Answers to Case Study-Avion, Inc

1. The following parts of the supply chain are closely involved with this situation which is described in this case.

1. Procurement Department: They should consider the fully demand and communicate with marketing department with the actual demand that need to be fulfilled. They should look forward to achieve global optima and should have a close relationship with vendors considering them as strategic partners.

2. Production Department: They should provide requisite data to the procurement team and if there is a change in operations plans that has to be informed.

3. Marketing Department: They should inform the actual demand to the procurement team and proceed accordingly.

4. Forecasting: The demand forecasting has to be accurate.

2. Initially the problem is the under-performance of vendors who didn’t commit themselves to the process. The problem was supposed to be the lack of order fulfilling rate of Foster.

But later on it was revealed that Avion caused the problem. Materials department had given Foster orders for only 2500 units and the lead time was supposed to be 14 days. Later production department needed the supply in 10 days and the marketing department had to cater to a demand of 4000 whereas the order was for 2500 only.

3. It is quite difficult to switch supplier because,

Difficulty to find a new supplier at a short span of time because of non availability of suppliers.

Process of finding a new vendor is time consuming.

Supplier might charge higher.

New supplier might not trust the company at first instance.

Relationship building might take a long time.

Following could complicate a firm’s ability to switch to a new supplier.

1. High switching cost

2. Lack of trust

3. Unreliable quality

4. Lack of information flow between supplier and buyer

4. Getting the root case would mean diagnosing the problem and eliminating it. In this case the root cause of the problem seems to be the lack of information flow with the supplier company Foster....