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6. SUPPLIER DEVELOPMENT PRACTICES IN PROTON<br />

The succeeding sub-sections will describe in detail the Pro<strong>to</strong>n's<br />

supplier development model (<strong>as</strong> exhibited in Figure 3). The suppliers'<br />

performance h<strong>as</strong> a greater impact on the productivity, quality, <strong>and</strong><br />

competitiveness of Pro<strong>to</strong>n. The company h<strong>as</strong> offered <strong>and</strong> performed<br />

various functions (activities) <strong>to</strong> develop the component parts<br />

manufacturers more than they can usually achieved on their own. The<br />

key functions/activities that were carried out by Pro<strong>to</strong>n in developing<br />

its suppliers are described below.<br />

6.1 Selection of Parts<br />

A critical strategic decision for any organisation centres on the<br />

issue of make or buy. Pro<strong>to</strong>n's management support the<br />

philosophy of sourcing from outside suppliers. The main re<strong>as</strong>on<br />

w<strong>as</strong> the challenges of maintaining long-term technological <strong>and</strong><br />

economic viability for a noncore activity. It is, therefore, the<br />

company's responsibility <strong>to</strong> search for or develop capable<br />

suppliers suitable for strategic needs of the organisation.<br />

Pro<strong>to</strong>n's supplier development programme starts with the<br />

identification of parts <strong>to</strong> be localised <strong>and</strong> potential local<br />

suppliers <strong>to</strong> undertake the manufacturing of the parts locally.<br />

The decision <strong>to</strong> place a certain volume of business with a<br />

supplier w<strong>as</strong> b<strong>as</strong>ed on a re<strong>as</strong>onable set of criteria. Normally, the<br />

decision is governed by the perception of the supplier's ability<br />

<strong>to</strong> meet satisfac<strong>to</strong>ry quality, quantity, delivery, price, service,<br />

etc.<br />

The potential parts for local production are selected from the list<br />

of CKD parts imported from Japan. These parts are then<br />

included in the long range product plan of the company (LRPP).<br />

The LRPP is for the period of three <strong>to</strong> five years. The parts<br />

selected for localisation would be tabled in the Annual<br />

Management Plan (AMP) of the company for the <strong>to</strong>p<br />

management approval prior the implementation. Upon approval<br />

of the AMP, the parts selected will be analysed in the<br />

Engineering Cost Estimates for further consideration for local<br />

production. Finally, the parts that meet the cost estimate review<br />

will then be considered for implementation. For example, 690<br />

parts were approved for localisation in the Annual Management<br />

Plan for 1996.

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