AVION, Inc.
Answers:
1. The parts of supply chain which are closely involved in this situation are
Purchasers and
Suppliers
There was a miscommunication between the purchasers and suppliers. The purchasing company (Avion Inc.) should have told the supplier company (Foster Technology) that there is an additional requirement of goods. Is it possible to supply additional goods? Or else the purchasing company would have found an alternate solution like bringing in an additional supplier. The forecasting department is also responsible for this cause. If they had already forecasted that there would be a requirement then an alternate solution could have been found.

In order to maintain a smooth flow of material each and every department in the supply chain namely Transportation (inbound and outbound), procurement, Inventory management, operations, marketing, forecasting team & sales team should have a nice communication between them. A periodic analysis on each and every department is also required.

2. The initial problem was that the qualities of goods delivered were low and the goods delivered were late. This made the procurement managers to blame that the supplier company is showing a poor performance.
But, the actual problem was that the original procurement order was different from the actual order i.e. the original order was 2000 units per month, but the actual order was increased to 4000 units per month. The company had production unit, which can produce only 3500 units per month in maximum. So they were not able to deliver goods on time.
3. It is not easy to switch to a new supplier because if there is a requirement to switch for a new supplier then the company should arrange a meeting with new suppliers and get know more details about the company. Once the new supplier is decided then a team of members is assigned to audit the company so that the quality, process and quantity can be analyzed. It is bit-complicated process, it takes a longer time period for getting a new supplier and the cost for the analysis is also high.

The signing of new supplier would be complicated if they had already signed an agreement or contract with the old supplier as they have to break the old contract or agreement and they had to pay some kind of money or property as penalty for breaking the contract.

4. The root cause of problem is the main area or key point where the problem had begun. For example, In this case the root cause of problem with the purchasers. They had increased the requirement twice but they didn’t notify the supplier and due to miscommunication between them the problem began to rise. One should always deeply analyze the problem in order to get to the root cause of the problem or else it would lead to a bigger problem.

5. Good customers are customers who have a good bonding with suppliers, internal customers, external customers that leads to a long term relationships between them.

A buying firm wants to be perceived by a supplier as a good customer because any supplier in any field wants a good customer only. So that there will be a smooth and long relationship between them or else the relationship will be damaged leading to losses for both customers and suppliers.

E.g.: In the Avion Inc. case the supplier would tell this company as a bad customer because they were miscommunication between them. They didn’t have proper response from the purchasing side as they had reported about an issue.
If the Avion company had already said to the supplier that there is an additional requirement of goods and also there is time constraint for delivering the goods, the supplier would tried to increase the production by adding an additional unit or the company could have even outsourced some quantity of goods, thus they can meet the customer demands or else the company would have found an alternate supplier for the remaining goods. Thus they will have a good relationship.

6. The role of performance measurement in managing supply chains is that the performance is measured in each and every departments of supply chain in order to have a smooth flow of material and to analyze the growth of the organization. Using the performance measurement report, one can easily identify when and where the problems have arrived and make changes or take actions immediately so that production is not affected.

7. When there is a change in Supply chain i.e. changes in Manufacturing or production processes or mode of delivery within the supply chain. The outline plan of the entire Supply chain gets changed. It leads to disrupt in normal flow of goods and services within the Supply chain.

8. Avion needs to reduce the Lead Time on its purchased materials and components because it leads to excessive inventory, which affects the bottom line of supply chain.

9. Small Companies or Firms sign in Single-source Contracts because the requirements for the company are very less compared to large-scale industries and it is cost effective for a small firm.

Single Source contracts are to be avoided for large-scale companies or firms even small-scale industries in order to sustain in the competitive market without risks.

10. Supply chain Plan
In this Scenario, the issues with the Avion Inc. and the supplier Foster Technology are
• Miscommunication between the supplier and Buyers.
• The lead time
• Increase in products requirements.
The changes to be made in Avion Inc. are
• There should be a good communication between the supplier and buyer.
• The company should arrange a meeting with the supplier and check whether is it possible to reduce the lead time
• As there is an increase in product requirements (quantity), they should notify it to the supplier and get to know information that is it possible for the supplier to deliver the extra requirements (goods) on time. If it is not possible they should find an alternate solution for the extra requirements of products by outsourcing to another supplier or finding a new supplier who fits these requirements.