supplier development effort if executed. As supplier development help in increasing competitiveness and is not successful every time if implemented, it is essential to examine supplier development and factors which result towards the success of supplier development. This paper will examine aspects associated with the success of supplier development strategies within different set of industry. This research will put forward a specific set of aspects are significant contributors to supplier development; also this paper will show that some factors of supplier development have significant influence on other factors of supplier development. Data from the population of buyers and suppliers will be collected to test the extent of relationship between significant factors and success of supplier development process. Agreement was noted between dependencies of success of supplier development process on several factors. Recommendations to supply managers and purchasing manager will be provided regarding upper management involvement, enhanced communication with their suppliers, recognition of their suppliers and development of strategic processing instead of reactive processing will be offered. chapter 1 introduction This thesis is a report of ethnographic study of critical factors for supplier development strategies. The study was based primarily upon the survey with supplier development managers and professionals involved in this field. This first chapter of the thesis will discuss the context of the study, intention of the study, describe the importance and will present the overview of the methodology used. Background of Study A global economy is emerging and resources are concentrated on core business rather than the diversification which show the way towards outsourcing. Outsourcing is increased from $91 billion to $416 billion in 20 years (Tunstall, 2002), and it is expected to increase further. In 2009 the value of outsourcing deals in logistics area were projected to $ 80 billion (Hyatt, 2009) which shows the intensity of use of suppliers. Due to this voluminous use of suppliers buying companies have to rely on their suppliers to deliver defect free product in a timely and cost effective manner. To compete in their respective markets, buying firm must ensure that their supplier capability equals the expectations (Krause Ellram, Success factors in supplier development, 1997). When a supplier is incapable of meeting the buying firms need the buying firm has three alternatives: (1) Bring the outsourced item in house and produce it internally, (2) Resource with a more capable supplier, (3) Help improve t he existing suppliers capabilities. All the three strategies can work. (Handfield, Krause, Scannel, Monczka, 2000). Supplier development is defined as Any effort of a buying firm with its supplier to increase the performance and capabilities of the supplier and meet the buying firms supply needs. (Krause Ellram, Critical elements of supplier development, 1997) When the suppliers are innovative and exclusively supplying a product then the supplier development option comes into the picture. When a company is using a supplier, it is necessary to have a good relationship with them. The Harvard research suggested that supplier development started very late in USA but it was started very long ago in the Japan. Toyota, Honda and Nissan implemented these supplier development activities in their plants a long back. Although similar research has been done previously, the theme of research was same but this new research is capable to generate new knowledge , First the populations is different and for the variety of reasons they will be having different opinions and attitudes than the previous cohort . There might be a different type of interaction in between me and those to which will generate the new idea, the sample data is from different set of industry and places so the research context will be totally different from the previous researches. Even the subject might be same but the contextual issues are very different. The Problem Statement Supplier development requires both supplier and buyer to commit their maximum to get the maximum out of the program. Even though both the sides agree that the commitment is required it is not necessary that supplier development program in which they are involved will be successful. In early 90s companies start reducing the number of direct suppliers and began evolving from adversarial relationships to more cooperative ones with the remaining suppliers. (Hartley Choi, 1996), Approximate one-third projects are failed due to suppliers underperformance. So the success in the supplier development is not a foregone conclusion. Supplier development is considered as a long term business strategy and there are various factors which affects this long term strategy. These factors not only affect the end result of supplier development process but also influence each other. This research tried to establish the critical success factors for supplier development and their inter-relationship with ea ch other. Regression models approach helped to develop the interrelationship among critical success factors. Anyone especially supplier development manager and procurement professional can refer the model over the wide range of circumstances and structure. The main objective of the research paper is to create the model for critical success factors for supplier development strategies. Professional Significance Large number of companies does the supplier development and they fail as well at surprising rate. Not all supplier development initiatives are successful in fact, as many as 50% are not successful, due to poor implementation and follow-up. (Handfield R. , 2002) The failed efforts consume tremendous amount of resources over months or even years. As multiple studies have shown over half of the supplier initiatives fails. This failure takes a toll that is not only financial but also psychological. Failure demoralizes employees who have been labored diligently to complete their share of the work. As the supplier development success factors depends on both the parties so a dedicated study is required to find out what factors make the supplier development process a success. In 2000, according to the study 53% of the companies claimed that they are involved in the supplier development program but it was found that only 20% of the companies are contributing for the financial support for the suppliers and only 14% of the companies are putting their employees in the suppliers place for the development purpose. Eleven percentages of the companies are giving the chance to the suppliers to come at the buyers place and learn. Only 11% of the companies are having the formal program for supplier development, others are doing it without any of the formal program. (Anonymous, 2000). It shows that even though companies are involved in supplier development program but not fully implementing in an appropriate way. In General Motors, after implementation of supplier development program supplier productivity was improved 50%, lead time was reduced by 75%, and inventory reduction happened around 70% during their one week workshops. On one project alone, Honda of Americas Best Practices (BP) team reduced a suppliers costs by more than $200,000 per year by changing the layout of a welding process. Furthermore layout change might increase the efficiency of supplier and ultimately give advantage to buying company. (Hartley Choi, 1996). Also one of the purchasing pro for a power tool producer said that in three years of developing suppliers, his company has seen quality rejects fall from 38.4% down to 0.5% while supplier on-time delivery has risen from 76% to 97.5%. Likewise, another proponent of supplier development cites an average supplier quality metric of 98.5% and on-time supplier delivery at 97%. They claimed to have improved quality, response time, prices and cycle time improvements, The VP f or a major California-based computer maker talks about how assistance from his firm allowed one subassembly supplier to ramp up to 50,000 pieces per month in only six weeks. (Anonymous, 2000).Although it took only 6 weeks to ramp up the production but usually supplier development is very time consuming and long process which consumes plenty of resources, so it is very much required to do it correct first time. To get the results mentioned above -$200,000 saving /year it is essential to learn what are the success contributors and failure contributors of supplier development. Overview of Methodology A structured survey questionnaire with five-point Likert scale was developed. Web and email were used to circulate and gather information regarding what group of supplier development professionals thinks about supplier development activities. Survey was divided in 6 small sections and every section was having 3 questions. Total of 20 questions were mailed to random sample of 300 supplier development professionals. The survey solicited about a single instance of supplier development performed by them. Survey was face validated and content validated with the help of thesis chair and committee. Of 300 surveys circulated 50 usable responses were obtained, which provides the perception of large group of supplier development manger regarding the nature of their supplier development project. The responding population represents a wide range of industry types. Also before e-mail survey set of interviews with supplier development managers was conducted. The interview was designed to validate the success factors collected after reviewing literature review and to help focus on reliable, important success factors which have extremely high control on supplier development success. Delimitation The research study was conducted at San Diego State University during the end of the fall semester-2009. This research was limited to supplier development manager who updated their resume on resume bank. This research was limited to professionals in North America continent to reduce cultural differences within the population used in the study. Multiple Regression model was used to prove the interdependency in between critical factors instead structural equation modeling. Survey instrument was developed with the help of existing instruments. This will allow us to compare new results with the old results. This research was limited to 3 questions per factor to keep instrument short. chapter 2 literature review This chapter will review the past researches that serves as the foundation for the thesis report presented. The research papers are basically associated with critical factors associated with success of supplier development. The research paper will present purpose and rationale for writing research paper on supplier development strategies. Following will be the review of literature on Strategic process, Upper management involvement, Supplier recognition, Effective and enhanced communication and commitment of suppliers. The chapter will conclude with a summary of literature. Examples of the key word used while finding the scholar research papers were supplier development, supplier relationship, supplier evaluation, supplier management, supply chain management and buyer-supplier relationship. Combinations of keywords were used to get different research papers. Search engine used during literature search were SDSU library search engine and Google scholar. (Ekholm Pashei, 2009). Past Literature First document application of supplier development comes from Toyota in 1939. Toyota discussed the need of working together with suppliers to improve collective performance. Thereafter in 1963 Nissan implemented first supplier development project, Honda joined the club in 1973 (Monczka, Handfield, Glunipero, Patterson, 2009). It is essential to understand the significance of each factor and the role it plays in supplier development process. Past researches can be categorized in (a) Theoretical, (b) Conceptual, (c) Empirical, (d) Conceptual and Empirical. Table 1 gives the brief of past literature which were identified. Previous to mid 1990s, the supplier development literature consisted mainly of theoretical studies covering cases of several companies and surveys and the purpose was to learn the barriers which comes in the way of supplier development. In 1990s the research moved towards establishing relationship in between various supplier development constructs where in 2000 the re search moved towards influence of supplier development towards innovation and purchasing strategy (Easton, 2000). In todays business increased trend of reliance on supplier is observed. Most of the buying firms need to pursue aggressive strategies in order to increase the future rate of capabilities improvement. (Monnczka, Trent, Callahan, 1993) Having mentioned that supplier is becoming increasingly critical to the competitive success of US firms, there are several reasons behind that. First manufacturers are beginning to focus on their core competencies and areas of technical expertise. Second, developing effective supply base management strategies can help counter the competitive pressures brought about by intense worldwide competition. Third, Suppliers can support directly a firms ability to innovate in the critical areas of product and process technology. Study showed 95% of business unit sample indicated supplier contributions were increasing throughout in terms of importance. There was a 232% increase in people from 1989-1990 who agreed with the statement that suppliers are extremely imp ortant to the achievement of competitive market strategies. More and more people started to outsource and started rely on suppliers. There was a growth of 15% of people from 1991-1992. Furthermore for each sample period, respondent projected and increasing dependency on suppliers for future product technology. More and more companies started to use supplier development process. Some of them are HP, Epson, Apple Computer, 3M, and BMW etc. Strong belief is supplier warrants improvement. If improvement does not occur firms across many industries may lose market share to competitors who are able to maximize supplier performance input. Sample was non random so the result can be generalized. Thus the trend is towards increasing reliance on supplier to help achieve competitive market strategies. This reliance on suppliers and improving their performance was initially documented from Toyota in 1939. Toyota discussed the need of working together with suppliers to improve collective performan ce. Thereafter in 1963 Nissan implemented first supplier development project, Honda joined the club in 1973 (Monczka, Handfield, Glunipero, Patterson, 2009). Supplier development was ubiquitous in Japan and Korea for number of years but less evident in US firms due to perceived lack of instant return on investment allied with setting up resources required to make it successful. Interestingly this practice was recognized early in the 1900 in the US automotive industry when Ford required improving supplier capacity (Krause, Handfield, Tyler, The relationships between supplier development, commitment, social and capital accumulation and performance improvement, 2006). In 1970s other Japanese automakers implemented the system and made their own modification like Honda developed a program called BP (Best practices). Review of case studies by (Sako, 2004) allowed examining differences in between supplier development activity in Toyota, Nissan and Honda. In 1939, Toyota purchasing rules stated that- Toyota suppliers must be treated as a Toyota branches and Toyota must continue to do business with these suppliers without switching to others and also develop the suppliers if required. Toyota bifurcated supplier development activities into TPS (Toyota Production System) and TQC (Total Quality Control). TPS was having different existence from TQC which allowed suppliers to take advantage of continuous improvement. Hyundai also realized that their small suppliers cannot again and again recruit engineers thus they sent engineers from their own shops to improve suppliers productivity. Hyundai do not financially support their suppliers but offer personnel support (Handfield, Krause, Scannel, Monczka, 2000). Nissan also implemented supplier development program which were significantly different from Toyota in the terms of number of point of contacts for suppliers, approach towards sharing the ideas and one to one training strategy during program. Honda and Nissan unified the TPS and TQC offering a single point of contact (Sako, 2004). The common features of the supplier development programs at Honda, Nissan and Toyota are multipl e channels for supplier development to transfer both tacit and explicit knowledge. Tacit knowledge is more difficult to accumulate as it needs closer interactions especially face to face with suppliers and more time thus it is difficult to replicate tacit knowledge (Clarke, 2007). In contrast to these companies in Japan, the suppliers in US and Europe distrust the buyers intention and also buyers dont have identical level of authenticity as in Japan to act as trusted well wisher who can suggest their suppliers how they should invest their resources (Sako, 2004). A recent study from Harvard school concluded that primary reason for declining USA competitiveness is that US companies invest less in supplier relations and development thus considering these points from Japan the supplier development was adopted in Eastern countries like UK and USA (Monnczka, Trent, Callahan, 1993). Supplier development activities were transferred to USA as buying firms commissioned their own plants in USA due to government regulations. By 1996 General Motors had completed supplier development projects with over 2000 suppliers and claimed productivity improvements over 50%, lead time reduction of up to 75% and inventory reduction of 70% (Hartley Choi, Supplier development: Customers as a catalyst of process change, 1996), (Clarke, 2007). By 2001 John Deere was involved in 426 different projects with 92 different supplier development engineer and delivering annual saving of $700,000 along with improvements in quality, cost and delivery. By 1994, Allied-Signal expe cted to save up to $300,000 from supplier development activities and also expected for increase in shares price (Monnczka, Trent, Callahan, 1993). At Deere and Delphi, a $100,000 investment in supplier development yields at least three to ten times the original investment (Nelson, Moody, Stegner, 2005). This illustrates that large firms adopted supplier development and it became strategic tool for them to improve quality, reduce cost and improve the delivery. The basic development process started with reduction in supplier base and then developing the remaining suppliers. Also it was adopted in service based companies from product based companies. But more focus was on the product based companies. Service based relies on the competitive pressure of market forces instigate supplier performance to a greater extent than product based firms and that then to use. In UK most companies rationalized or optimized their supple base to include fewer total suppliers. Western countries were no t getting involved in direct supplier development; Japanese companies were successful because they were involved in direct supplier development. Toyota is purchasing product from the same supplier since 1937. GM adopted this strategic supplier development in Europe. Motorola and Ford also adopted similar kind of supplier development Countries and large firms started to realize the benefits of supplier development, they recognized that supplier development must be worth if its emerging everywhere in Japan. From the national perspective, benefits of supplier development were improvement in domestic suppliers, reduction in off shoring and increase in GDP (Krause Ellram, 1997). From the corporate and large firm perspective, supplier development helped in improving quality, reliability and manufacturability of new design. Besides that supplier development also helped in knowledge sharing and improved collaboration. Furthermore responsiveness to customer needs and market dynamics also increased with supplier development (Krause Ellram, 1997). The data gathered with 527 purchasing executives by (Krause D. R., Supplier development: Current practices and outcomes, 1997) revealed that supplier development attributed to timely delivery, completed orders, reduction in defects scrap and reduced order cycle time. Research by (Blonska, Rozemeijer, Wetzels) established that supplier development guide towards getting a preferential buyer status and supplier adaptability. Supplier adaptation is perceived as an attainment of a goal of supplier development aimed at supplier performance improvement (Blonska, Rozemeijer, Wetzels). With help of two in depth case studies (Reed Walsh, 2002) established that supplier development activities enhance technological capabilities in their suppliers. Also some of the firms expected technological improvement should follow from improved business processes. Supplier development also helped in developing mutual trust in between buyers and suppliers (Reed Walsh, 2002). As mentioned earlier this increase in reliance was due to improvement in performance after implementing supplier development program. BMW strives to be 20% above industry average in quality performance. Management believed supplier development made it possible to attain that quality standard and increase in revenue (Rhodes, Warren, Carter, 2006). Also in Honda dramatic improvement was seen in product quality since Honda began to develop suppliers in North America, In 1985 quality level was 7000 parts defective per million and In 1995 quality level was increased to 100 defective parts per million (Berlow, 1995). A team of purchasing professionals from Honda of America worked with 12 stamping suppliers to reduce cost by $4million in six months in 1995 with its supplier development efforts (Berlow, 1995). In the context of supplier development, suppliers and buyers state that they want to practice more supplier development methods to enjoy its benefits but there are myriads of barriers that hinder the effective supplier development strategies. Research by (Lascelles Dale, 1989) utilizing survey responses from UK based suppliers to 3 major customers in automotive industry illustrated that poor communication and feedback, unstructured quality improvement programs, credibility of buyers, misconception regarding purchasing power and supplier satisfaction are the foremost barriers in the supplier development programs. Also in an empirical study with 89 minority goods and service providers (Krause, Ragatz, Hughley, Supplier development from the minority suppliers perspective, 1999) demonstrated that the main barriers towards minority owned supplier development are poor communication, non-profit situation and racial biases. Results also indicated that small minority owned suppliers were le ss positive about supplier development activities as compared to large minority owned suppliers (Novak, 2008). Survey by (Handfield, Krause, Scannel, Monczka, 2000) on supplier development strategies with 84 companies established several other barriers apart from already mentioned that deter supplier development strategies. It includes Lack of supplier commitment, insufficient supplier resources, lack of trust, and poor alignment of organizational cultures, unsupportive upper management and insufficient inducement to suppliers. Research by (McDuffie Helper, 1997) established that supplier development might fail if suppliers are not having a strong identification or if suppliers are not dependent on buyers. It will show the way to break down in learning relationship. Another major barrier towards supplier development program found from research by (Forker, Ruch, Hershauer, 1999) is difference between perceptions of buyer and suppliers about supplier development practices. These di fferences in perception are due to disparity in understanding in preference, intention, and process of supplier development program (Forker, Ruch, Hershauer, 1999). Supplier might agree initially for the proposal but later fail to implement due to difference in understanding. This problem can be cured with the help of clarification of issues. Researchers came up with number of conceptual models for building solutions to overcome these barriers. A ten step generic process model was developed based on the examination of in-depth response to open ended survey questions. Such a model was a step towards strategic supplier development. It was ranging from identification of critical commodities for development to systematically instituting ongoing continuous improvement. The model also suggested proposition that firms competing in markets characterized by high rates of technological changes and high level of competition are more likely to be involved with this model (Krause, Handfield, Scannell, An empirical investigation of supplier development: reactive and strategic processes, 1998). This model was slightly changed by proposition of seven steps generic model (Handfield, Krause, Scannel, Monczka, 2000). Also it was found most organization deployed first three steps but was less successful in deploying later stages. Similar t o previous model a process oriented four step generic supplier development model was proposed. This model was designed to help suppliers sustain and continue the change process and effectively build the capability for improvement within the organization (Hartley Jones, Process oriented supplier development: Building the capability for change, 1997). This model also increases the suppliers capability to act on its own and the improvement effort will continue once the buying firm finishes its activities (Wagner S. M., 2006). Also supplier structure was developed on the basis of specific vendor development strategy. Conceptual link was generated in between generic business unit strategies based on framework proposed by Porter and generic supplier development strategies, in other words linkage between supplier development strategies and company strategies (Chakraborty Philip, 1996). Execution of case study of five firms by (Dunn Young, 2004) results in a process model that enables th e buyers to pinpoint specific areas where improvement is required. Highlighting these small areas can impact on long term strategic supplier development initiatives. A review of the conceptual model and context of supplier development resulted in the identification of several elements that appear to be critical to the success of the supplier development program. These comprise of effective and enhanced communication, supplier commitment, top management involvement, strategic processing and long term commitment and supplier recognition/rewards (Krause Ellram, 1997). Background What is supplier development, why is the supplier development critical, what made this required to study and how the factors might affect the supplier development? Big things happen when you do little things right (Don, 2000). In this case if small generic steps for supplier development are deployed correctly then it can contribute towards success in supplier development. (Handfield, Krause, Scannel, Monczka, 2000) Developed seven step generic process map for set up supplier development activities. These are recognized as (a) Identify critical commodities (b) Identify critical supplies (c) Form a cross functional team (d) Meet with supplier top management (e) Identify key project (f) Define details of agreement and (g) Monitor status and monitor strategies. A discussion of each as follows. Identify critical commodities and suppliers Upper management involvement is vital to assess the relative importance of commodities and services procured by business unit. A corporate level executive committee analyzes the purchasing portfolio developed during strategic process. This analysis is extension of company strategic planning (Handfield, Krause, Scannel, Monczka, 2000). As a result critical commodities are identified and warranted for supplier development activities. Steps adopted here are mainly observed in strategic approach supplier development where in reactive approach respondents skip this step in supplier development process (Krause, Handfield, Scannell, An empirical investigation of supplier development: reactive and strategic processes, 1998). Choosing which supplier to develop is a critical task again because supplier development involves resources such as money and time, thus the decision should be strategic not reactive (Gordon, 2008). (Handfield, Krause, Scannel, Monczka, 2000). Many situations exist which are not mutually exclusive but warrant supplier development. To decide which situation needs supplier development is calculated judgment. Companies have formal supplier measurement system with help of which they assess suppliers performance. If any gap is found in measured and expected results, these suppliers are identified for development process where in reactive approach respondent skip this step in supplier development activities (Krause, Handfield, Scannell, An empirical investigation of supplier development: reactive and strategic processes, 1998). Also buying firm carefully evaluates suppliers quality, volume, delivery cost performance, launch readiness and potential kaizen opportunities to identify a prosp ective supplier development program (Novak, 2008). Hence, Strategic processing and upper management involvement have significant influence on the outcome of this first step of supplier development-identifying critical commodities and suppliers. These two will be among the variable of interest in the research thesis. Form a cross functional team Each firm must develop their suppliers according to their requirement. For example, some firms need managerial assistance and some need technical assistance. Thus it is essential to evaluate each supplier individually to create a plan that benefits both supplier and buyer (Daghfous, Campa, Hamde, 2008). As a result to face this complex challenge of developing dissimilar suppliers, innovative ideas are required to break down knowledge barrier between buyers and suppliers and to facilitate a transition of knowledge transfer from buyers to suppliers, a cross functional team is necessary to form (Blindenbacj-Driessen, 2009). Before approaching suppliers and ask for enhanced performance, it is also important to build up cross functional consensus and build up their own house before expecting commitment from suppliers (Monczka, Handfield, Glunipero, Patterson, 2009). In particular commitment of buyers and strategic approach is essential for buildup of cross functional consensus. Also a b uyer must establish its supply chain strategies and roles of procurement so that the business objectives are clear. Hence, Commitment and strategic process have significant influence on the outcome on creation of cross functional team. Therefore, these two will be among the variable of interest in the research thesis. Meet with supplier top management Upper management involvement again prevails but this time it is of suppliers side. Cross functional team must meet upper management of supplier side and establishes stra Analysis of Supplier Development Strategies Analysis of Supplier Development Strategies ABSTRACT OF THE THESIS Any activity undertaken by a buying firm to improve supplier performance, supplier capabilities, or both and to meet the buying firms short and/or long term supply needs can be termed as supplier development activity. A study by the Harvard Business School concluded that a primary reason for declining US competitiveness is that US companies invest less than foreign rivals in intangible investments such as supplier development. Half of the companies fail in this supplier development effort if executed. As supplier development help in increasing competitiveness and is not successful every time if implemented, it is essential to examine supplier development and factors which result towards the success of supplier development. This paper will examine aspects associated with the success of supplier development strategies within different set of industry. This research will put forward a specific set of aspects are significant contributors to supplier development; also this paper will show that some factors of supplier development have significant influence on other factors of supplier development. Data from the population of buyers and suppliers will be collected to test the extent of relationship between significant factors and success of supplier development process. Agreement was noted between dependencies of success of supplier development process on several factors. Recommendations to supply managers and purchasing manager will be provided regarding upper management involvement, enhanced communication with their suppliers, recognition of their suppliers and development of strategic processing instead of reactive processing will be offered. chapter 1 introduction This thesis is a report of ethnographic study of critical factors for supplier development strategies. The study was based primarily upon the survey with supplier development managers and professionals involved in this field. This first chapter of the thesis will discuss the context of the study, intention of the study, describe the importance and will present the overview of the methodology used. Background of Study A global economy is emerging and resources are concentrated on core business rather than the diversification which show the way towards outsourcing. Outsourcing is increased from $91 billion to $416 billion in 20 years (Tunstall, 2002), and it is expected to increase further. In 2009 the value of outsourcing deals in logistics area were projected to $ 80 billion (Hyatt, 2009) which shows the intensity of use of suppliers. Due to this voluminous use of suppliers buying companies have to rely on their suppliers to deliver defect free product in a timely and cost effective manner. To compete in their respective markets, buying firm must ensure that their supplier capability equals the expectations (Krause Ellram, Success factors in supplier development, 1997). When a supplier is incapable of meeting the buying firms need the buying firm has three alternatives: (1) Bring the outsourced item in house and produce it internally, (2) Resource with a more capable supplier, (3) Help improve t he existing suppliers capabilities. All the three strategies can work. (Handfield, Krause, Scannel, Monczka, 2000). Supplier development is defined as Any effort of a buying firm with its supplier to increase the performance and capabilities of the supplier and meet the buying firms supply needs. (Krause Ellram, Critical elements of supplier development, 1997) When the suppliers are innovative and exclusively supplying a product then the supplier development option comes into the picture. When a company is using a supplier, it is necessary to have a good relationship with them. The Harvard research suggested that supplier development started very late in USA but it was started very long ago in the Japan. Toyota, Honda and Nissan implemented these supplier development activities in their plants a long back. Although similar research has been done previously, the theme of research was same but this new research is capable to generate new knowledge , First the populations is different and for the variety of reasons they will be having different opinions and attitudes than the previous cohort . There might be a different type of interaction in between me and those to which will generate the new idea, the sample data is from different set of industry and places so the research context will be totally different from the previous researches. Even the subject might be same but the contextual issues are very different. The Problem Statement Supplier development requires both supplier and buyer to commit their maximum to get the maximum out of the program. Even though both the sides agree that the commitment is required it is not necessary that supplier development program in which they are involved will be successful. In early 90s companies start reducing the number of direct suppliers and began evolving from adversarial relationships to more cooperative ones with the remaining suppliers. (Hartley Choi, 1996), Approximate one-third projects are failed due to suppliers underperformance. So the success in the supplier development is not a foregone conclusion. Supplier development is considered as a long term business strategy and there are various factors which affects this long term strategy. These factors not only affect the end result of supplier development process but also influence each other. This research tried to establish the critical success factors for supplier development and their inter-relationship with ea ch other. Regression models approach helped to develop the interrelationship among critical success factors. Anyone especially supplier development manager and procurement professional can refer the model over the wide range of circumstances and structure. The main objective of the research paper is to create the model for critical success factors for supplier development strategies. Professional Significance Large number of companies does the supplier development and they fail as well at surprising rate. Not all supplier development initiatives are successful in fact, as many as 50% are not successful, due to poor implementation and follow-up. (Handfield R. , 2002) The failed efforts consume tremendous amount of resources over months or even years. As multiple studies have shown over half of the supplier initiatives fails. This failure takes a toll that is not only financial but also psychological. Failure demoralizes employees who have been labored diligently to complete their share of the work. As the supplier development success factors depends on both the parties so a dedicated study is required to find out what factors make the supplier development process a success. In 2000, according to the study 53% of the companies claimed that they are involved in the supplier development program but it was found that only 20% of the companies are contributing for the financial support for the suppliers and only 14% of the companies are putting their employees in the suppliers place for the development purpose. Eleven percentages of the companies are giving the chance to the suppliers to come at the buyers place and learn. Only 11% of the companies are having the formal program for supplier development, others are doing it without any of the formal program. (Anonymous, 2000). It shows that even though companies are involved in supplier development program but not fully implementing in an appropriate way. In General Motors, after implementation of supplier development program supplier productivity was improved 50%, lead time was reduced by 75%, and inventory reduction happened around 70% during their one week workshops. On one project alone, Honda of Americas Best Practices (BP) team reduced a suppliers costs by more than $200,000 per year by changing the layout of a welding process. Furthermore layout change might increase the efficiency of supplier and ultimately give advantage to buying company. (Hartley Choi, 1996). Also one of the purchasing pro for a power tool producer said that in three years of developing suppliers, his company has seen quality rejects fall from 38.4% down to 0.5% while supplier on-time delivery has risen from 76% to 97.5%. Likewise, another proponent of supplier development cites an average supplier quality metric of 98.5% and on-time supplier delivery at 97%. They claimed to have improved quality, response time, prices and cycle time improvements, The VP f or a major California-based computer maker talks about how assistance from his firm allowed one subassembly supplier to ramp up to 50,000 pieces per month in only six weeks. (Anonymous, 2000).Although it took only 6 weeks to ramp up the production but usually supplier development is very time consuming and long process which consumes plenty of resources, so it is very much required to do it correct first time. To get the results mentioned above -$200,000 saving /year it is essential to learn what are the success contributors and failure contributors of supplier development. Overview of Methodology A structured survey questionnaire with five-point Likert scale was developed. Web and email were used to circulate and gather information regarding what group of supplier development professionals thinks about supplier development activities. Survey was divided in 6 small sections and every section was having 3 questions. Total of 20 questions were mailed to random sample of 300 supplier development professionals. The survey solicited about a single instance of supplier development performed by them. Survey was face validated and content validated with the help of thesis chair and committee. Of 300 surveys circulated 50 usable responses were obtained, which provides the perception of large group of supplier development manger regarding the nature of their supplier development project. The responding population represents a wide range of industry types. Also before e-mail survey set of interviews with supplier development managers was conducted. The interview was designed to validate the success factors collected after reviewing literature review and to help focus on reliable, important success factors which have extremely high control on supplier development success. Delimitation The research study was conducted at San Diego State University during the end of the fall semester-2009. This research was limited to supplier development manager who updated their resume on resume bank. This research was limited to professionals in North America continent to reduce cultural differences within the population used in the study. Multiple Regression model was used to prove the interdependency in between critical factors instead structural equation modeling. Survey instrument was developed with the help of existing instruments. This will allow us to compare new results with the old results. This research was limited to 3 questions per factor to keep instrument short. chapter 2 literature review This chapter will review the past researches that serves as the foundation for the thesis report presented. The research papers are basically associated with critical factors associated with success of supplier development. The research paper will present purpose and rationale for writing research paper on supplier development strategies. Following will be the review of literature on Strategic process, Upper management involvement, Supplier recognition, Effective and enhanced communication and commitment of suppliers. The chapter will conclude with a summary of literature. Examples of the key word used while finding the scholar research papers were supplier development, supplier relationship, supplier evaluation, supplier management, supply chain management and buyer-supplier relationship. Combinations of keywords were used to get different research papers. Search engine used during literature search were SDSU library search engine and Google scholar. (Ekholm Pashei, 2009). Past Literature First document application of supplier development comes from Toyota in 1939. Toyota discussed the need of working together with suppliers to improve collective performance. Thereafter in 1963 Nissan implemented first supplier development project, Honda joined the club in 1973 (Monczka, Handfield, Glunipero, Patterson, 2009). It is essential to understand the significance of each factor and the role it plays in supplier development process. Past researches can be categorized in (a) Theoretical, (b) Conceptual, (c) Empirical, (d) Conceptual and Empirical. Table 1 gives the brief of past literature which were identified. Previous to mid 1990s, the supplier development literature consisted mainly of theoretical studies covering cases of several companies and surveys and the purpose was to learn the barriers which comes in the way of supplier development. In 1990s the research moved towards establishing relationship in between various supplier development constructs where in 2000 the re search moved towards influence of supplier development towards innovation and purchasing strategy (Easton, 2000). In todays business increased trend of reliance on supplier is observed. Most of the buying firms need to pursue aggressive strategies in order to increase the future rate of capabilities improvement. (Monnczka, Trent, Callahan, 1993) Having mentioned that supplier is becoming increasingly critical to the competitive success of US firms, there are several reasons behind that. First manufacturers are beginning to focus on their core competencies and areas of technical expertise. Second, developing effective supply base management strategies can help counter the competitive pressures brought about by intense worldwide competition. Third, Suppliers can support directly a firms ability to innovate in the critical areas of product and process technology. Study showed 95% of business unit sample indicated supplier contributions were increasing throughout in terms of importance. There was a 232% increase in people from 1989-1990 who agreed with the statement that suppliers are extremely imp ortant to the achievement of competitive market strategies. More and more people started to outsource and started rely on suppliers. There was a growth of 15% of people from 1991-1992. Furthermore for each sample period, respondent projected and increasing dependency on suppliers for future product technology. More and more companies started to use supplier development process. Some of them are HP, Epson, Apple Computer, 3M, and BMW etc. Strong belief is supplier warrants improvement. If improvement does not occur firms across many industries may lose market share to competitors who are able to maximize supplier performance input. Sample was non random so the result can be generalized. Thus the trend is towards increasing reliance on supplier to help achieve competitive market strategies. This reliance on suppliers and improving their performance was initially documented from Toyota in 1939. Toyota discussed the need of working together with suppliers to improve collective performan ce. Thereafter in 1963 Nissan implemented first supplier development project, Honda joined the club in 1973 (Monczka, Handfield, Glunipero, Patterson, 2009). Supplier development was ubiquitous in Japan and Korea for number of years but less evident in US firms due to perceived lack of instant return on investment allied with setting up resources required to make it successful. Interestingly this practice was recognized early in the 1900 in the US automotive industry when Ford required improving supplier capacity (Krause, Handfield, Tyler, The relationships between supplier development, commitment, social and capital accumulation and performance improvement, 2006). In 1970s other Japanese automakers implemented the system and made their own modification like Honda developed a program called BP (Best practices). Review of case studies by (Sako, 2004) allowed examining differences in between supplier development activity in Toyota, Nissan and Honda. In 1939, Toyota purchasing rules stated that- Toyota suppliers must be treated as a Toyota branches and Toyota must continue to do business with these suppliers without switching to others and also develop the suppliers if required. Toyota bifurcated supplier development activities into TPS (Toyota Production System) and TQC (Total Quality Control). TPS was having different existence from TQC which allowed suppliers to take advantage of continuous improvement. Hyundai also realized that their small suppliers cannot again and again recruit engineers thus they sent engineers from their own shops to improve suppliers productivity. Hyundai do not financially support their suppliers but offer personnel support (Handfield, Krause, Scannel, Monczka, 2000). Nissan also implemented supplier development program which were significantly different from Toyota in the terms of number of point of contacts for suppliers, approach towards sharing the ideas and one to one training strategy during program. Honda and Nissan unified the TPS and TQC offering a single point of contact (Sako, 2004). The common features of the supplier development programs at Honda, Nissan and Toyota are multipl e channels for supplier development to transfer both tacit and explicit knowledge. Tacit knowledge is more difficult to accumulate as it needs closer interactions especially face to face with suppliers and more time thus it is difficult to replicate tacit knowledge (Clarke, 2007). In contrast to these companies in Japan, the suppliers in US and Europe distrust the buyers intention and also buyers dont have identical level of authenticity as in Japan to act as trusted well wisher who can suggest their suppliers how they should invest their resources (Sako, 2004). A recent study from Harvard school concluded that primary reason for declining USA competitiveness is that US companies invest less in supplier relations and development thus considering these points from Japan the supplier development was adopted in Eastern countries like UK and USA (Monnczka, Trent, Callahan, 1993). Supplier development activities were transferred to USA as buying firms commissioned their own plants in USA due to government regulations. By 1996 General Motors had completed supplier development projects with over 2000 suppliers and claimed productivity improvements over 50%, lead time reduction of up to 75% and inventory reduction of 70% (Hartley Choi, Supplier development: Customers as a catalyst of process change, 1996), (Clarke, 2007). By 2001 John Deere was involved in 426 different projects with 92 different supplier development engineer and delivering annual saving of $700,000 along with improvements in quality, cost and delivery. By 1994, Allied-Signal expe cted to save up to $300,000 from supplier development activities and also expected for increase in shares price (Monnczka, Trent, Callahan, 1993). At Deere and Delphi, a $100,000 investment in supplier development yields at least three to ten times the original investment (Nelson, Moody, Stegner, 2005). This illustrates that large firms adopted supplier development and it became strategic tool for them to improve quality, reduce cost and improve the delivery. The basic development process started with reduction in supplier base and then developing the remaining suppliers. Also it was adopted in service based companies from product based companies. But more focus was on the product based companies. Service based relies on the competitive pressure of market forces instigate supplier performance to a greater extent than product based firms and that then to use. In UK most companies rationalized or optimized their supple base to include fewer total suppliers. Western countries were no t getting involved in direct supplier development; Japanese companies were successful because they were involved in direct supplier development. Toyota is purchasing product from the same supplier since 1937. GM adopted this strategic supplier development in Europe. Motorola and Ford also adopted similar kind of supplier development Countries and large firms started to realize the benefits of supplier development, they recognized that supplier development must be worth if its emerging everywhere in Japan. From the national perspective, benefits of supplier development were improvement in domestic suppliers, reduction in off shoring and increase in GDP (Krause Ellram, 1997). From the corporate and large firm perspective, supplier development helped in improving quality, reliability and manufacturability of new design. Besides that supplier development also helped in knowledge sharing and improved collaboration. Furthermore responsiveness to customer needs and market dynamics also increased with supplier development (Krause Ellram, 1997). The data gathered with 527 purchasing executives by (Krause D. R., Supplier development: Current practices and outcomes, 1997) revealed that supplier development attributed to timely delivery, completed orders, reduction in defects scrap and reduced order cycle time. Research by (Blonska, Rozemeijer, Wetzels) established that supplier development guide towards getting a preferential buyer status and supplier adaptability. Supplier adaptation is perceived as an attainment of a goal of supplier development aimed at supplier performance improvement (Blonska, Rozemeijer, Wetzels). With help of two in depth case studies (Reed Walsh, 2002) established that supplier development activities enhance technological capabilities in their suppliers. Also some of the firms expected technological improvement should follow from improved business processes. Supplier development also helped in developing mutual trust in between buyers and suppliers (Reed Walsh, 2002). As mentioned earlier this increase in reliance was due to improvement in performance after implementing supplier development program. BMW strives to be 20% above industry average in quality performance. Management believed supplier development made it possible to attain that quality standard and increase in revenue (Rhodes, Warren, Carter, 2006). Also in Honda dramatic improvement was seen in product quality since Honda began to develop suppliers in North America, In 1985 quality level was 7000 parts defective per million and In 1995 quality level was increased to 100 defective parts per million (Berlow, 1995). A team of purchasing professionals from Honda of America worked with 12 stamping suppliers to reduce cost by $4million in six months in 1995 with its supplier development efforts (Berlow, 1995). In the context of supplier development, suppliers and buyers state that they want to practice more supplier development methods to enjoy its benefits but there are myriads of barriers that hinder the effective supplier development strategies. Research by (Lascelles Dale, 1989) utilizing survey responses from UK based suppliers to 3 major customers in automotive industry illustrated that poor communication and feedback, unstructured quality improvement programs, credibility of buyers, misconception regarding purchasing power and supplier satisfaction are the foremost barriers in the supplier development programs. Also in an empirical study with 89 minority goods and service providers (Krause, Ragatz, Hughley, Supplier development from the minority suppliers perspective, 1999) demonstrated that the main barriers towards minority owned supplier development are poor communication, non-profit situation and racial biases. Results also indicated that small minority owned suppliers were le ss positive about supplier development activities as compared to large minority owned suppliers (Novak, 2008). Survey by (Handfield, Krause, Scannel, Monczka, 2000) on supplier development strategies with 84 companies established several other barriers apart from already mentioned that deter supplier development strategies. It includes Lack of supplier commitment, insufficient supplier resources, lack of trust, and poor alignment of organizational cultures, unsupportive upper management and insufficient inducement to suppliers. Research by (McDuffie Helper, 1997) established that supplier development might fail if suppliers are not having a strong identification or if suppliers are not dependent on buyers. It will show the way to break down in learning relationship. Another major barrier towards supplier development program found from research by (Forker, Ruch, Hershauer, 1999) is difference between perceptions of buyer and suppliers about supplier development practices. These di fferences in perception are due to disparity in understanding in preference, intention, and process of supplier development program (Forker, Ruch, Hershauer, 1999). Supplier might agree initially for the proposal but later fail to implement due to difference in understanding. This problem can be cured with the help of clarification of issues. Researchers came up with number of conceptual models for building solutions to overcome these barriers. A ten step generic process model was developed based on the examination of in-depth response to open ended survey questions. Such a model was a step towards strategic supplier development. It was ranging from identification of critical commodities for development to systematically instituting ongoing continuous improvement. The model also suggested proposition that firms competing in markets characterized by high rates of technological changes and high level of competition are more likely to be involved with this model (Krause, Handfield, Scannell, An empirical investigation of supplier development: reactive and strategic processes, 1998). This model was slightly changed by proposition of seven steps generic model (Handfield, Krause, Scannel, Monczka, 2000). Also it was found most organization deployed first three steps but was less successful in deploying later stages. Similar t o previous model a process oriented four step generic supplier development model was proposed. This model was designed to help suppliers sustain and continue the change process and effectively build the capability for improvement within the organization (Hartley Jones, Process oriented supplier development: Building the capability for change, 1997). This model also increases the suppliers capability to act on its own and the improvement effort will continue once the buying firm finishes its activities (Wagner S. M., 2006). Also supplier structure was developed on the basis of specific vendor development strategy. Conceptual link was generated in between generic business unit strategies based on framework proposed by Porter and generic supplier development strategies, in other words linkage between supplier development strategies and company strategies (Chakraborty Philip, 1996). Execution of case study of five firms by (Dunn Young, 2004) results in a process model that enables th e buyers to pinpoint specific areas where improvement is required. Highlighting these small areas can impact on long term strategic supplier development initiatives. A review of the conceptual model and context of supplier development resulted in the identification of several elements that appear to be critical to the success of the supplier development program. These comprise of effective and enhanced communication, supplier commitment, top management involvement, strategic processing and long term commitment and supplier recognition/rewards (Krause Ellram, 1997). Background What is supplier development, why is the supplier development critical, what made this required to study and how the factors might affect the supplier development? Big things happen when you do little things right (Don, 2000). In this case if small generic steps for supplier development are deployed correctly then it can contribute towards success in supplier development. (Handfield, Krause, Scannel, Monczka, 2000) Developed seven step generic process map for set up supplier development activities. These are recognized as (a) Identify critical commodities (b) Identify critical supplies (c) Form a cross functional team (d) Meet with supplier top management (e) Identify key project (f) Define details of agreement and (g) Monitor status and monitor strategies. A discussion of each as follows. Identify critical commodities and suppliers Upper management involvement is vital to assess the relative importance of commodities and services procured by business unit. A corporate level executive committee analyzes the purchasing portfolio developed during strategic process. This analysis is extension of company strategic planning (Handfield, Krause, Scannel, Monczka, 2000). As a result critical commodities are identified and warranted for supplier development activities. Steps adopted here are mainly observed in strategic approach supplier development where in reactive approach respondents skip this step in supplier development process (Krause, Handfield, Scannell, An empirical investigation of supplier development: reactive and strategic processes, 1998). Choosing which supplier to develop is a critical task again because supplier development involves resources such as money and time, thus the decision should be strategic not reactive (Gordon, 2008). (Handfield, Krause, Scannel, Monczka, 2000). Many situations exist which are not mutually exclusive but warrant supplier development. To decide which situation needs supplier development is calculated judgment. Companies have formal supplier measurement system with help of which they assess suppliers performance. If any gap is found in measured and expected results, these suppliers are identified for development process where in reactive approach respondent skip this step in supplier development activities (Krause, Handfield, Scannell, An empirical investigation of supplier development: reactive and strategic processes, 1998). Also buying firm carefully evaluates suppliers quality, volume, delivery cost performance, launch readiness and potential kaizen opportunities to identify a prosp ective supplier development program (Novak, 2008). Hence, Strategic processing and upper management involvement have significant influence on the outcome of this first step of supplier development-identifying critical commodities and suppliers. These two will be among the variable of interest in the research thesis. Form a cross functional team Each firm must develop their suppliers according to their requirement. For example, some firms need managerial assistance and some need technical assistance. Thus it is essential to evaluate each supplier individually to create a plan that benefits both supplier and buyer (Daghfous, Campa, Hamde, 2008). As a result to face this complex challenge of developing dissimilar suppliers, innovative ideas are required to break down knowledge barrier between buyers and suppliers and to facilitate a transition of knowledge transfer from buyers to suppliers, a cross functional team is necessary to form (Blindenbacj-Driessen, 2009). Before approaching suppliers and ask for enhanced performance, it is also important to build up cross functional consensus and build up their own house before expecting commitment from suppliers (Monczka, Handfield, Glunipero, Patterson, 2009). In particular commitment of buyers and strategic approach is essential for buildup of cross functional consensus. Also a b uyer must establish its supply chain strategies and roles of procurement so that the business objectives are clear. Hence, Commitment and strategic process have significant influence on the outcome on creation of cross functional team. Therefore, these two will be among the variable of interest in the research thesis. Meet with supplier top management Upper management involvement again prevails but this time it is of suppliers side. Cross functional team must meet upper management of supplier side and establishes stra

The Source of Conflict between Antigone and Creon in Sophocles Antigon

The Source of Conflict between Antigone and Creon in Sophocles’ â€Å"Antigone† In the following paper, I plan to discuss the source of conflict between the title characters of Antigone and Creon in Sophocles’ â€Å"Antigone†. I also plan to discuss how each character justifies his or her actions and what arguments they give for their justifications. I will also write about the strengths and weaknesses of these arguments. The final points I try to make are about who Sophocles thinks is right and who I think is right. The main source of conflict between Antigone and Creon is the issue of the burial of Antigone’s dead brother. Both of her brothers were killed in battle, however one brother fought against their home city and was considered a traitor. Creon issued a law that whoever tries to bury this man will be put to death. Antigone is very upset because her one brother is graced with all the rites of a hero while the other is disgraced. Antigone is determined to bury her brother because of her loyalty to her family and to the gods. She believes that no mortal, such as Creon, has the right to keep her from her own. Even if Antigone must die during the burial, she will not disgrace the laws of the gods. She believes that she has to please the dead much longer than she has to please the living. Creon states, â€Å"Whoever places a friend above the good of his own country, he is nothing.† Therefore, he does not allow the burial of Antigone’s brother because he did not place the good of his country first. He was a traitor. Creon makes this law for the good of his country. The following statements that Creon makes exemplify this: â€Å"I could never make that man a friend of mine who menaces our country†, â€Å"never will the traitor be honored a... ...er of what he hears people around the town saying about the situation. Haemon says, â€Å"No woman ever deserved death less, and such a brutal death for such a glorious action†¦ Death? She deserves a glowing crown of gold.† The play seems to praise the actions of Antigone and it is never seen that she is looked down upon for what she did, except by Creon. In conclusion, the gods and the love of her family rule Antigone’s life. Creon’s life is ruled by what he thinks is good for his country and pride. Creon did not change his mind to free Antigone until a prophet told him he would suffer horribly for his actions. However, because Creon was so stubborn for so long and did not take heed to anyone’s advice sooner, he ultimately suffers in the end, as does everyone else in the play. This was all due to a man’s lack of good judgment, his selfish pride and his stubbornness.

Revenue and Production

BERGERAC CASE STUDY Summary The purpose of this report is to analyze the opportunity to produce plastic components for cartridge production and choose the best alternative. It is predicted that the annual demand growth is a triangular distribution with a minimum of 5%, most likely of 17% and a maximum of 25%. Due to the continuous growth in the demand, the alternatives cannot be compared using just the data for 2010. An analysis is carried out for the time period 2011 to 2015 and the present worth of the net income is considered as the criteria to select the alternative.The analysis basically can be divided into 5 steps: * Forecasting demand for next five years, * Estimating capacity required, * Developing production strategy, * Calculate the operating expenses for the alternatives, * Select the alternative based on the present worth of net income. From the estimated installed base of 7500 OmniVue instruments at the end of year 2010, the demand for the OmniVue instruments and cartrid ges are forecasted. There is a new product OmniVue mobile, ready to be launched in year 2013.It is assumed that the OmniVue mobile can be accounted for 30% of the demand for Instruments in year 2013, 50% in year 2014 and 60% in year 2015. The growth in demand for the OmniVue instrument is assumed to decrease after the release of OmniVue mobile. It is estimated that the production capacity of Bergerac to produce OmniVue instruments is approximately 2000 units per year with a production of 5 days per week. It is inferred that using level strategy, the probability that the demand is not met in the next five years is 5. 74%.There is no need to increase the capacity of the production line apart from changes required when the OmniVue mobile is released. There are various strategies which are compared in build option. For each production strategy, the optimum solution for the capacities in each year is found out. After finding the optimum solutions, the production strategies are compared w ith each other to find out the best solution for the build option. The production strategies that are analyzed are: * Level production strategy and Chase production strategy * Overtime is allowed / not allowedThe base values assumed to calculate the production costs for cartridges are included in Appendix F. Based on the production plan, the expenses incurred are calculated for both options. The expenses are calculated for the years 2011 to 2015. The expenses and revenue for cartridges and instruments are shown in Appendix H and Appendix I respectively. The income statement is prepared from the expenses calculated and the revenue (refer to Appendix J). The income tax rate for the company is estimated to be 39% from the income statements for years 2007 to 2009.The revenues and other expenses from operations other than OmniVue is estimated and added to the income statement. The net income is calculated. The cash flows for years 2011 to 2015 is also calculated. The net present worth is calculated for the net income and the cash flows. The objective used to optimize the solution is to maximize the mean of net present worth of the net income and cash flows. The four production strategies for the build option are optimized and the maximum net present worth for the options is forecasted. The best solution from the four strategies is chosen and compared to the net present worth of the buy option.Based on the analysis, build is a better option than buy option. The present worth of the net income is highest for level production, overtime allowed. But level production, overtime not allowed is very close to it and it does not affect the employee relationship. It is recommended to use level production strategy, no overtime (net present worth for net income is $59. 8 million). The current objective is to produce the plastic components for Bergerac with the lowest expenses, which can be achieved by building a unit for plastic component production in the plant itself.It is al so recommended to buy 5 machines instead of 4 machines in year 2010 based on the analysis. Dilemma for Ian Wyckoff Since 2008, Bergerac had been exploring the opportunity to begin its own production of cartridge components. Plastic suppliers like GenieTech and Elsinore faced difficulties in responding to demand spikes, leading to production delays. Such supplier unreliability made it challenging for Bergerac to optimize its cartridge production. Thus, the company had to carry more inventory of parts and finished goods than Wyckoff could have liked.The obvious appeal to fully control the supply of plastic lead to a strategy, the company has to decide whether to buy or build this capability. GenieTech owner was interested in retirement and was willing to sell the company for a purchase price of $5. 75 million. GenieTech has 8 molding presses each could produce 5 cartridges per cycle with a total capacity of 10,782,720 cartridges per year with 5 days production in a week. The other alt ernative is to build a unit with 4 molding presses which are more efficient than the presses at GenieTech.The total capacity of the unit will be 6,097,371cartridges per year with 5 days production in a week. It is required to predict the best long term decision among the buy and build options. Mr. McCarthy’s Analysis of Buy vs Build The analysis by Mr. McCarthy is a good basic analysis for comparing the alternatives, Buy vs Build. The main factor which Mr. McCarthy has not considered is the growing demand of the cartridges. The demand for cartridges is growing steadily and the Mr. McCarthy’s build option with 4 molding presses will not be able to satisfy the demand in the upcoming years (refer table 1). Additionally, Mr.McCarthy has not considered the possible revenue from the existing operations of GenieTech with other customers. The possible merger could also serve as a possibility for development in a new product line which would favor the growth of the company. So, Mr. McCarthy has not considered all the factors when comparing the two alternatives which means it is not ideal to accept this analysis. Financial analysis to choose between alternatives – Buy Vs Build using a 2011 to 2015 study period The analysis can be basically divided into 5 steps: First, the demand for the years 2011 to 2015 has to be forecasted.Second step is to estimate the capacity required to meet the demand in both buy and build options. The next step is to plan the production accordingly to meet the demand forecasted previously. The employee strike which is predicted to happen in the start of year 2013 should be accounted for when planning the production. The costs of operation and the revenues are then calculated which is used in the income statement. Final step is to compare the cash flows to determine the optimal solution that can be executed in the years 2011 to 2015.Estimated demand for OmniVue cartridges and the testing instruments for years 2011 – 2 015 The expected annual growth rate of demand is a triangular distribution with a minimum of 5%, a most likely of 17% and a maximum of 25%. From the estimated installed base of 7500 OmniVue instruments at the end of year 2010, the demand for the OmniVue instruments and cartridges are forecasted. There is a new product OmniVue mobile, ready to be launched in year 2013. It is assumed that the OmniVue mobile can be accounted for 30% of the demand for Instruments in year 2013, 50% in year 2014 and 60% in year 2015.The growth in demand for the OmniVue instrument is assumed to decrease after the release of OmniVue mobile. Table 1 – Demand for OmniVue Instruments and Cartridges forecasted for years 2011 – 2015 Capacity planning OmniVue instruments: It is predicted that the installed base at the end of year 2010 is 7500. Bergerac has manufactured 7500 units in the period mid-2006 to 2010. Hence, it is estimated that the production capacity of Bergerac to produce OmniVue instru ments is approximately 2000 units per year with a production of 5 days per week.Using the assumption for increase in demand for the instruments, the number of units to be produced using level production for years 2011 to 2015 is forecasted and it is seen that the probability that the demand is not met is 5. 74%. The maximum number of units to be produced is 2,588. It can be met if the production is increased to 7 days per week whenever required. Hence, it is assumed that there is no need to increase the capacity of the production line apart from changes required when the OmniVue mobile is released.Figure 1 – Level production – capacity required for years 2011 to 2015 OmniVue Cartridges: Build option: Figure X shows the demand for years 2011 to 2015 based on the estimated installed base of 7500 at the end of 2010 and the assumed growth rate. The minimum and maximum growth rates are 5% and 25% respectively. Figure 2 – Demand for cartridge The demand for the assume d growth rates is plotted. The 4 molding presses proposed by Mr. McCarthy will be sufficient to meet the demand if the growth rate is 5% every year, but will not be able to meet requirements if the demand grows by 25%.The capacity of the proposed 4 machines with 5 days/week and 7 days/week are plotted. The number of units to be produced with level production is plotted; the proposed 4 machines will be able to meet the demand with overtime (excess of 5 days/week). It is assumed that the OmniVue mobile is given preference in case of shortage of capacity. Optquest is used to estimate the right number of machines to be purchased and the expansion strategy in the future years so that the company profit is maximum. Buy option: The cartridge components are the only difference between the buy and build options.There is no increase in the capacity required because the current capacity of 8 machines will be able to satisfy the demand for the next 5 years. Figure 3 – Cartridge demand fo r year 2015 – peak demand Other product lines: It is assumed that the new product OmniVue mobile can be manufactured in the same production line with some modifications in the equipment. Overtime: It is assumed that overtime can be used for manufacturing when the 5 days/week is not enough to meet the demands. The overtime wages for the labor are twice the normal.The overtime wages are calculated from the utilization factor of the machines which is 5 days/week normal production (100% utilization). The overtime cannot exceed 40% because there are only 2 more days left in a week. It should be noted that there is only 3% change in the operational expenses for overtime (refer to Appendix E). Employee strike in 2013: It is predicted to be 50% probability that the employees will do strike for a period of 0. 5 to 3 months. So, it is assumed that the annual capacity is reduced to 75% if the strike duration is 3 months (refer Appendix D).Strategies can be formulated to tackle the strik e situation by producing more units in the previous year so that the demand can be met in the first 3 months of 2013. The maximum demand during the strike period is estimated to be a maximum of 1. 6 million cartridges and 277 instruments. It is assumed that the OmniVue mobile will be released after the strike is over. Production planning Cartridges: Buy option (GenieTech): The same number of units is produced every year which will be equal to the production capacity.The plastic components requirement for Bergerac is first satisfied and the remaining capacity is used for the other contracts of GenieTech. After the launch of OmniVue mobile, the production for OmniVue mobile is given preference. Overtime is used for production if the demand exceeds capacity which is unlikely to happen in the next 5 years. Since the production capacity of GenieTech has been always above the demand, the other strategies are not analyzed. Build option: There are various strategies which are compared in bu ild option.For each production strategy, the optimum solution for the capacities in each year is found out. After finding the optimum solutions, the production strategies are compared with each other to find out the best solution for the build option. There criteria used to find the optimum solution is the present worth. The production strategies that are analyzed are: * Level production strategy and Chase production strategy * Overtime is allowed / not allowed For level production strategy, the inventory holding cost is assumed to be $0. 2/unit for OmniVue and $0. /unit for OmniVue mobile. The alternatives are compared using net present worth forecast graphs. The level production plan and chase production plan are included in Appendix B and Appendix C respectively (Note: production plan for both the cartridges and the instrument are available in the same table). Instruments: The instruments are produced using level production strategy. The production is scheduled based on the deman d forecast for the years 2011 to 2015. OmniVue mobile is given more preference like the production strategy for cartridges.It is assumed that 2 foremen and 6 other labors are required for the production line. It is also assumed that OmniVue mobile instrument also can be manufactured in the same production line with some modification in the equipment. The production of instruments does not impact the analysis because the same cost is incurred in both options. Other products: The operations for other products are directly included in the income statement and it is not analyzed. Operational expenses and Income statement The base values assumed to calculate the production costs for cartridges are included in Appendix F.Based on the production plan, the expenses incurred are calculated for both options. The expenses are calculated for the years 2011 to 2015. The expenses and revenue for cartridges and instruments are shown in Appendix H and Appendix I respectively. The income statement i s prepared from the expenses calculated and the revenue (refer to Appendix J). In level production strategy, the expenses are incurred during a period different from the period in which the product is sold. But, it is expended only when the product is sold.For that purpose, the cost per unit is calculated and is used to calculate the cost of goods sold. For example, if in a year, 3000 goods are sold and 1000 are from previous year inventory, then the cost is calculated using previous year cost per unit for 1000 units and current year cost per unit for the remaining units. The income tax rate for the company is estimated to be 39% from the income statements for years 2007 to 2009. The revenues and other expenses from operations other than OmniVue is estimated and added to the income statement.The net income is calculated. Cash flows (refer Appendix K) Similar to the Income statement, the revenues, expenses and capital investment for each year is calculated from the data and the cash flows for the alternatives are calculated. In cash flow statement, the expenses are expended in the same year when it was spent. The income statement which was prepared previously has used accrual accounting. Depreciation is included in income statement. In cash flow, the capital investments are included instead of depreciation. Present worth analysisThe net present worth is calculated for the net income and the cash flows. The objective used to optimize the solution is to maximize the mean of net present worth of the net income and cash flows. The four production strategies for the build option are optimized and the maximum net present worth for the options is forecasted. The best solution from the four strategies is chosen and compared to the net present worth of the buy option. The overtime not allowed scenario is performed in Optquest by adding a constraint that the utilization in all years is less than or equal to 100%.Build option (refer Appendix M): Present worth of Net incom e: For chase production strategy, overtime allowed, maximum of mean of net present worth is $58. 770 million. 31002 For chase production strategy, overtime not allowed, maximum of mean of net present worth is $58. 486 million. 40101 For level production strategy, overtime allowed, maximum of mean of net present worth is $60. 786 million. 40000 For level production strategy, overtime not allowed, maximum of mean of net present worth is $59. 789 million. 50100 Present worth of Cash flow:For chase production strategy, overtime allowed, maximum of mean of net present worth is $53. 474 million. 31000 For chase production strategy, overtime not allowed, maximum of mean of net present worth is $52. 220 million. 40101 For level production strategy, overtime allowed, maximum of mean of net present worth is $50. 086 million30010. For level production strategy, overtime not allowed, maximum of mean of net present worth is $47. 742 million. 50100 Buy option (refer Appendix N): Present worth of Net income: $54. 204 millionPresent worth of Cash flow: $47. 647 million Based on the analysis, build is a better option than buy option. The present worth of the net income is highest for level production, overtime allowed. But level production, overtime not allowed is very close to the highest and it does not affect the employee relationship. It is recommended to use level production strategy, no overtime. There is an issue with inventory building in level production strategy. Also, by not choosing the buy option, Bergerac loses a chance to enter a new product line.But, the current objective is to produce the plastic components for Bergerac with the lowest expenses, which can be achieved by building a unit for plastic component production in the plant itself. It is also recommended to buy 5 machines instead of 4 machines in year 2010 based on the analysis. Appendices List of assumptions * The growth of demand is a triangular distribution with 5%, 17% and 25%. * The OmniVue mobile demand accounts for 30%, 50% and 60% in 2013, 2014 and 2015 respectively. * It is predicted that there is a 50% chance of strike in 2013 for a time period of 0. to 3 months. * The OmniVue instruments and cartridges can be manufactured in the same production line with some changes in equipment. A $200,000 cost is added in year 2013 for these changes. * The base values considered for calculating production cost for cartridges and the instruments are available in the Appendix F and G respectively. The labor cost for instruments is assumed to be the same as that of cartridges. There will be no impact for assumptions related to instruments because the same cost is assumed in both options. * The labor growth of GenieTech is 2 to 5%.The material cost increases by 3 to 8%. * For overtime, the salary is 2 times the salary in normal production hours. The overtime salary is calculated from the utilization. * OmniVue mobile cartridge will be sold at $8 per unit. * Transportation cost of plastic components from GenieTech is $0. 1/unit. * The inventory holding cost for cartridges is $0. 2 for OmniVue and $0. 1 for OmniVue mobile. * The plastic components are sold to other customers from GenieTech at $1. 66/unit. * The labor and overhead for instrument production are assumed values. The revenue from other products is assumed to be $35 million. Gross margin for other products is 60%. * The R & D costs increase 7% every year. The R & D cost for GenieTech is 5% of Bergerac’s. * Sales and marketing cost is 25% of revenue. Profit sharing is 0. 1% of gross profit. * The General and administrative cost for HemaVue is $6 million and it increase 10% every year. * Interests are 5% of Income from operations. * In capital investments, installation and building cost has a $125,000 fixed cost and $75,000 variable cost per machine.

Essay Anthem for Doomed Youth by Wilfred Owen - 1182 Words

Anthem for Doomed Youth by Wilfred Owen The sonnet ‘Anthem for Doomed Youth’, by Wilfred Owen, criticizes war. The speaker is Wilfred Owen, whose tone is first bitter, angry and ironic. Then it’s filled with intense sadness and an endless feeling of emptiness. The poet uses poetic techniques such as diction, imagery, and sound to convey his idea. The title, ‘Anthem for Doomed Youth’, gives the first impression of the poem. An ‘anthem’, is a song of praise, perhaps sacred, so we get the impression that the poem might me about something religious or joyous. However, the anthem is for ‘Doomed Youth’ which is obviously negative. The title basically summarizes what the poem is; a mixture of thoughts related to religion and death,†¦show more content†¦The climax in irony is ‘Shrill, demented choirs of wailing shells’; however, just as the poems irony climaxes, we are taken away from the war to the ‘sad shires’. Furthermore, the last two lines of the octet are transition lines: they prepare you for the sestet by slowing the pace and softening the tone, ‘And bugles calling for them from sad shires.’. The sestet of the poem, by using strong religious motifs, concentrates on what will happen after the war: about the friends and families left behind. The vast number of dead ‘cattle’ is described by Own when he says that there aren’t enough ‘candles’ to ‘speed them all’, and there aren’t any official funerals, but they can only be mourned by releasing their ‘holy glimmers of good-byes’ and that ‘the pallor of girls brows shall be their pall’. Lastly, it is stated that for the ‘patient minds’, each day passes by very ‘slow’ and they ‘draw down’ their ‘blinds’ as if slowly getting rid of any hope left. Nevertheless, they are finally in serenity. The poem is divided into two different ideas. The first part’s tone is at first violent, firm and negative; while the second part’s is miserable and unhopeful. The mood of the octet and sestet is similar to their tone: angry and depressive. Throughout the sonnet, Owen has used two rhetorical questions: one at the beginning of the octet and one at the beginning of the sestet. The diction and the actualShow MoreRelatedAnthem For Doomed Youth By Wilfred Owen1187 Words   |  5 PagesWilfred Owen joined the corps in 1915, at the tender age of twenty-two therefore his poems are testimonial, reflecting the gullibility evinced by many of the other young soldiers who fought in the World War. Consequently, Owen’s poems allude to a theme of the loss of innocence in the young soldiers as they were unprepared for the reality of what they would encounter. He also illustrates that the soldiers joined for materialistic reasons (e.g. titles, patronage) spurred in by the fervent propagandaRead MoreAnthem for Doomed Youth by Wilfred Owen776 Words   |  3 Pages â€Å"Anthem for Doomed Youth† is a poem written by Wilfred Owen who was a soldier that died in the Great War. Throughout his poem he effectively communicates the distress and terror he experienced during his time of service. By Owen using a sonnet layout he is using irony as he is talking about an anthem of war not an anthem of love. The use of a traditional sonnet provides an emphasis on the severity of the subject. The poem is structured in 14 lines which Owen has divided into two stanzas. BothRead MoreAnthem For Doomed Youth By Wilfred Owen932 Words   |  4 Pagesâ€Å"Anthem For Doomed Youth† by Wilfred Owen helps us open up our thoughts to be able to look deeper into the meaning of how boys put their lives on the line to protect their country. The poem is 14 lines with themes of war, religion and death. In just two stanzas there is a rhyme scheme of ABABCDCD EFFEGG that is seen. The first stanza represents the octave and the second stanza represents the sestet. Owen’s poem in the form of a sonnet puts the volta going from the first to second stanza by connectingRead MoreWilfred Owen Anthem for Doomed Youth Analysis1000 Words   |  4 PagesAnthem of the Doomed Youth by Wilfred Owen The poem I chose to study is Anthem of the doomed youth by Wilfred Owen. Wilfred Owen, the son of a railway worker, was born in Plas Wilmot, near Oswestry, on 18th March, 1893. Owens youthful illusion of the glory of fighting as a soldier was reflected in his words to his mother on his return to England shortly before volunteering for the army...I now do most intensely want to fight. In the summer of 1917 Owen was badly concussed atRead More`` They `` And Wilfred Owen s `` Anthem For Doomed Youth ``1460 Words   |  6 PagesSiegfried Sassoon’s â€Å"They† and Wilfred Owen’s â€Å"Anthem for Doomed Youth† depict disillusionment with religion justifying or romanticizing World War I. Both these poems express the authors’ frustrations that religion cannot justify the tragedies and consequences of the war. These frustrations are conveyed through tones of mocking and sarcasm, in addition to other methods. In â€Å"They† Sassoon creates a conversation between a Bishop and soldiers to express his frustration, while Owen uses sarcastic questionsRead MoreEssay on Anthem for Doomed Youth Commentary Wilfred Owen1216 Words   |  5 PagesThe sonnet ‘Anthem for Doomed Youth, by Wilfred Owen, criticizes war. The speaker is Wilfred Owen, whose tone is first bitter, angry and ironic. Then its filled with intense sadness and an endless feeling of emp tiness. The poet uses poetic techniques such as diction, imagery, and sound to convey his idea. The title, ‘Anthem for Doomed Youth, gives the first impression of the poem. An ‘anthem, is a song of praise, perhaps sacred, so we get the impression that the poem might me about somethingRead MoreThe Soldier By Rupert Brooke And Anthem For Doomed Youth By Wilfred Owen1367 Words   |  6 Pages‘The Soldier’ by Rupert Brooke and ‘Anthem for Doomed Youth’ by Wilfred Owen are two World War One era sonnets, both making a comment on what it means to die in war. The two poets show very different views on war, as both had very different experiences in war. Rupert Brooke died before he made it to war, his poem highlights the soldier as a hero and glorifies dying in war, in contrast Wilfred Owen shows a grittier side to death in war, as he experienced war first hand and his poem is real and brutalRead MoreEssay about Analysis of Anthem For Doomed Youth by Wilfred Owen937 Words   |  4 PagesAnalysis of Anthem For Doomed Youth by Wilfred Owen The first poem that I am to analyse is Anthem for Doomed Youth, written by Wilfred Owen. This poem is a sonnet. It has fourteen lines. In this poem, the first and fourth lines rhyme, as do the second and third. The first stanza is mainly about the battlefield, whereas the second stanza is more about the feelings of friends and family back at home. This poem starts off at a quick pace, and then slows down throughout Read MoreAnthem For Doomed Youth And Dulce Et Decorum Est By Wilfred Owen1378 Words   |  6 PagesWilfred Owen is today recognised as the greatest poet of the first World War, his poetry at the time was considered to be controversial as it revealed the truths behind trench warfare and contradicted popular attitudes at the time. The works of Wilfred Owen, and specifically, the poems of ‘Anthem for Doomed Youth’ and ‘Dulce et Decorum Est’ are both successful in powerfully giving a voice to the soldiers of war and conveying the dark and inextricable truth behind war provoking the reader to considerRead MoreAnalysis Of Poem Anthem For Doomed Youth By Wilfred Owen And Trench Duty927 Words   |  4 Pagesimportant factor affecting many people’s lives. The two sonnets â€Å"Anthem for Doomed Youth† by Wilfred Owen and â€Å"Trench Duty† by Siegfried Sassoon are two tal es inspired by their experiences fighting in WW1 and all the horrors that war made them experience. Both poets use different sonnet structures, yet convey quite similar messages. In addition, these poets develop powerful images and metaphors, but in subtly different ways. Sassoon and Owen use structure, imagery and metaphor to show his audience the