2012 Student Case Competition Story Car the operations manager for Cargo Taller Manufacturing, was busy working “ust ‘angther Tuesday maming atthe plant” when his phone rang, Jack, the warehouse maneger, ‘rely called unless there was 8 problem brewing. Jack reported that one ofthe warehouse skanbans hod just gone inte the red zone. It appeared thatthe military tactleal trailer (MTT) broke assemblies were late from the vendor. Not Immediately concerned, Carl decided to g0 and see the purchasing agent responsible forthe brake assembli the brake assembly vendor wasn Taiwan and had not responded to her email request for Information the previous day. Unable to contact the supplier drecty, Cari waited while Jan called the import broker. Tey were astonished to fin out thatthe cargo ship had artved the previous week, ight on schedule. The broker assured them thet all ofthe product shioped from ‘Taiwan Brake Company had already been delivered to.CargoTraller Manufecturing. Confused, Jan indicated that she would email Talwan Brake again and would even stay late thatevening to call them after Gum Seale time (20am in Talwan}. Unable to do mare in purchasing, Carl went tothe warehouse to check the steck levels. Jack reported that te line had just started using the frst batch of parts out ofthe four day safety stock. it was tive eniering of thet han red zone that had tiggered Jack to report the shortage, The previous Friday, receiving had gotten a call from Jan in purchasing asking about the brake assembly delivery that had not been received yet, so when Jack found out from his material handlers thatthe safety stock had been breached on those same brake assemblies, he decided to raise the alarm right away. Carl was concerned. He only had four days of inventory anda vendor haf way around the world, Unfortunately there were no other authorized brake assembly vendors fr this ‘product; Taiwan Brake Company was the last current source on the Miltary drawings. It hd taken almost two months to get Taiwan Brake Company authorized to be added to those ‘drawings. Shipping late to the military is nota minor issue. Itcan trigger late shipping penalty‘payments, and worse, negative reporting under “past practices” that could create problems long into the future fr new contract bidding. Being late was rt an option to be taken light. Cart waited around that evening for Jan to call Talwan Brake Company. A ful shift and a half of his four day sxfety stock had been used and he was still waiting to talk withthe ‘manufacturer. There were now only ten and ahalf shifts of material left before the line shut down, Carl was geting anvious. At 6:30pm, fan transfered the call rom the vendor representative to Cal. After a few minutes of talking with the gentleman, Carl began to fei to matter how many times the vendor apologized, Carl just couldn't seem to fully comprehend ha a ge we have any product on the way to Cargo Traller Manufacturing. Not only that, but they had no ‘raw material eft onhand in which to make the brake assembles since their vendors had withheld the materal while waiting for payments t seemed thatthe Taiwan Brake Company representatives had been so embarrassed by the bankruptcy that they had not told thelr customers and had just stemped Incoming purchase orders and production release requests with a confirmed stamp. Every day our world seems to get smaller Vendors and customers are Becoming so Interconnected today that they are able to run synchronized operations and complex supply chains from opposite sides ofthe lobe. But when a problem does occur It quickly becomes ‘What do yeu recommend Carl and his operations team do? "Notes tothe student teams: you wil be responding to this case as Jan, the purchasing agent Thc meane that when you orally present your case analy ch and every member of Your team will be addressing Carl and the rest of his operations team as if you are Jan. You know Carl ona first name basis because you have worked fo him for several months. Not only do you want to impress him with your detailed analysis of the problem and with your cogentanswer(s, but you aso understand thac this probiem is erucal to the work lives of 250 of your fellow workers Please make sure you speak to him and his team when you present.Company Background ‘© Cargo Trailer Manufacturing » Annuai revenue $80 miiiion (©. 75% of revenue from military trailer sales ‘© Privately held company ‘© Over 75 years in business One of 2 authorized military tactical trailer (MTT) manufacturers '* Primary customers: US Military and trucking industry ‘* MTT shipments are handled through Defense Contract Management ‘Agency (DCMA) ‘+ Single manufacturing plant in Seattle, WA ‘© 250 employees, 180 direct of which 80% are dedicated to MTT production ©. 65% of 77,000 sa foot production facility dedicated to MIT production © Company has been pursuing Lean Manufacturing processes for over 5 years: assembly and machining areasBrake assembly product information ‘Brake shoas ae spec controlled and source controlled by customer drawings to Japan ‘Taiwan Brake Company buys brake shoes from Japan Brake Shoes te make brake assembles Cargo Traler Manufacturing worked with Talwan Brake Company toge authorized by US itary to suply this assembly ‘id brake assembly suppers have been terminated or are no longer authorized fr production ‘brake shoes required per taller as part of brake assembly 2brake shoesare assembled into ach LM and RK brake assembly | par nf rake accamblag 11H 1 RH} Head on aach llr 1200 brake assemblies itn one shipping container (600 LM & 600), each weighlng 33 fos Lead time from Talwan Brake Company for orders is 13 weeks Standard shipping tie va ship from Talwan to Seattle 6 weeks Shipments scheduled to arive 1 week pir to production requirement ‘Safety tock sset at 4 days production ‘raller production levels set 2 48 trallers pr day or about 1000 per month Production rus 3 shifts per day, Monday through Friday Production rue 3t 98.7% on time month to month Import broker purehates the material from Taiwan Brake Company and then handles the “customs ane cuties or imporang, passing along te costs anda manup to argo ‘rater “Manufacturing Company Purchase contact st up at begining of year for full year's estimated production volume Purchase order releases placed a 13 wees out to are 1 week ror to production need ‘Order of 1200 brake assembles was due to arive last week ands row late