Golden Elephant Castings Company Case Study Analysis
Introduction
The case involves an email from the Global Procurement Office representative regarding the information obtained from the new major supplier for the exclusive product line (C- series). The case requires a risk evaluation and the estimation of the dollar impact associated with the supplier based on certain facts and information provided. The risk evaluation is assessed using a risk matrix and compared with other companies’ financial risks.
Supplier Risk Evaluation
Supplier Relationship
Based on the information provided in the case in which the whole new product line (C-series) would be solely dependent on a single supplier, it is perceived that the risk would be higher. Since there would be a sole provider of raw material there is a possibility of the supplier’s inefficiency to provide the required material efficiently and on time, causing a major problem for the company.
As the forecasted revenues are $50M in the first year following $75M in the next year it can be assessed that the company would generate value for the suppliers being their customers. The case does not provide any evidence of cooperation, trustworthiness, and sharing of any kind of financial information with the suppliers therefore it is supposed that the risk of a supplier relationship is below average.
Information Sharing
The case does not provide any indication of sharing cost structures, inventory status, material planning, production process, etc. Consequently, the risk of sharing information can not be assessed accurately and it is assumed to be below average.
Performance
After a thorough analysis of the case, it can be realized that the supplier has a serious quality problem as any statistical quality assurance charts could not be seen on the site but only the assurance by the owner of their well-trained workers. Also, it can be observed that there would be some delivery problems as there are rumors of dockworkers union problems at the location of the shipment port.
There might be some engineering or service support problems since the engineers are young and inexperienced and employee turnover is also disturbed in the company. The data for the expansion, shutting down and production slowdown could not be found in the case.
Human Resource Risks
As per the study of the case, we can evaluate that employee turnover is at a high level. Furthermore, the company also had a major turnover in its key leadership team, and the company is under a new management team just from a period of six months ago.
Data regarding the pay rate is not certain but we can evaluate from the notes of the owner that the pay rate is high and that he is trying to keep the cost below the average for New Delhi therefore the risk for the pay rate is below average. The risk of a strong union is high and the grievances filed by the employees are not evident from the case.
Supply Disruption Risks
The major risks that we can evaluate from the case are concerned with supply disruptions. As the supplier purchases the raw material at spot prices for the cheapest prices it is difficult to maintain the prices of raw materials and can be deficient in providing the required quantity of raw materials noting the problems in getting raw materials.
Moreover, we can estimate that quality and capacity problems would also arise concerning the purchase of raw materials and the experience of the employees. There are also some threats of some policies and restrictions from the government that can result in supply disruption. Additionally, the risk reduction and business continuity plan of the supplier can not be analyzed from the given information.
Financial Risks
Financial risks can not be evaluated from the information provided in the case therefore it is supposed to be below average.
Conclusion
The overall assessment of the risk evaluation can be provided as the supplier has the highest risk in the supply disruption and the human resource would carry certain limitations for the company. Whereas due to the limited amount of information, other risks evaluated posed a below-average rate.
However, the company indicates a comparably low financial risk of 43% with a revenue impact of $50,000,000 from other companies excluding Alchem which shows a lower risk of 25%. In conclusion, the company provisions to contract with the supplier on some specifications of required heat treat ovens specified cost structure and price targets. Therefore it could consider and evaluate all the risks associated with the agreement and take the initiatives to secure its position as a customer................
Golden Elephant Castings Company Case Study Analysis
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