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Chapter 3: Q. 7DQ (page 368)

What are the roles of suppliers and customers in a lean system?

Short Answer

Expert verified

Lean involves suppliers and customers as an important part of the process. Suppliers are the ones who supply the raw materials to the company and then the company uses those raw materials to produce the finished goods to deliver them to its end consumers. Suppliers and customers have an indirect relationship with each other. They are indirectly connected through the company and both of them have different roles and responsibilities.

Step by step solution

01

Role of Suppliers in a lean system

The buyer has to make sure that the suppliers have the materials to satisfy their condition or to fulfill the need for the raw materials. A lean organization helps the suppliers or guides them in training and implementation and also guides them in value creation.

02

Role of Customers in a lean system

As per the lean organization, customers are the reason for exiting their business. One of the major reasons that the lean system works so effectively is that it focuses on value creation in the eye of the customers. They believe that customers are those who work with the organization from outside of the organization.

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Most popular questions from this chapter

Is it possible to achieve zero inventories? Why or why not?

DM Office Products (DMOP) is a wholesale supplier of Office products with one facility in Pennsylvania. It has decided to build a new distribution warehouse in the state of New York to help serve the growing demand in that market. It has four major customers located in Buffalo, Syracuse, Albany, and New York City. Though New York City is the largest market, it also has the greatest competition and DMOP is not a major player there. When DMOP ships an order to a customer it uses its small fleet of two trucks to deliver, so the cost of delivery is essentially the same for a full or partially full truck. The expected number of annual shipments to each city and their coordinates on an x, y grid is shown in the following table

Use the centroid method to recommend a location for the new warehouse for DMOP. Round your coordinates to one decimal place

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Question: Your company assembles five different models of a motor scooter that is sold in specialty stores in the United States. The company uses the same engine for all five models. You have been given the assignment of choosing a supplier for these engines for the coming year. Due to the size of your warehouse and other administrative restrictions, you must order the engines in lot sizes of 1,000 each. Because of the unique characteristics of the engine, special tooling is needed during the manufacturing process for which you agree to reimburse the supplier. Your assistant has obtained quotes from two reliable engine suppliers and you need to decide which to use. The following data have been collected:

Requirements (annual forecast)

12,000 units

Weigh per engine

22 pounds

Order processing cost

\(125 per order

Inventory carry cost

20 percent of the average value of inventory per year


Order quantity

Supplier 1 Unit Price

Supplier 2 Unit Price

1 to 1499 units/ order

\)510.00

\(505.00

1500 to 2999 units/order

500.00

\)505.00

3000 + units/order

490.00

488.00

Tooling costs

\(22.000

\)20.000

Distances

125 miles

100 miles

Note: Assume that half of the lot size is in inventory on average (1,000/2 =500 units).

Two qualified suppliers have submitted the following quotations:

Order quantity

Supplier 1 Unit Price

Supplier 2 Unit Price

1 to 1499 units/ order

\(510.00

\)505.00

1500 to 2999 units/order

500.00

\(505.00

3000 + units/order

490.00

488.00

Tooling costs

\)22.000

\(20.000

Distances

125 miles

100 miles

Your assistant has obtained the following freight rates from your carrier:

Truckload (40,00 lbs. Each load):

\)0.80 per ton-mile

Less-than-truckload

$1.20 per ton-mile

Note: Per ton-mile 5 2,000 lbs. per mile.

a. Perform a total cost of ownership analysis and select a supplier.

b. Would it make economic sense to order in truckload quantities? Would your supplier selection change if you ordered truckload quantities?

Sometimes a company may need to purchase goods or services that are unique, very complex, and/or extremely expensive. These would not be routine purchases, but there may be some vendors that could supply what is needed. What process would be used to transmit the company鈥檚 needs to the available vendors, asking for a detailed response to the needs?
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