Procurement case study PDF

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Strategic Procurement process Case study assignment...

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MAGNA INTERNATIONAL INC. CASE STUDY ANSWERS 1. As Magna is a highly Engineered Tech company, describe how this company have their suppliers to get involved in part/component improvements and provide examples of what kind of KPIs Magna may need to implement in order to evaluate supplier’s performance?

Answer: In business, estimation is most of the way to implementation improvement. Analyzing supplier performance is a troublesome undertaking. In the scenario of Magna international Inc. . it is seen that the company is having products that come from different parts of the world or almost all the continents of the world, since then it is a difficult task to maintain and improve the supplier performance, some of the things the company can do to improve these can be:

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Based on price measurements

The most basic part of guaranteeing esteem is ensuring that the supplier attains Magna international Inc. value prerequisites. These can be gathered through straightforward connections like formal dealings. E.g.: If the first provided cost estimate if $100 and the purchaser wrangles it down to $95. That is $5 sparing per unit.

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Based on cost measurements

Decreasing expenditure on suppliers by Magna international Inc. can decidedly affect the financial plans of the business. A straightforward cost-decrease target takes a fall at the notable cost benchmark for a better and analyzes the current cost amount. The rate difference affects the savings figure. E.g.: Suppose the initial value is $100 and the new sum is $95, the resultant $5 sparing contributes to 5% cost savings.

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Based on quality measurements

At the highest level, quality identifies with performance to contract. This can be estimated as far as defects per part or dismissed parts per request or through some either characterized sum. These are simple guidelines measurements and are to be considered into the robotized segments into the getting procedure. Inside an agreement, these can be incorporated with an assistance level understanding. E.g.: on the off contrary that the supplier hits a 90% endorsement rating inside the stakeholder’s view. This is a way to guarantee that the supplier exercises are carefully in accordance with the necessities of the business.

Hence, these are the key performance indicator for the supplier of Magna international Inc. to improve the supplier’s performance.

2. As Magna has manufacturing plants all over the world, please describe the strategies this company uses to minimize the risks due to cultural differences and miscommunication. Please provide specific examples.

Answer: Culture in Canada the home country of Magna International Inc. is a mix of American, British, and French inclinations which are enough similarities between Mexico. U.S, Europe. The only difference that exceeds more than the similarities are in Asian continents, to adapt to these differences the company has a wide range of cultural practices among all the countries, which include 

Learning each other’s culture

Learning about each culture can substitute to a rise in the horizon of individual perspective about life and people, which can lead to a much more pleasant conversation and the relation among co-workers in a global firm. 

Respecting others culture

By respecting other people's cultures and accommodating them with prayer breaks and other facilities required, it will lead to loyalty to the firm and respect each other's cultures. After all, it's about giving and then taking respect. 

Using simple language

Not using complex English words and unique idioms with Asia, Europe and practicing the simple words and sentences will lead to a fruitful understanding of what the person is about to communicate without any miscommunication. 

Following a shared corporate culture

Since Incorporations or multinational companies have many people striving hard for the same goal, shared corporate culture will enhance employees' commonality to raise the bars for unity among their co-workers. For e:g, in a big corporation where many people come together to work for one purpose, it is vital to use formal and simple keywords to communicate the rules every employee to follow to perfect the craft and surmount the organizational goals and also the dressing culture differs too.

3. The implications of Quality failure in any part is highly critical and involve safety concerns, please explain some of the practices and strategies that Magna is to perform to ensure there is no part/component failure.

Answer: Magna's objective is for all providers of materials what's more, benefits, delivering or influencing direct creation material, to illustrate adjustment to the most recent ISO/TS 16949 guidelines, and to different gauges that may be coordinated by the obtaining plant(s) some things to ensure the quality of part/component fail-proof are

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Arranging and definition of prerequisites

Magna’s Survey of past guarantee issues for any comparable item plan as well as application. At every possible opportunity, each endeavour to benchmark contender items will be made. The guarantee examination will incorporate all sub-level providers, where appropriate. Historical quality information on past plans or updates of the current part, or no comparative parts and assembling forms, will be investigated. Issue reports and remedial activities will be inspected to guarantee incorporation of sufficient controls to forestall a repeat of past non-similarities

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Tooling, measures and test installations

Tooling plan and assemble is commonly the duty of the provider, anyway numerous Magna bunches have created point by point Tooling Standards to guarantee providers produce instruments that will give highquality parts for the duration of the life of the tooling.

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Process of product validation

Preceding to the last creation endorsement, the supplier will approve all control documentation to guarantee the assembling procedure is appropriately point by point and all estimation and control frameworks are distinguished and actualized.

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Feedback analyzation

As a feature of the creation part endorsement process for all new and move items, suppliers will build up an early item dispatch regulation arrangement. The procedure will incorporate a normal review of information gathered as a component of the control checks, with proper controls and restorative activity executed to address all cases of nonconformance. Regulation plans, results and remedial activity must be affirmed by Magna and accessible for audit upon demand. Early item regulation must remain Thus, By following these practices and strategies, it will ensure the component will be fail-proof while using it.

4. Please name the risks for Magna that the Global Outsourcing of Manufacturing might pose. Provide specific examples and the strategy for Magna to mitigate those risks.

Answer: 

Quality issues

The quality matters in any sort of company’s products. It can be a huge deal here because there can be a profound change in the product that won't be in the same quality as company standards when produced in a different part of the world. Since the company has entered into a partnership with BAIC group fo manufacturing electric vehicles; the company must ensure high battery quality to last long and provide backup power options. The company can conduct inspections and visits to make sure outsourcing companies follow company protocols. 

Intellectual property

Intellectual properties are solely owned by the country and every company must register its IPs under respective laws. So, when entering into a strategic alliance there can be chances of misusing intellectual properties. Countries have their own intellectual property protection laws and some may not. Therefore, if a big company like Magna plans to start a business abroad in a country where these laws thoroughly not followed there can be a significant risk of leaking confidential data to the competitors and the company must conduct a thorough market study beforehand. 

Supplier issues

It is a challenging task to trust and delegate the manufacturing process to a third party manufacturing company abroad because the company must ensure that they are following company protocols and producing the company’s products with due care and diligence and maintaining high quality. The suppliers must follow proper channels for distribution and make use of effective warehousing facilities.

The strategies to mitigate the risk are

 Signing in a non-disclosure agreement can be highly helpful in protecting the intellectual properties of the company.  Giving the outsourcing company information regarding the proper quality of standard can overcome the problems regarding the quality of the product.  Proper research about the supplier risk and the co-related issues can make the Magna inc prepared for any uncertain changes and quickly adapt and overcome any losses.

Example. If Magna co goes into trade with a company in the east. Agreeing in a non-disclosure agreement with that can firm can be a crucial aspect for protecting the intellectual property....