Case Study

Problems and Causes Contributing to Low Quality


throughout the Supply Chain

Initially M-Case Company followed an established policy that included nobody to represent management/ board in the process of quality control. So in the meanwhile, if the results achieved were good, a supervisor was praised. In case if something went wrong, a guilty person, usually a worker, was punished. As a result, ordinary working team members did not think that they were involved in the creation of a better quality product anymore. That is why this problem provoked an increase of fear felt by an ordinary staff member of the possibility to make a mistake. In the end, the company, having lost their labor resources incentive, could not produce goods of high quality anymore.

As it has cleared out, M-Case owned only 26% of firms retail shops, the rest 74% were privately owned distribution centers. In this situation, M-Case had no financial control over focal suppliers. Moreover, the two specific focal suppliers started to develop an opportunistic behavior towards the company that has resulted in the poor quality of end goods. It has also become very difficult to control the quality of the raw materials.

In H-Case, a problem of responsibility was assigned to managers only. Nobody thought of teamwork at that time as well as in the above example. In this case, the workers did not feel they could be implementing the basics of the quality control measures, as every of them had a line manager who took on this responsibility. The quality management was maintained and controlled from the center only. In the event that a mistake was detected, a guilty person was punished. The fact of bad results identification has become more important than initial understanding of the problem. Nobody was interested in the development of a policy that could allow preventing the same mistakes happening again. In addition to this, a strong competition has arisen between departments within the company that distracted management from the quality policy planning. The idea of the quality scheme initiated earlier was supposed to be integrated into working processes of wholesalers and as well retailers. However, it was proven to be a difficult task to complete.

Eventually, all of the efforts that the head representatives of the company were investing money in did not bring any improvement into the quality management of the business. This was explained by a strong dependency on their suppliers, which, in their turn, were quite reluctant to any changes initiated by the company-manufacturer. As it was reported later, the company experienced a heavy market segmentation that allowed it to sell products of various quality levels in different markets. At the same time, sales figures did not change much in such regions like Asia and the Middle East, because the target audience in these locations was still purchasing these goods only due to the attachment they had to this particular brand (Soltani, Azadegan, Liao, & Phillips, 2011).

Implementation of the Recommendations Developed in the Case Study

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It is also recommended to cover education aspect of all parties taking part in the production, delivery and sales. This could be performed by investing money into the creation of learning centers to promote quality on all levels of the company. Moreover, every partner organization can appoint people who would be in charge of all quality communication, so they will be always aware of the changes in the quality policy.

It was advised to establish closer cooperative relationships with focal suppliers. This could be done through a better understanding of the peculiarities of their business, letting them feel the loyalty and serious approach of the company-manufacturer to all business standards.

Changes in the Supplier Contract in order for the Supply Chain to be Successful

The total minimum quantity of monthly order into the contract should be added. This number would be fixed for a set (agreed by both sides) period. This would give suppliers a possibility to account for a firm number of goods ordered and paid for. At the same time, it would allow a buyer to plan ahead and change the number of the goods ordered depending on the markets demand. As for a supplier, it means that the business can plan ahead knowing the schedule of stable payments it will receive every month.

It would be worth mentioning half of the total monthly sum prepayment that needs to be made before goods are shipped. The rest can be paid for after goods were delivered. Any outstanding sums will be charged with a 1% interest per month after 30 days past the delivery date.

Delivery should be seen as an approximate date after all paperwork is completed and an official order received from a buyer. In the case of any problems, leading to prolongation of the delivery date, occur, the estimated delivery dates will be changed.

Supplier is ready to give a warranty for its goods that will be valid for a particular period.

All products ordered should be covered by an insurance policy during their transportation time.

The contract between a buyer and a supplier may be terminated only after the latter has given written consent (Suppliers Standard Terms and Conditions, n.d.).

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