Hydraulic cylinder is an industry that has been on the market for over a decade and has successfully maintained a global market. The company has adopted strategies that enable them to provide quality products at best prices. This sourcing report enables the company to meet its objectives of supplying a larger number of products to the growing market while maintaining its product quality. The company will attain products that are more efficient and have minimum energy losses. The company uses waste metals and recycles other metals for specific part production. The products are cost effective, high quality and environmental friendly. Such products will keep the production within the budget limits and provide increased margins. The company should allocate a considerable set of the budget to the research and development of the product. They should embrace thorough scientific research to improve the quality of the products and reduce the production cost.
Milestone and Timeline of activities
The internal procurement divisions, which include customer service, product development, marketing, distribution, operations, and finance, will perform their duties as requested. The customer service will inspect that the product meets the customers’ desires provided. The marketing team will ensure proper marketing of the product to all distribution targets. The finance team will provide the required finances to run the project. The external procurement divisions include the suppliers, the manufacturers, the vendors, distributors, and the transportation will ensure on-time delivery of the product. The suppliers will present the purchased item within four weeks of signing the deal. The distributors and transporters will draft a distribution map to the target market within two weeks of signing the deal. The company estimates that the product is required in 20, 000 units per year and the total spend is approximately 195, 000. For the company to meet this demand at cost effective levels, the company is looking for new suppliers of the Hydraulic Cylinder Assembly “End Block” in the next 100 days. To provide 20, 000 units per year is a significant milestone for the company.
Sources of Supply
Selection of the supplier
The company is seeking suppliers for the Hydraulic Cylinder Assembly from will be from Juarez Mexico, and the selection will involve a profound interview. The interview will require the suppliers to show their previous involvements with a similar company. They will be asked to show how their supply strategies complement the strategies of our company. The suppliers should have diverse products as required by our customers and deliver them on time (when and where the product will be needed).
Checking the references
The suppliers who state to have done this kind of work before will be asked to provide the references to support their claim. The references will be checked out on one-on-one meetings, phone calls, or emails. The references that do not check out will result in the disqualification of the respective suppliers. The interview and the background reference checking will take a period of two weeks. After checking the references, the team will visit the suppliers’ plants and their distribution centers to assess their capabilities. The team will evaluate the testimonials provided by the suppliers and ensure that they agree with the customer testimonials and the objectives of the company.
Quality Standards of the suppliers
The supplier must produce quality products based on the industrial standards and customer demands. The company produces different types of hydraulic products such as Model Code M4-12 Load Sensing Control Valve. Other products include Model Code M4-15 Load Sensing Control Valve, Model Code M4-22 Load Sensing Control Valve, and Model Code SB12
Load Sensing Control Valve among others (HANNON Hydraulics, 2015). The suppliers must meet these standards. The quality standards should be ISO standards appropriately certified for strength, appearance, texture, appearance, chemical content, toxicity, and manufacturing process among others.
Access Management Skills and Experience
The workers in the company have an experience of ten years and certified qualifications. Their expertise is impeccable, and the reputation they command in the industry is respected. The company boasts state of the art research and manufacturing facilities. The workers possess up to date skills due to frequent training and have optimum working conditions (HANNON Hydraulics, 2015). The managers promote open communication channels and brainstorming sessions to promote a dynamic workplace.
The company finances are stable and the company projects growth in the next financial year. Therefore, this is a safe partnership to enter.
The company has implemented a number of quality programs for optimum production. The company has embraced the six-sigma techniques and regular employee training. The company has set evaluation techniques to ensure quality products. They embrace up to date technology and regulations in their production.
Operations and Technology
The company uses forecast and strategy in their work and this way, they are able to estimate the demand yearly. Once the company estimates the annual demand using this fine strategy, they program their production to meet this demand. The products are pre-manufactured based on forecast and released into the market. This style helps counter the cost and time that production requires. The company employs the latest technology in the market to automate their production. The company ensures strict regulation and monitoring during production to ensure good quality products. The company tests its product for brightness, color, strength, and finish qualities set by the ISO (HANNON Hydraulics, 2015).
Supplier Evaluation Criteria and scoring Matrix
|Category||Score and comment|
|Capability||The capability of the supplier is 80 percent of the requirement|
|The machinery is up to date and efficient for the production
The company has an efficient labor personnel that is well trained and managed
The knowledge is acceptable. They exhibit good knowledge of raw materials, production processes and machine operations
|Financial Standing||The company is financially strong|
|Capacity and hours of operation||They can fulfill all demands in amount and quality but require a significant lead time|
|Location for transportation and labor||The location is close to the manufacturing plant but the transport cost is moderately expensive|
|Testing Capabilities||The materials are of high quality|
|Storage – Dry||The storage is in warehouses with ample safety stocks|
The company will pay $9.75 USD per pound of every steel type. For the labor, tolerance’s, the perceived standard Machine shop processes and Clear Zinc Plating process, profit, and typical machinery, the company will purchase each at a price of $9.75 USD each. The total unit of the product is 20, 000 units per year.
The due date of this quote is 15th October 2015. The date of submitting samples will be the 10th November 2015. Date of production shipment across the US border is the 16th December 2015. The production should start on the 15th February 2016.
Terms and conditions
The products should meet the qualities provided, and the safety stocks should be maintained. Strict observance of the lead-time is required so that the quality is consistent. The supplier should have the capability to meet sudden demands for the same quality.
The raw materials should have a minimum of four months warranty
Price: The Company demands $195000 for every load shipped
Discount: the Company offers a discount of 9 percent for every four products
Packaging: the delivery will be fully packed and protected well from the weather and scratches.
Lead-time: The lead-time will be three weeks after payment is made. The company will also meet any lead-time provided.
Production Lot Sizes and Quantity Breaks: the lot sizes will be 25% of the requirement.
The company will provide the following products in the lots demanded by the company: custom telescopic cylinders, welded cylinders, mill-type cylinders, tie rod cylinders, servo-actuated cylinders.
Terms and conditions
The company must provide the exact specifications and amounts. The payment must be made on-time together with the production lots and sizes.
Supplier selection and product acquisition
The chosen supplier meets all the required cost, quality, and delivery agreements. All the certifications and practices were assessed, and they checked out. The supplier agrees with all the set prices and any necessary adjustments. The supplier has agreed to provide sample parts to the Buyers Company Quality group to validate specification. The business partnership was finalized and the first order placed. A sample of the Hydraulic Cylinder Assembly “End Block” was ordered prior to finalizing to the order or any legal documents.
HANNON Hydraulics. (2015). HANNON Hydraulics. Retrieved from http://www.hannonhydraulics.com/equipment/hydraulic-cylinders-hydraulic-actuators/
Parker Hydraulics. (2015). COMPACT HYDRAULIC CYLINDERS. Retrieved from http://ph.parker.com/mx/en/compact-hydraulic-cylinders