Avoin, Inc. Case Study

Avion, Inc. Case Study

Q1. What part of the value chain is most closely involved with the situation in the case? What is the responsibility of each part in order to maintain a smooth flow of material?

Answer: The following parts of the value chain are mostly involved with the situation in this case:-

1. Procurement Department: The Procurement Department did not consider fully the demand that needed to be fulfilled. They calculated the demand to be 2500 whereas the actual demand was over 4000. The department was working in silo and had very little or no communication with the Marketing department. In a nutshell, they were interested in achieving Local Maxima rather than achieving Global Optima. Moreover, they maintained an arm’s length distance with vendors rather than considering them as strategic partners.

2. Production Department: The production department didn’t provide the requisite data to the materials management/procurement team. They required materials after ten days instead of 14days (which was planned). The change in operations plan was not informed. As such, there was erratic supply of materials.

3. Marketing Department: The Marketing Department knew that the demand was over 4000.As such, they should have informed the materials department regarding the demand and should have proceeded accordingly.

4. Forecasting: The demand forecasting was highly erroneous and had very little accuracy.

Q2. What initially appears to be the problem? What really is the problem in this case?

Answer: Initially the problem was supposed to be the under-performance of vendors who didn’t commit themselves to the process. The problem was supposed to be the order fulfilling rate of Foster but later on it was revealed that Avion was the root cause of problems. The Materials department had given Foster orders for only 2500 units and the lead time was supposed to be 14 days. But later on, as seen in the case, the Production Department needed the supply in 10 days. Moreover,...