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Product supply strategy and contract manufacturing

You are the director of supply chain management for a $1 billion consumer packaged goods (CPG) company.

Pw 6039 John Farren

It is Friday afternoon, and you’ve just learned that your European factory is facing a major problem and won’t be able to deliver on schedule.

To make matters worse, two of your contract suppliers say they lack the capacity to deliver this week’s finished-goods schedule. For the past eight months, you have been battling a declining customer service rating. Your top customer has de-listed two of your No. 1 selling products because of failure to deliver. The company president has called and asked what you’re doing to rectify the situation immediately.

You assembled a team to sort through the situation and get the facts to identify what caused the problem. Two weeks later, you’ve learned:

1. Internal factories have a poor record for schedule adherence.

2. There are too many contract suppliers—more than 100 globally.

3. Virtually no process has been established for managing quality control or schedule adherence.

4. No single process exists for managing contract suppliers. Some are managed by internal factories as a resource to make up production, doling out orders as well as rescinding them as suits their needs.

5. There is no sense of partnership or loyalty from your supply base.

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