OPS FPX 5630 Assessment 1

Supplier Selection Process for JM Manufacturing

Introduction

This essay addresses the supplier selection process of JM Manufacturing as it looks for a supplier of major components such as power supply units, batteries, circuit boards, drill bits, and plastic casings for its line of power drills. The company has decided to outsource these components because each piece has special manufacturing requirements. This report will analyze the market conditions, review the behavior of suppliers, and discuss the legal and ethical implications present in the supply chain relationship between JM Manufacturing and its chosen supplier.

Market Assessment

The power tools market worldwide will expand greatly with a projected 8.80% growth in 2028 to a total market size of $54.75 billion (Grandview Research, 2020). This growth is primarily fueled by sectors such as construction, automotive, and DIY projects, which heavily depend on power tools for constructing homes, vehicles, and other critical components. The COVID-19 pandemic has further accelerated demand in the home improvement sector, evidenced by Lowe’s reporting sales surpassing $96 billion in 2021, stemming from approximately 19 million weekly customer transactions (Lowe’s, 2022).

This increase in manufacturing activity, along with the enormous DIY market boom, has meant that there has been a corresponding increase in demand for the handy, battery-powered, portable power tools. This is why JM Manufacturing has found it fit to outsource the production of these basic components, such as circuit boards, batteries, power supplies, and plastic cases. An effective supply chain will ensure the availability of low-cost and stable components in line with the anticipations of the customers for cost, quality, and readiness (Grandview Research, 2020).

Analysis

The international supply chain environment promotes business and country relationships through foreign trade. Outsourcing production has been effective, with the total cost of ownership (TCO) being less when supplies are purchased from a Chinese supplier than when they are produced locally. TCO involves various costs such as raw materials, assembly, quality inspection, warehousing, financing, forecasting, planning, and shrinkage costs (Drake & Sabbaghi, 2014; Sabbaghi, 2004).

In outsourcing the manufacturing of components, JM Manufacturing is required to meet the seven “R’s” of logistics: right product, right time, right quantity, right cost, right quality, right location, and right customer. Best practice in JM Manufacturing is selecting a supplier who is able to meet the customer needs by providing quality products at competitive prices and in the necessary quantities. These practices entail usage in every channel in order to achieve proper cooperation with suppliers (Redwood, 2020).

Best Practices

For effective management of global suppliers, JM Manufacturing will implement several important practices, including supplier process knowledge, standardization, relationship building, regular product specification updates, audits, compliance checks, and quality control checks. The procedure will begin with a correct analysis of potential suppliers like Ennopro Group Limited, Shenzhen TL New Energy Company Limited, and Yangzhou Kele Power Tools Company Limited. Once a supplier has been selected by their practice, JM Manufacturing will cooperate hand-in-hand to implement the standards required. Having long-term relationships with suppliers is crucial to growing together, and keeping the product specifications regularly updated will be conducive to innovation, quality, and customer satisfaction. The firm shall have a policy of “trust but verify” with regular audits and quality inspections to determine conformity to contractual provisions and consistent product quality (UT Haslam News, 2021).

Supplier Evaluation and Knowledge

JM Manufacturing has negotiated with prospective suppliers such as Ennopro, Shenzhen TL New Energy, and Yangzhou Kele Power Tools. These negotiations have involved many aspects, from responsibility to production capacity, skill, cultural fit, communication practices, record-keeping, ethics, regulatory compliance, and research and development capabilities (Knack, 2018).

OPS FPX 5630 Assessment 1: Selecting a Supplier 

Redwood. (2020). What are the 7 R’s of supply chain management? Retrieved from https://www.redwoodlogistics.com/what-are-the-7-rs-of-supply-chain-management/# The_Right_Customer_-_Building_up_for_the_long-term

Sabbaghi, A., & Sabbaghi, N. (2004). Global Supply Chain Strategy & Global Competitiveness. International Business & Economics Research Journal, 3(7). Retrieved from https://core.ac.uk/download/pdf/268107122.pdf

Sandford, N. (2016). Insights for Writing a Code of Ethics or Conduct. Wall Street Journal. Retrieved from https://deloitte.wsj.com/articles/insights-for-writing-a-code-of-ethics-or-conduct-1471492892

Shenzhen TL New Energy Company Limited. (2022). About Us. Made in China. Retrieved from https://tlnewenergy.en.made-in-china.com/company-Shenzhen-TL-New-Energy-Co-Ltd-.html

Timothy, H. (2022). Nine Best Practices for Managing Global Suppliers. Trace Gains. Retrieved from https://www.tracegains.com/blog/9-best-practices-to-managing-global-suppliers

UT Haslam News. (2021). Global Procurement: The Risks and Benefits to the Supply Chain. University of Tennessee. Retrieved from https://supplychainmanagement.utk.edu/blog/global-procurement-risks-benefits-to-supply-chain/

Yangzhou Kele Power Tools Company Limited. (2022). About Us. Made in China. Retrieved from https://tlnewenergy.en.made-in-china.com/company-Shenzhen-TL-New-Energy-Co-Ltd-.html