Universal Motor Company Acquires Semi Conductors

The Universal Motor Company Acquires Semiconductors

1. Major Facts/Problems:

* The Universal Motor Company is one of the world’s largest manufacturers of automobiles and trucks.

* Due to the air pollution issue the U.S. government established vehicle emission standards; the U.S. government-mandated standards could not be achieved with the existing technology – design engine control computers to manage engine efficiency.

* Existing methods and strategies of procurement no longer provided satisfactory results when applied to the procurement of semiconductors.

* Semiconductors were required for the manufacture of the new engine control computers.

* Production disruptions were occurring in the auto industry due to stock-outs. Semiconductors were a greater cause of the disruptions and suppliers seemed uninterested in the firm’s problems neglecting to react to the emergencies of their customers as normal auto industry suppliers would.

* The auto industry only represented 2 percent of the semiconductor market; because of this observation, members of the semiconductor industry did not believe that the auto industry deserved any special attention.

* The normal practices of sourcing from many suppliers to lower the price and promote competition caused supplier relation issues.

* The semiconductor industry was growing faster than the auto industry market component. Over the next five years, semiconductor requirements would grow from $10 million annually to a whopping $90 million annually! Projected growth in electronic requirements appeared to be unsupportable.

* Supply management was most often thought of as a reactive function organized to support manufacturing which resulted in their inability to recognize strategic and futuristic implementation of innovative actions.

* The external environment revealed an industry that is dynamic, high growth, entrepreneurially focused, and technology driven.

* Major issue was the decision...