Jenny's Cycle Components Case Accounting, Finance Case Study

 
 
 
 
 
 
Jenny's Cycle Components Case
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1.The reasons an OEM uses several tiers of suppliers. Further, consider the complexity inherent within this supply chain structure that is the result of a large number of potential product combinations.
The original equipment manufacturer like JCC requires tier 1, 2 and tier 3 suppliers to supply all the essential components in the company like for other firms in the automotive industry. The tier 1 suppliers supply directly to the OEM while focusing on cost and quality. Tier 2 is mostly a secondary source, which operates in certain regions, and tier 3 provides the necessary raw materials. There is a need to nurse that the delivery process is efficient as the inventory levels change, yet the prompt response is expected so long as there are no missed schedules and delayed inventory. The various suppliers in the tier system are necessary to provide high-quality products at the best price compared to the dominant suppliers with high bargaining power and who can quote high prices.  In any case, when there are multiple suppliers the supply chain agents who specialize, which increase value along the value chain while increasing quality and reducing costs, making it possible to increase the production output. Since there are multiple possible combinations for the final product, having a multi-tier supply chain allows for manufacturers to specialize. This increases the quality of products, cuts costs, and increases production output.
2. JCC’s position within the existing supply chain and the strengths and weaknesses of its current production process flow, some of which may have been exposed through its adoption of Lean principles
JCC is a first-tier supplier, and the first level suppliers provide original parts to assemblers, mainly of subassemblies and have design capacity. On the other hand, tier 2 and 3 are Parts suppliers with designs supplied by tier 1, and mostly provide relatively basic products and individual parts. The tier 1 supplier level allows JCC to improve efficiency and provide high-quality products, and combined with lean manufacturing there is little wastage including an efficient inventory system that minimizes costs. An efficient production chain is partly based on the ability of suppliers to fill production orders quickly.
The lean supply chain is appropriate since it is possible for JCC to supply components that are required to meet the OEM needs. Elimination of waste is the greatest potential source of improved profitability and operations while supporting continuous improvement. The lean manufacturing production strategy empathizes eliminating losses and optimizing productivity, where added value improves competitiveness as there is a focus on what the buyers are willing to purchase. Even though lean manufacturing is associated with improved productivity levels, if there are delays and inability to meet demand among tier 2 suppliers, this also creates a delay for JCC and in extreme cases may cause bottlenecks. JCC also lacks contact...