Essays on The Procurement of New Plant Equipment - ABC Company Case Study

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The paper 'The Procurement of New Plant Equipment - ABC Company " is a good example of a business case study.   Manufacturers in the United States are under pressure to deliver a variety of products in small quantities at a faster rate. It is the expectation of the customer to order different products at lower prices. To achieve this objective, manufactures are now shifting to cellular manufacturing where production workstations are organized in a sequential manner that enhances the smooth flow of materials and components in the course of the production process with less transfer and delay.

To implement this manufacturing process, there is a need for a shift in production activity to a state that increases production velocity and flexibility in addition to reduced capital requirements. The aim of cellular manufacturing in ABC Company is to move products through the manufacturing process at a rate determined by the customer’ s needs. Briefly, cellular manufacturing aims at reducing delays in moving a product along the production line. This paper will address the transformation of company ABC to a Cell Manufacturing Process Plant with an aim of manufacturing not only the gears and shafts but also a large number of parts, which were not previously produced at a plant located in Manchester.

The scope of this paper is to address four specific issues in relation to transforming a plant to a Cell manufacturing set up. These issues are procurement of new plant equipment, procurement of previously used equipment, identification, and use of new suppliers, and managing existing suppliers to realize increased supply. Strategies employed for the different categories The Procurement of New Plant Equipment: To procure new plant equipment, standard purchasing procedure is appropriate since it takes care of the lead-time.

It is expected that the plant should be in full operation by 27th October 2011. In the standard procedure, the first step is to place a purchase request. Departments are usually vested with the responsibility of determining specifications, quantity, and delivery of the new plant equipment. The case study clearly indicates that 40 new CNC machines valued at £ 450,000 are to be purchased with a lead-time of 3 to 10 months. The next stage in the standard procedure of purchasing the new equipment is to choose suppliers with a previously established business relationship.

The choice of the company depends on factors such as quality, the performance of equipment, compatibility with existing facilities, degree of reliability, safety, delivery time, and after-sale services (Christopher, 1992). A supplier who will deliver within the specified period will be offered the task of supplying the equipment. The third step involves requesting the selected supplier to present cost estimates and specifications before a specific date. At the fourth step, the purchasing department that will use the machine is allowed to check the specification sheet in order to determine whether standards are met.

This stage is critical since company ABC may at its own volition, request changes to the specifications. After a comprehensive review of costs and specifications, contract terms and conditions are discussed at the fifth stage. When the contract is concluded, business is established in writing. This marks the start of obligations and liabilities of company ABC. The seventh stage is a confirmation of delivery dates as specified in the contract and subsequent inspection of the equipment to confirm whether specifications were met.

Finally, payment is made with reference to contractual terms.



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