Case Study – Agricultural and Construction Incorporated
Agricultural and Construction Incorporated (ACI) is a manufacturer and global distributor for complex agricultural vehicles. ACI also distributes spare parts for the vehicles around the world.
The procurement function at ACI buys component parts and services from a large number of suppliers around the world. Many of these components are built into sub-assemblies and are required to be delivered into ACI’s manufacturing facilities on a just in time (JIT) basis, aligned to the build sequence.
Wiring Loom Category Management
Lola Hart is the category manager for wiring looms at ACI. These looms distribute power and signals around the agricultural and construction vehicles. Lola has recently undertaken a supply chain mapping exercise on the vehicle wiring looms; these are complex assemblies and unique to each type of vehicle manufactured.
The wiring looms are designed by ACI design department and are unique per model of vehicle. They must be delivered to ACI to an exact build sequence in exactly correct numbers and are critical to the assembly process. Lola is well informed and has good relationships with her Tier 1 suppliers but has very limited knowledge of the suppliers higher up the supply chain.
The supply chain map for wiring looms is shown in Fig 1. Lola now intends to use the supply chain map to identify and study potential operational risks associated with security of supply and logistics complexity within the supply chain network.
Logistics services category management
Ethan Parks is the category manager for logistics services at ACI, managing a team of four buyers with responsibility for logistics contracts. Ethan’s team is responsible for sourcing and negotiating contracts with specialist logistics suppliers in each country where ACI’s vehicles are sold.
ACI also has a worldwide service for the collection of components from suppliers and their delivery into ACI s manufacturing facility. This is operated by an independent third-party global logistics partner.
ACI also wishes to expand the distribution of its vehicles into a new market and Ethan’s team must set up a new logistics contract. Ethan has suggested that his buyer should use a project lifecycle model to manage the risks and ensure that the new contract is set up successfully.
Ethan is also reviewing ACI’s current insurance and in-house disaster recovery arrangements, because the new logistics contract will involve the use of new shipping routes for ACI and will cover an area which is affected by earthquakes. He is also aware of a recent international incident where a ship carrying similar vehicles and equipment ran aground causing significant damage to the cargo.
Recently, Lola and Ethan have been working with the other category managers at ACI to develop a comprehensive list of potential risks for the procurement function at ACI. Once it has been developed, the list will be maintained and updated on a regular basis as part of the ongoing risk management process.
Case Study Questions –
Question 1 – Identify and categorise Five key risks for the procurement function at ACI (referring to the case study above).
Question 2 – Discuss how the complexity of the logistics network may increase operational risk at ACI.
Question 3 – Describe one other component part vital to the assembly of ACI’s type of vehicles and develop a new supply chain map.
Question 4 – Identify and categorise Five key risks associated with this component (You will need to investigate outside the case study).
Question 5 – Describe appropriate risk mitigation and management strategies
Question 6 – Identify reasons why ACI might consider outsourcing its disaster recovery services.
Note – Analysis of the case study would be in the form of a formal report, maximum 2,500 words, demonstrating the application of the theories, methods and techniques of risk management in procurement and logistics/distribution through answering the above questions.
The report style and structure must be professional, but is your responsibility and must include:
1. Introduction: a brief introduction of the case study;
2. Analysis of the case study: (make sure the analysis must reflect the case study and show further reading)
3. Analysis process and answers to questions in order
4. Short Summary: reflect the key points you have made in the main context.
5. Reference (Harvard standard referencing).
