Transaction-Processing Network – Sending  Purchase Orders – Management Assignment Help

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QUESTION 1 [16] CASE STUDY 1: THABANG VAN WYK IT SUPPLIERS 

1.1 Read the case study below and answer questions that follow: 

“In 2015, Thabang van Wyk IT Suppliers (TvWTS) did what would seem to be a near  impossible task. It began doing business with 5,000 suppliers over the Internet-sending  purchase orders, receiving invoices and paying suppliers, all using World Wide Web as  its transaction-processing network”. Setting up 5,000 suppliers to do business on the  Internet was relatively easy compared to the resistance of suppliers to link to TvWTS via  EDI (electronic data interchange). Suppliers who did not have large contracts with  TvWTS balked at EDI because of the expense of special software and a VAN (value 

added network) that were needed to do EDI. No such problem with using the Internet:  Suppliers do not need special software or a costly VAN to do business with TvWTS. 

The Internet’s simplicity reduces costs for TvWTS and its suppliers. TvWTS estimated  that it saved R25 in 2015 by moving procurement to the Web, and believes that is only  the tip of the iceberg. Much of the savings came from eliminating intermediaries. TvWTS uses the Web to manage multiple tiers of suppliers and as a tool to work with suppliers  to improve quality and reduce costs. But cost reduction was not the only reason TvWTS switched to Internet procurement. Web-based procurement is a key part of its supplier  management strategy: TvWTS sees great value in using the Internet to collaborate with  suppliers and tap into their expertise much more rapidly than previously. “The Internet  will also allow TvWTS to collaborate with suppliers over scheduling issues. If the  company wants to increase production of a certain product it will be able to check with component suppliers and determine if suppliers can support the increase. If there are  schedule cutbacks, it will be able to notify suppliers almost instantaneously and excess  inventory can be avoided”. And although supply chains are viewed as sequential, TvWTS does not necessarily want to manage them that way. Rather, it wants to use the Internet  to manage multiple tiers of suppliers simultaneously. An example of this is how it deals  with CMs (contract manufacturers). The company sends forecasts and purchase orders  to the CMs for the printed circuit boards they supply. It also gives all the component  manufacturers the requirements and they ship parts directly to the CM. The company  estimates it saved in excess of R15 million in 2015. “The savings were the difference  between contract manufacturer’s price for components used on the boards and TvWTS’  s price that it had negotiated with component suppliers”. Because the Internet is  becoming crucial to TvWTS’ s supplier management strategies. TvWTS is trying to make  it easier for suppliers to do business over the Web. The company has developed a Web based portal to provide a single entry point to TvWTS. As is the case with most large  companies. TvWTS has multiple interfaces with its suppliers, including engineering,  quality, as well as purchasing, and typically suppliers have to connect to separate URLs  (universal resource locators) in a company. TvWTS’ s portal provides a single point of  entry for suppliers, making it easier for suppliers to do business with TvWTS and  increasing the speed of the supply chain. Speed is vitally important in the electronics  industry due to very short product life cycles. If products do not get to the market quickly,  most of the profit opportunity is lost. Still another benefit envisioned by TvWTS will be  the ability to form strategic alliances with some of its suppliers. In the past, the fact that  many suppliers used by TvWTS for its production processes were as far as 5,000  kilometres away made it difficult to build strategic alliances with them. TvWTS believes  that using the Internet will strengthen relations and enable it to develop alliances. “The  Internet also will play an important role in TvWTS’s general procurement. TvWTS was  doing EDI with core production suppliers, but not with other forms of general  procurement. Purchasers were still faxing and phoning orders, which is timely and  costly”.

1. How did TvWTS achieve cost reductions by the Internet for procurement? (3)

2. What advantage did TvWTS’s use of the Internet have for small suppliers? (3) 

3. Aside from cost reduction, what major value does TvWTS envision for its  interaction with suppliers? (3)

  4. How does use of the Internet for procurement reduce mistakes? Indicate how  using the Internet made that benefit possible. (4)

5. How does having a Web-based portal help TvWTS’s suppliers? (3) 

 

QUESTION 2 [18] CASE STUDY 2: QUALITY AT ABC (PTY) Ltd 

Protect life. Protect truth. That is the mission of ABC (PTY) Ltd, the company that  produces public safety technologies such as Taser electrical smart weapons and body  cameras for law enforcement around the globe. In business since 1993, the company  manufactures three weapons lines inside its high-tech headquarters in Scottsdale,  Arizona. Ninety-nine percent of its customers are in law enforcement, military,  correctional, and professional security organisations. Designing and manufacturing  smart weapons technologies requires precise engineering and production processes that  can assure both accuracy and operational safety for its organisational customers and  personal protection buyers. This attention to detail is evidenced in the manufacturing  operation is organised. ABC (PTY) Ltd’s manufacturing operations are ISO 9001:2008  certified. 

All finished goods are produced to stock, so that the company can be responsive when  an order is received. Sales history data helps dictate which items to make to stock, and  which could sit in inventory between six to twelve weeks before being sold. Most  employees have undergone voluntary exposure to the weapons, including the founders. 

ABC’s work cells are arranged by product. At the start of the week, each cell is given a  “production order” document that lists the bill of materials for order is released by ABC  (PTY) Ltd’s Enterprise Resource Planning (ERP) system, with raw materials required 

from assembly pulled and staged at each cell weekly. In addition to supporting the  informational needs of all the functional areas of a firm, ERP systems support to  manufacture of a firm’s products by scheduling the fabrication of components and the  arrival of purchased materials in support of the overall production plan. 

ABC (PTY) Ltd’s attention to quality is embedded throughout its manufacturing  processes. Raw materials are tested and inspected for quality conformance at the  supplier to assure no faulty components are shipped. Circuit boards, which are  assembled domestically, are each tested prior to shipment, and then acceptance  sampling at ABC (PTY) Ltd’s receiving dock confirms shipment conformance. The same  process occurs for the supplier of injection-molded components, such as weapons  casings. Testing includes functionality checks, drop tests to assure the product can  withstand being dropped, and temperature checks to assure the assure the weapons will  work between a temperature range of -20 Centigrade and +-%50 Centigrade. When  finished goods are ready, ABC (PTY) Ltd per forms a final quality assurance check on  100% of goods to assure everything functions properly prior to shipping to the customer.  All goods come with a one-year warranty. 

 

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