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Agile Electric Quality Issues in a Global Supply Chain Case Solution

Solution Id Length Case Author Case Publisher
2646 2028 Words (8 Pages) Dhruv Dar, Sanjay Kumar, Vijay Aggarwal Ivey Publishing : W12056
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The current case highlights the product quality issues that were being faced in the supply chain system at the global level. This global supply chain system consists of 4 tiers; hence, four organizations are involved. Tier 1 supplier is Automek which is a US-based organization. Tier 2 supplier is Agile, following Electronics Components Private limited as tier 3 and Board India Private Limited as Tier 4. Except for Automek, all three tiers were India based. The case specifically illustrates the situation when Automek gave the order of a new product to Agile based on their previous track record. For Automek, Agile was their main supplier. However, Agile was inexperienced in new product development and processes. Despite their concerns, Agile accepted the contract, and this was when issues began. Conclusively, the case shows that the risk factor could increase when the supply chain's dependency increases. However, firms can eliminate such risks by implementing mitigation tactics and managing an integrated supply chain via exceptional internal quality practices, which all tiers must consider.

Following questions are answered in this case study solution:

  1. Should the complete recall/field failure and associated costs be charged to the tiered suppliers?

  2. Was Automek’s decision to source the business from Agile a good one? Did Agile make the right call in accepting the contract?

  3. Do you see internal quality practices as having a major role in the case, considering all the supply chain members? Are ISO 9000 and TS 16949 necessary and sufficient conditions for adequate process knowledge and diffusion of internal quality practices?

  4. Would Agile receive any benefits if it invested resources in developing its suppliers? Who is responsible for accelerating the implementation of quality practices in lower-tier suppliers? 

  5. Why were ECPL and BIPL not interested in improving their processes and manufacturing practices?

Case Study Questions Answers

1. Should the complete recall/field failure and associated costs be charged to the tiered suppliers?

The entire case study illustrates two different incidents. The first issue relates to capacitors, and the latter relates to PCB. When merged, both issues made enough disaster for Agile and Automek. As the main supplier to Automek, Agile is obliged to tackle the issue and take responsibility. The blame is to be shifted to Agile in the entire chain process, but the associated cost should not be completely charged to Agile. Agile should be responsible for bearing 2/3 of the cost, and the rest should be taken care of by Automek. The reason is that before the manufacturing process, both parties signed an agreement. It was mentioned clearly that for any mishap, the responsibility would be shared by both parties. Although the contract clauses exhibit that the quality of the product is the responsibility of the supplier, and based on that, agile is to be blamed for this overall failure, but still, Automek is to be responsible for bearing one-third recall cost as Agile had no experience to produce actuator. 

During the process, Automek sent its own engineers to identify the issues that may affect the quality of the product, but Agile showed resistance to committing to the task. Similarly, in the second failure, it was clear that ECPL and BIPL had problems that might have become the reason for the potential recall, but still, Automek allowed them to proceed with the development. Further, with multiple failures at various steps, Automek no doubt audited tier 3 and 4 suppliers and addressed the gaps, permitting Agile to proceed with development. Hence, it shows that Automek did not handle the audit responsibility well and failed to audit the actuator supplier and sub-supplier and their capability properly. Also, Automek was unwilling to make any change or implementation to integrate with high-level suppliers, which made the situation more complex and hence was difficult to be solved. 

2. Was Automek's decision to source the business from Agile a good one? Did Agile make the right call in accepting the contract?

The outcome of the assigned case depicts that the decision made by Automek to give business to Agile was wrong. But from the reader's perspective, we have the leverage to assess the case and give the stance. If looking at the decision clearly from a business perspective, we can't label it as a wrong move. Automek is one of the largest auto component manufacturers based in North America. In developed economies, organizations are forced to outsource their production line to other countries to maintain a competitive edge at the global level.

Similarly, in the case of Automek, if the company has not sourced its business, then the chances of losing a competitive edge would be higher. With this lens, the decision of Automek to outsource its business was technically right. However, choosing agile as a supplier gives room for argument. Automek's decision to choose Agile was based on their past experiences and track record. Agile's performance has always been good as they always managed to produce quality products.

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