Problem Solution: Kuiper Leda

Running head: PROBLEM SOLUTION: KUIPER LEDA

Problem Solution: Kuiper Leda

Bryan

MBA 550

MS, CQM

January 23, 2007

Problem Solution: Kuiper Leda

Supply chain management is becoming and organizations most powerful business tool in reducing cost while improving production and customer satisfaction. Managing the supply chain is transforming the way manufactures purchase raw materials, run production, and distribute final products.

Kuiper Leda's present production capacity is insufficient to meet the additional demands/requirements needed to fill a contract with Midland Motors. Kuiper will need to increase its production of Radio Frequency Identification and Electronic Control Units, or outsource part if not all the production to fill present and future contracts.

To further complicate the situation, Kuiper Leda's production planning, inventory tracking, and supply chain management systems are inadequate to meet the demands of increased production. The following will cover Kuiper Leda's problems and define recommendations to enable Kuiper's success.

Situation Analysis

Issue and Opportunity Identification

Up front it appears that the problem Kuiper Leda is facing is caused by an opportunity to grow and take on more and larger customers, but further analysis demonstrates a poor or lack of an effective inventory, supply management, and production plan.

Perhaps the greatest issue for Kuiper Leda is being able to meet the production demands necessary to take on and retain a contract with Midland Motors. If Kuiper Leda is successful it will be able to grow within its industry. Kuiper Leda's present production capacity is insufficient to meet the demands/requirements of Midland Motors. Based-on a 365 day production-year, Kuiper Leda will need to increase its production of Radio Frequency Identification (RFIDs) by 39% and Electronic Control Units (ECUs) by 55%, or outsource the production to make quantity and quality requirements.

To win the contract with Midland Motors, Kuiper should consider outsourcing. By outsourcing Kuiper Leda will be able to increase internal competencies and develop strategic plans to move forward with the company. Chase, Jacobs, and Aquilano (2005) contend that

Outsourcing allows a firm to focus on activities that represent its core competencies. Thus, the company can create a competitive advantage while reducing cost. An entire function may be outsourced, or some elements of an activity may be outsourced, with the rest kept in-house. (p. 413)

Although outsourcing the production of RFIDs and ECUs to win the contract with Midland Motors is a wise choice, it will be necessary for Kuiper Leda to bring its Work-In-Progress (WIP) under control. If Kuiper is unable to control WIP it will have the misfortune to miss deliveries.

The type of production planning, inventory tracking, and supply chain management used Kuiper Leda will need to be upgraded to allow for better internal control, demand forecasting, increased distribution control, and web integration. Part of the upgrades should include upgrading Kuiper Leda's enterprise resource planning system which will allow the integration of suppliers to Kuipler and Kuipler to its customers through web enabling.

Web-based tool[s] used to coordinate