Mohamud Hassan
DSC434
John Deere case study
Due date 11/11/14

Early Supplier Integration in the Design of the Skid-Steer Loader

Scott has been offered a new position as supply management manager for a new Deere & Company manufacturing facility of designed product skid-steer loader. As part of his new job, he must make a proposal to identify specific suppliers to integrate into skid-steer loader development process and specific ways to effectively integrate these suppliers in order to meet aggressive target costs.

Scott faced many problems during his time at Deer and Company. For example, Scott is required to produce a proposal that outlines how the company is going to manage the early supplier integration into the design and manufacturing of the new Deere Skid-steer loader. On the other hand, suppliers will have to be integrated based upon strict selection guidelines that will prove to be critical in improving the new Deere skid-steer loader.
Some of the issues or problems the company was facing. 1.) One of the problems that company facing is Skid-steer loader from Deere & Company lacks of market.
Deere &Company did not design, engineering and manufacturing the skid-steer loader itself, on the opposite, they put it in the hand of a third party. They had contracted the engineering and manufacturing to new competitiveness and no significant benefits over competing Holland, which is also sell same product, competing in the same market product and product features.
This issue is very important because the Deer & company is facing many challenges on the market. The company who makes the product for Deer and Company has also other customers who sells same product as Deer and Company. Other companies are selling the product cheaper than Deer and Company. 2.) The market access strategy may not work smoothly as its excesses capacity.
The reason is because the time frame is short. Scott has only 24 months to make the new facility fully operational. In this case Scott does not enough time because the target date is supposed be by 1998. The company requires so many criteria to fulfill in a not long time. For instance, Scott was given only 24 months to run fully operational for the entire facility. This will make very difficult for the company to make the market access work smoothly.
This issue is very important because if the market issue doesn’t work smoothly, the company might struggle in the market and does not sell more products. 3.) How Deer & Company needs to decide and find appropriate suppliers in different product?
Deer & Company’s main problem is that deciding and finding the right supplier for their product. They must improve their product features and expand product range. For example, Deer & company should consider offering a better product delivery and service for their customers because there are other competitors in the market who also offers same product. They should also lower their product price because other competitors such as Holland are selling products for a cheaper price than Deer & Company.
This issue is very important because if the company does not provide a quality product for their customers, then they might lose customers. If the company loses customers then they will struggle in the market and the other competitors will take advantage of it.

Analysis
The solution to the first problem which is lacking of the market is that the Deer & Company needs to focus the market penetration strategy in order to reach their goal. For instance, the target is to produce an improved skid-steer loader that is lower in price than the best competitors, and meet all other identified order-winning standard, like product features, product range, delivery and price.

Areas to focus | Not Important | Very Important | Product feature | 0 | 5 | Product range | 1 | 4 | Product delivery | 0 | 5 | Price | 1 | 5 |

Not important =0 Very important = 5 It is very important the company focuses on the product features such as fuel efficiency, improve mechanical, and tires. Improving product features will help the company grow and produce quality products. The solution of the second problem that Deere & John is facing about market access strategy may not work smoothly as its excesses capacity because Scott was given for 24 months to run the entire facility fully operational. Also this will be very difficult for Scott and his company because the time frame that was given is short so that The reason of implementing supplier integration in the design and fabricating processes for Deere & John is to move towards a new business model to stay competitive in the increasing global competition.
The other solution of the third problem is why the company needs to decide and find appropriate suppliers in different product? Deer & John planned to make their own facility and start producing their own product. The company wants to take back design and manufacturing of skid steer loader from the company who makes the product for them and decides to invest for building a new design, manufacturing and marketing facility. This will be a great idea for the company because they will be able to produce a variety of products. Deer & John Quality: The quality objective will not necessarily be changed by the new business strategy. The Deer & Company must decide where it wants to position itself on the quality range. The delivery objective will probably be changed toward shorter lead times in order to compete. Since the product is custom designed, the customers may expect some products to be held in finished goods inventory. Customers may also insist that raw materials inventory be carried so that some products can be quickly produced. John & Deere should also consider moving quality product assurance under the manufacturing department. This will provide the opportunity to make quality more than just outside inspection and to consider quality as part of the production process. Deer & John financial on planning new facility: There are few financial options that Deer & John should decide to follow for planning the new facility.
Option 1 will cost more money to implement in new assembly equipment, plus a large amount of time and other costs, for example, including training, lost production time during changeover, management time, etc. However, these costs could be paid off in short period of time depending on what savings are assumed for quality improvement, and inventory reduction.
Option 2 will also improve quality even further because it will take more time than expected date. It might also cost more and more money than option 1. I recommend that the company proceed with Option 1 and then move to Option 2, if demand and product changes are relatively stable. It appears in this case that Option 1 can be financially justified and that important benefits will flow to the company in profits, balance sheet improvements, and in holding market share. After implementing option 1, they will have time to evaluate whether a further move to option 2 is also desirable.

Finally, Deere & John should use supply chain to minimize cost and get maximum benefit and competitive advantages. For example, they can select suppliers and use different practices. It is clear that effective utilization of the company that is selected for partnership is important. This has to be achieved with certain techniques or guidelines that the supply management team will implement.