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

It depends on where the problems arose. If the basic parts had quality issues, then the upper
tiered suppliers could charge the basic suppliers. If the basic parts meet the global standard and
pass the inspection of clients, but problems arose after parts being assembled, the middle tiered
suppliers should be responsible for the failure. However, no matter how the problem happened,
the first tier should be charged by clients since they have the direct business relationship.

Was Automek's decision to source the business from Agile a good one?
Did Agile make the right call in accepting the contract?
I suppose that it was a good decision to source the business from Agile for Automek, since Agile’s
quality and delivery performance was good. After having received a new business for a new
product, Agile can still supply with zero defect and delivery defaults. It shows that Agile has the
ability to produce parts which can meet with Automek’s requirements. Furthermore, the price is
less than half of the local suppliers, which could let Automek save a lot.
Agile did make the right call. Because this business had the potential of growing over US$ 1
million in three years. Taking variable cost of different items and the initial investment in capital
equipment into consideration, it still lead to a suggested contribution of US$ 0.54 per piece.
Besides, their Automek business is increasing and Automek will probably become one of their top
three customers. What’s more, Automek would help Agile in locating and developing the sub-tier
suppliers.

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?
I think not. We can see that all suppliers reach the global standard and have certifications, but
the products provide to Agile didn’t follow their specification. Although Agile had a final testing
station, the problems still remained undiscovered.
ISO 9000 and TS 16949 are necessary but not sufficient enough. Although the suppliers have the
certification, it doesn’t mean that they will meet the specification of each companies. As Exhibit 8
shows, both ECPL and BIPL performed poor in internal controls.

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?
Why were ECPL and BIPL not interested in improving their processes and manufacturing
practices?
If Agile invested resources in developing its suppliers, the quality of actuators they made will
improve for sure, which will bring Agile better reputation from Automek and other clients and
then get more business in the future. But in the mean while, the cost could be considerable and
probably cannot be covered by the benefits I mentioned before.
I think the direct upper tier is responsible for accelerating the implementation of quality practices
in lower-tier suppliers.
First, from what I’ve learned, making a little improvement of product quality could mean a mass
increasing on cost, especially in mechanical and electric manufacturing industry. So, improving
their processes and manufacturing practices could only bring limited profits for them.
Furthermore, Agile is not ECPL and BIPL’s major customers and the competition among tiered
suppliers is not intense.