Agile Electric: Quality Issues in a Global Supply Chain Question#1: If OEM decides to make a complete recall, the associated costs would be charged to the tiered suppliers; especially a higher potion on Automek and then Agile. Automek takes the risks on Agile, the manufacturer has no previous experience on producing this critical part, with the major purpose of reducing the cost. Moreover, it was the Automek’s responsibility to carefully audit the qualification and capability of the lower tiered suppliers.
But, it turns out that it was the failure of the tier four supplier caused the major defect on the final part, which causes the potential recalls. Agile is also responsible for the damages because Agile offers ECPL-the tier three supplier- to produce the PCB, which is the most critical component for the actuator assembly by previously knowing that the PCB that ECPL usually make has a different standard comparing to the one Automek requires. The tier three and four suppliers have minor responsibility because of their lack of experience dealing with North American automobile companies with different quality standards.
Moreover, their unwillingness about making any implementation and changes to corporate with the upper stream suppliers makes the situation even more complex and difficult to fix. Question#2 The internal quality practices are having major role in this case, even considering all the supply chain members. Automek should be responsible for the quality of the final part which delivered from Agile, who is expected to manage the its quality in proper way.
The quality for the outsourced components should be audited and monitored by both Automek; Agile is responsible to narrow the quality and process gaps between lower and higher tier suppliers. The final product in this case is produced extremely dependent among each suppliers, whose quality management would affect the quality chain in dramatic ways. It is the ORM’s responsibility to test the parts in proper temperature in order to avoid the future defects. Agile should figures out a better way to monitor the quality for the completed assembly since it is easily damaged and highly fragile.
For ECPL and BIPL. it is theirs responsibilities to produce the parts that qualify the upper stream customers’ quality standards and requirements. Question#3 Agile is responsible for accelerating the implementation of quality practices in lower-tier suppliers. Agile proposed ECPL to produce the PCB assembly, and agreed to ECPL’s proposal to use BIPL to make the PCB. In this situation, Agile is expected to make sure both producers are qualified towards the standards OEM requires.
After the defects are identified, Agile should work closely with ECPL and BIPL to make proper changes and implementation to eliminate the errors. As lower-tier suppliers, ECPL and BIPL do not connect with Automek and OEM tightly in business relationships. The only reason they take this risky offer is to utilize the OEM brand name to advertise themselves in the industry. From the profit’s perspective, this offer does not attracts both ECPL and BIPL that much. Even though they will lose the future business opportunity with OEM or Automek, it will not affect their profit level in dramatic ways.