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John Deere and Complex Parts

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Case # 2 – John Deere and Complex Parts Inc.
Key Facts * Net Sales for John Deere were over $19 billion * Net assets of more than $34 Billion * Complex parts was supplier for more than 10 years * Supplied Deere with a key manufacturing part requiring significant engineering input and testing * Complex Parts supplied all needs to John Deere at the time * Complex parts was interested in increasing sales to John Deere * Achieving Excellence Program (AEP) was a supply management program trying to give the competitive advantage to deliver world class equipment * Strived to develop long lasting relationships * Promoted communication, trust, cooperation, and continuous improvement * Key, Partner, approved , conditional supplier rankings * Complex Parts * Started falling short of requirements of John Deere * Not answering phone calls * Delivery rating was over 150,000 * Target cost not met, reducing projected profits on certain things for Deere * Not following Deere Quality Plan at new Facility * Getting quotes on time seemed to be very difficult
Discussion Questions 1. Some of the strengths about the Achieving Excellence Program are that they strived to develop long lasting relationships with their suppliers. They provided supplier performance summaries at the end of each quarter to show the suppliers how they were doing in their part of supply John Deere, and they also had John Deere training programs, but not all suppliers were eligible, which I believe to be one weakness of the program. I believe they chose the right categories to base the supplier’s performance off of (quality, cost management, wavelength, and technical support). One thing that really caught my eye out of the four categories that I believe to be excellent was the wavelength category. This category was an analysis of the supplier’s attitude, responsiveness, attention, initiative, and communication which is key to forming a long lasting relationship between a business and its suppliers. With a good performance in this category, meant that the supplier was dedicated to continually improve not only within itself but with the business it was supplying. 2. From the information provided, I believe that Complex Parts was performing adequately the past year because of their ratings, but recently it seems to me that Complex Parts was not performing adequately. They were not performing adequately because their delivery rating was over 150,000, which is considered as a conditional supplier, they had fallen behind in implementing the Deere Quality program at their new facility, and a number of items supplied by Complex Parts had not met Deere’s cost targets, effectively reducing Deere’s projected profits on these products. In addition, Complex Parts seemed to have trouble answering phone calls and getting quotes on some parts in a timely fashion. This to me is not a supplier performing adequately. Conditional supplier should have been assigned to Complex Parts at this time with their performance. 3. If I were a member of the supplier evaluation team I would recommend that they start doing things the old way, and by old way I mean the way they did things last year. They seemed to have changed something up from last year and it is causing them to slip as a supplier. They need to follow with the Deere Quality Plan, cost targets, answering within a timely manner, and fix the deliveries and they will be back to being a key partner, otherwise if business with them keeps going the same way, they will not be a supplier of John Deere any more, since there are other company’s out there that are capable of doing the same thing as Complex Parts. I would recommend letting them go until the end of the quarter to see if they are fixing the problem they seem to be having, and if they do not improve to go to someone else. 4. Well it could either get better or get worse for the short and long term implications. It all depends on whether Complex Parts wants to still be a supplier of John Deere and step their game back up to what it was last year. The only problem I could see, is trying to establish a whole other network with another company if Complex Parts doesn’t step it up.

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