FKN1: Operations and Supply Chain Disruption D472 Task 1 Case Study
D472 Task 1 Case Study: Assessing Supply Chain Disruption at AJM
D472 Task 1 Case Study
Operation and Supply Chain Disruption a t Autojor Manufacturing
Background
Autojor Manufacturing (AJM), based in Louisville, Kentucky, is a company that produces
high-dollar electronic components for the automotive industry. The company has been
in operation for over 25 years and has a reputation for providing high-quality products
at competitive prices. The company has a current partnership with a supplier in
Houston, Texas, that provides 100% of key components (small metal gears). The
company has recently experienced an operation and supply chain disruption that
threatened to impact its ability to deliver products to customers.
Disruption
This disruption occurred when AJM's supplier in Houston experienced a f ire at their
manufacturing facility, resulting in a complete shutdown and a shortage of critical
components. This incident disrupted AJM's supply chain and ability to deliver products to
their customers, resulting in lost sales and potential loss of business. The company had
to incur expedited freight costs during the plant start-up after the f ire.
To tackle the disruption, AJM quickly formed a team to evaluate options and determine
the risk factor based on various start-up time frames. AJM held internal meetings to assess
their inventory positions and determine the next steps to take. A team was quickly
assembled two days later to evaluate various options and assess the risk factor based on
different time frames scheduled for the supplier's start-up. During the interviews, AJM
discovered that their employees were concerned about the potential long-term effects
of the disruption, including fears of layoffs, employee reductions, and loss of business.
Multiple news sources and social media outlets added to the uncertainty with a range of
opinions, many of which were based more on emotions than on facts. From a customer
perspective, AJM avoided major outages with the three large automotive companies—
Cadallia (CD), Lexiplus (LP), and Elecktore (ET)—with only one disruption caused to
Cadallia and potential penalties
forthcoming. The extensive communication with the three companies throughout
the disruption was key to ensuring that all options could be explored.
Resilience
Despite the disruption, AJM demonstrated short-term resilience by immediately
contacting other potential sources, engaging expedited carrier services, and reviewing
potential substitutions. They also increased communication with their customers to
manage their expectations regarding potential inventory outages. However, the
disruption had a
, FKN1: Operations and Supply Chain Disruption D472 Task 1 Case Study
significant impact on the company's operations and supply chain, with production
levels decreasing by 100% three weeks after the disruption.
Data Analysis
The disruption had a significant impact on AJM's operations and supply chain, leading to
a 100% decrease in production levels three weeks after the supplier's facility f ire.
However, the company was able to avoid stock outages with Cadallia, Lexiplus, and
Elecktore thanks to on-hand inventory at the supplier site and maintaining min-max levels
for f inished goods. Unfortunately, production for the OEM market (where AJM's name is
not directly on the products) was stopped immediately, and subassembly materials were
reassigned. While the company was fortunate to avoid stock outages, the data showed
that the current recovery plan could be more robust.
During discussions with key executives, it became clear that there were concerns about
some of the processes or lack of processes in the current operation. The executives
noted that it took two days to assemble a team to respond to the disruption, there was
no clear- cut leader for the response, and the procurement process had only one
supplier for a key item.
In addition, the leadership team felt that the min-max inventory level carried at the
organization was tying up capital. Long-term options were needed to allow the
leadership team to feel comfortable reducing inventory to free up capital. They also felt
that the recovery time to a secure inventory level was too long and wanted to explore
long-term options for sourcing.
A positive factor highlighted in the f indings was the effectiveness of the ERP system,
with barcode scanning at the point of production and within the warehouse operations.
The internal resources combined with EDI communication for demand from the
customer base provided AJM with real-time data to formulate a plan. One point
expressed by leadership was the barcoding technology and whether an RFID system
would enhance the ability to capture data. In addition, the leadership team wanted to
have a better understanding of the analysis capabilities of big data and the potential for
improved forecasting.
The AJM's leadership team identified concerns with the procurement process, the lack of
a clear-cut leader for a disruption response, and the min-max level tying up capital. To
mitigate future disruptions, they evaluated three long-term solutions:
Solution 1: Multisource Supply Chain
The AJM leadership team is evaluating the implementation of a multisource supply chain
strategy. This strategy is being considered as a strategic option to increase the
resilience and viability of the company's supply chain and reduce the risk of supply
chain disruptions that would negatively impact their ability to meet the needs of their
customer base (Cadallia, Lexiplus, and Elecktore).
Implementing a multiple-sourcing strategy will provide AJM with the f lexibility to
manage any future supply chain disruptions without significant interruption to its
business operations. Multisourcing offers several attractive advantages:
D472 Task 1 Case Study: Assessing Supply Chain Disruption at AJM
D472 Task 1 Case Study
Operation and Supply Chain Disruption a t Autojor Manufacturing
Background
Autojor Manufacturing (AJM), based in Louisville, Kentucky, is a company that produces
high-dollar electronic components for the automotive industry. The company has been
in operation for over 25 years and has a reputation for providing high-quality products
at competitive prices. The company has a current partnership with a supplier in
Houston, Texas, that provides 100% of key components (small metal gears). The
company has recently experienced an operation and supply chain disruption that
threatened to impact its ability to deliver products to customers.
Disruption
This disruption occurred when AJM's supplier in Houston experienced a f ire at their
manufacturing facility, resulting in a complete shutdown and a shortage of critical
components. This incident disrupted AJM's supply chain and ability to deliver products to
their customers, resulting in lost sales and potential loss of business. The company had
to incur expedited freight costs during the plant start-up after the f ire.
To tackle the disruption, AJM quickly formed a team to evaluate options and determine
the risk factor based on various start-up time frames. AJM held internal meetings to assess
their inventory positions and determine the next steps to take. A team was quickly
assembled two days later to evaluate various options and assess the risk factor based on
different time frames scheduled for the supplier's start-up. During the interviews, AJM
discovered that their employees were concerned about the potential long-term effects
of the disruption, including fears of layoffs, employee reductions, and loss of business.
Multiple news sources and social media outlets added to the uncertainty with a range of
opinions, many of which were based more on emotions than on facts. From a customer
perspective, AJM avoided major outages with the three large automotive companies—
Cadallia (CD), Lexiplus (LP), and Elecktore (ET)—with only one disruption caused to
Cadallia and potential penalties
forthcoming. The extensive communication with the three companies throughout
the disruption was key to ensuring that all options could be explored.
Resilience
Despite the disruption, AJM demonstrated short-term resilience by immediately
contacting other potential sources, engaging expedited carrier services, and reviewing
potential substitutions. They also increased communication with their customers to
manage their expectations regarding potential inventory outages. However, the
disruption had a
, FKN1: Operations and Supply Chain Disruption D472 Task 1 Case Study
significant impact on the company's operations and supply chain, with production
levels decreasing by 100% three weeks after the disruption.
Data Analysis
The disruption had a significant impact on AJM's operations and supply chain, leading to
a 100% decrease in production levels three weeks after the supplier's facility f ire.
However, the company was able to avoid stock outages with Cadallia, Lexiplus, and
Elecktore thanks to on-hand inventory at the supplier site and maintaining min-max levels
for f inished goods. Unfortunately, production for the OEM market (where AJM's name is
not directly on the products) was stopped immediately, and subassembly materials were
reassigned. While the company was fortunate to avoid stock outages, the data showed
that the current recovery plan could be more robust.
During discussions with key executives, it became clear that there were concerns about
some of the processes or lack of processes in the current operation. The executives
noted that it took two days to assemble a team to respond to the disruption, there was
no clear- cut leader for the response, and the procurement process had only one
supplier for a key item.
In addition, the leadership team felt that the min-max inventory level carried at the
organization was tying up capital. Long-term options were needed to allow the
leadership team to feel comfortable reducing inventory to free up capital. They also felt
that the recovery time to a secure inventory level was too long and wanted to explore
long-term options for sourcing.
A positive factor highlighted in the f indings was the effectiveness of the ERP system,
with barcode scanning at the point of production and within the warehouse operations.
The internal resources combined with EDI communication for demand from the
customer base provided AJM with real-time data to formulate a plan. One point
expressed by leadership was the barcoding technology and whether an RFID system
would enhance the ability to capture data. In addition, the leadership team wanted to
have a better understanding of the analysis capabilities of big data and the potential for
improved forecasting.
The AJM's leadership team identified concerns with the procurement process, the lack of
a clear-cut leader for a disruption response, and the min-max level tying up capital. To
mitigate future disruptions, they evaluated three long-term solutions:
Solution 1: Multisource Supply Chain
The AJM leadership team is evaluating the implementation of a multisource supply chain
strategy. This strategy is being considered as a strategic option to increase the
resilience and viability of the company's supply chain and reduce the risk of supply
chain disruptions that would negatively impact their ability to meet the needs of their
customer base (Cadallia, Lexiplus, and Elecktore).
Implementing a multiple-sourcing strategy will provide AJM with the f lexibility to
manage any future supply chain disruptions without significant interruption to its
business operations. Multisourcing offers several attractive advantages:
