Purchasing & Vendor Management Homework

Discussion (Case Study Discussion – Ch. 11-13)

Read the “Case Study: The Lear Seating Plant” and “Supply Chain Management at Bose Corporation” case studies. Select two questions per case and post answers in 100 or more words to the selected case study questions in the discussion area below (do not attach a separate document).

Make sure you do BOTH case study discussions. In addition, read your peers’ answers and provide three substantial comments in the discussion area below. You only need three peer comments, NOT three per case study.

Your case study questions are worth 30 points total and the peer comments are worth 30 points total (10 points each).

See the Assignment and Grading page in the Course Information Module for more information on grading and discussion expectations.

Case Study: The Lear Seating Plant


  1. What are the major changes required for Lear Seating to apply a JIT replenishment model for Chrysler? Think about the following areas:

· Product Design

· Process flow

· Production Scheduling

· Communication with customer

· Inbound receiving

· Sequencing and loading

· Transportation scheduling

  1. What are the risks associated with direct shipping? What contingency elements are required to overcome these risks?
  2. Can direct shipping be achieved without collaboration with customers and/or suppliers? What does it take to make this happen?
  3. An important consideration that allowed Lear to succeed was proximity to its customers and suppliers. Should suppliers to Lear consider co-locating closer to its automotive customers and suppliers as well? Why or why not?
  4. What does it really take to become a lean manufacturer with direct shipping capabilities?


Lear ships JIT to Warren, Michigan Chrysler truck division – located 38 miles from the plant. This is a UAW plant – but relationships with management have always been very good. This was evident as we walked through the plant – Bob, one of the general managers at the plant, has been working in the automotive industry for 37 years, previously at GM and now at Lear. He has an outstanding relationship with the workers, keeps track of all happenings that occur, and knows every associate on a first-name basis.

New Product Development

Lear has a very close relationship with Chrysler. Lear Romulus 1 is the feeder plant exclusively for Chrysler, producing seats for the Dodge Ram, Dodge Dakota, Dakota Extended Quad Cab, and Dakota AN 84. Lear sales representatives and engineers are in daily contact with Chrysler people – and many of them reside full-time in Chrysler plants. For example, design for manufacture is a critical element in seat design, which has major implications for ergonomics and efficiency (and cost) at this plant. As such, many design engineers from Lear reside permanently at the Auburn Hills design center. This is where they go to work every day! They are there to ensure that manufacturability elements are well understood by Chrysler designers – and work to engage Chrysler in value analysis and value engineering suggestions that can take cost out of the seats and make them easier to manufacture.

One section of the plant is devoted exclusively to prototype development – building future seat models for the Ram and Dakota models. Worker input is used as feedback to Chrysler regarding how easy a seat cover is to work with, and this is used to input suggestions regarding which seats are selected. This area is also used to prototype the process to assemble seats – using actual tooling. A miniaturized seat assembly process is put together – essentially a prototype plant that will be used to produce the product on a broad scale. This is also used as a big input into the upfront design process.

A big concern with seating has to do with the torque controls for bolts used to assemble seats. This is a big safety item that is of concern to the federal government automotive safety agencies. As such, all torque settings are controlled by using an automated torque gun that not only automates the process, but collects real-time electronic data that is fed into an SPC system. This data is stored in real-time to a database, that allows complete traceability of the actual torque applied to every seat produced in the plant. Because every seat is barcoded with the VIN for the truck it is going into, this allows complete traceability of failures in Failure Mode and Effects Analysis studies that may be required down the road.

Strategic Initiatives

A number of strategic initiatives are current priorities in the plant.

· Ergonomics – A number of lockout assembly fixtures are also used for all foam and frames. These ergonomic tools prevent injuries stemming from muscle fatigue and repetition within the plant. Plant-wide job rotation is also used – workers are cross-functionally trained, and move to different parts of the assembly line on a periodic basis.

· Six Sigma was implemented two years ago – and has become a way of life within the plant. It is now engrained as a way of thinking – with a focus on internal workers using it as well. Even the hourly union representatives are routinely part of six sigma improvement teams – with results documented throughout the plant.

· Supplier partnership programs are important. The foam supplier – Woodbridge – is co-located across the street. With the exception of the cut and sew operation in Saltillo, Mexico– 68% of Lear’s Romulus 1 suppliers are within a 300 mile radius of the plant. Although this was not by design – it is a critical element that improves the response time for the facility.

· The plant was built originally to supply the General Motors H-car (Caprice / Oldsmobile), but switched over to a Chrysler supply plant in ’93-94. Although GM decided to transfer their H-car production to Arlington, Texas during this period, the Chrysler contract was won at almost the same time – and the plant was idled for only one week during which time it was completely transitioned over to the Chrysler product! This was a very hectic time, to say the least.

Plant Operations

Plant operations are fairly stable:

· 254 hourly workers – 39 salaried – running 2 ten hour shifts. Recently, Chrysler indicated that the Dodge Ram volume will be increasing by 30% this year – which will be accommodated by running an additional shift on Saturdays. A third shift is not yet required.

· 57 suppliers to the plant – 68% are located within 300 miles. This is a big selling point for additional business to Chrysler – as this can significantly avoid disruption.

· Plant ships 10-15 trucks worth of outbound materials to Chrysler per shift – with 7 trucks rotating on this schedule. Vinyl supplier to the plant is Sandusky – fabric supplier is Guildford.

· Lear receives 12 weeks advance build requirements from Chrysler – with a 10 day frozen schedule of firm requirements. However, this 10 day frozen schedule can vary by sequence – and the plant receives 862 ship schedules direct from the Chrysler assembly line daily.

· The plant has 13 receiving docks – with trailers full of completed seat covers from Saltillo, Mexico arriving every day, and trucks leaving for the Chrysler plant located 38 miles away. Inventory turns about every two days – for annual turns of approximately 140. The plant can product about 1200 assembled seat units (front and back) per day – the Chrysler usage is on average 1100, providing a little extra capacity. However, the assembly line’s start and stop times are completely aligned with Chrysler’s plant times – “When they run weekends, we run weekends – if they start early, we start early”.

· There are 408 components in the seat – the plant generally has a two day supply of trim covers, and 1 days’ worth of other components. However, the plant has less than 1 shifts’ worth of foam on-hand, as it receives foam from the feeder plant directly across the street. Inventory turns are at 145 – with about 2-4 hours of finished goods inventory on-hand.

· Fabric arrives in trailer loads from Saltillo, while frame assemblies and other components are drop shipped and located in racks (see Figure 2). Material flows to one of two assembly lines – front seats or back seats. In the first part of the operation, the frame is assembled into the foam, the fabric/vinyl stretched over the foam/frame, and the different seat elements (seat, back, attachments, etc) assembled in the electronic torque area. Various custom fixtures and tooling make this part of the operation ergonomically safe.

· Next, the seat components are inspected for defects – and placed into a repair/rework area if required. Product that is perfect proceeds to a baking/steaming operation – then is married, assembled, and palletized, and packaged for shipment. The pallet proceeds to an overhead area for sequencing.

Production Scheduling, Sequencing, and Delivery

· The plant receives an electronic broadcast of vehicles coming through the Chrysler plant in Warren – which specifies the leather options, vinyl options, fabric options, style, etc. With 852 shipments arriving, this amounts to one vehicle identification number (V.I.N.) every 53 seconds. There is a 5 hour delivery window from the time the scheduled order is received, during which time the plant must build, sequence, and deliver the seats to the feeder location on the Chrysler assembly line (see Figure 1). There is no finished goods warehouse – they ship direct from the plant to the Chrysler assembly line, with all of the seats sequenced in the right order every time.

· Travel time from Lear’s dock to the Warren Truck assembly is on average 1 hour and 15 minutes – faster if the truck driver goes quickly through the 38 miles! However, traffic and accidents in the Detroit Metropolitan area are frequent – and there is always the danger that an accident or traffic snarl will hold up a delivery.

· A contingency measure is to have a total of 7 trailers in rotation – with 54 seats loaded in sequence on the truck. Sequencing is done on the second story automated sequencing material handling equipment. Seats come off the line, and are transported to the second floor in a lift. The sequencing is done using a “last in – first out” logic. Seats are sequenced in reverse order – from number 54 at the back of the trailer, with number 1 at the front – so that when they are delivered to Chrsyler, the first seat coming off the trailer is number 1.

· As seats come off the line, a barcode on each palletized seat identifies where it is in the V.I.N. sequence provided by Chrysler – and an automated material handling system positions each completed palletized seat assembly (front and back seats on the same pallet for Quad trucks) onto a set of rollers that are exactly the size of a trailerload. When a full trailerload is complete, they are all moved automatically down to the first floor and loaded onto one of two trailers waiting on the dock. Thus, if one seat must be taken off the assembly area for a quality discrepancy or re-work at one of the poka-yoke inspection areas, it is quickly repaired (or another produced if the problem cannot immediately be fixed in time), and sent up to the sequencing operation without disrupting the scheduled trailer shipment. With the Quad front and back seats on a single pallet, the back seat must be manually attached to the front seat with a fixture. All pallets are plastic and recycled from the Chrysler plant.

· The plant has not been late for a shipment to the Chrysler plant in over three years. This can be a very tricky situation. In most situations, the truck drivers can radio ahead to one another to monitor traffic conditions to take alternative routes to Warren. However, it is a constant juggling act. For example, two weeks ago a truck full of seats was stuck in traffic on I-94 due to a major accident. As a contingency measure, the plant went into an emergency mode and began duplicating the seat sequence that was on the truck. They were over half-way through this process when traffic began moving again – and the truck arrived at the Chrysler plant with 20 minutes of supply before shutting down the plant. However, the plant manager ascertained that “shutting down Chrysler is “not allowed”.

· The production rate is 68 trucks per hour, or approximately 1200 per day (1160 in a ten hour shift).

Fabric and Vinyl Input Requirements

· There are a variety of truck models, as well as various styles for each model, that must be sequenced.

Dakota – 1 trim style X 2 colors

Dakota Extended Cap – 1 trim style X 2 colors

Dakota AN84 – 2 trim styles X 2 colors

Ram – 6 trim styles X 3 colors

· This is a total of 26 different SKU’s that must be sequenced on the plant. By comparison, this is actually a relatively simple plant to run. Some other Lear plants that support GM run multiple models, and within each vehicle there are multiple types of different seats with different styles and colors. In general, GM tends to have a proliferation of different styles compared to Chrysler. This represents a big opportunity for simplification. A major issue that is coming to the forefront of OTD with GM, as well as with Chrysler, is to create opportunities for simplification and “design in” through greater collaboration in the product development process.

· Fabric styles are an important consideration in the design process. In general, Lear prefers fabric that stretches in both directions, not just one direction. In the latter case, the product tends to “knuckle” in the seams. As such, the circular knits are the preferred fabric. After the final assembly, the seats must go through a steaming and baking process. The steaming causes the fabric to stretch tight, then lay flat, removing seams. The baking process does the same thing for the vinyl/leather. Both processes are optimized to a temperature that does not negatively affect the properties of the fabric or vinyl/leather.

· Another important issue is the napped fabrics. Naps are sensitive to touch, and sit-up when handled. This is often perceived by customers as a defect, as the darker colors in particular appear to be a different color when the nap is sitting up. Customers often think this is a “stain” and complain to the dealers.

· Because of these issues, Lear is increasinglyu trying to “design in” the fabric during the design process. This is very difficult to do – the people in the design studio at Chrysler are very particular about having suppliers influence their design decisions – but “at least we are now talking to them about the handling properties of the fabric and vinyul”. However, the plant manager also noted that the Chrysler design staff “try to pit us against one another (other suppliers)”.

· A major property of automotive fabric is the wear factor. Thus, quality of fabric is an extremely important element. In general, the plant wants to work with fabric that is easy to pattern and work with – understanding that plushed fabric is generally required for the higher end vehicles. Sewing properties are also important – another consideration often overlooked by design people.

Supply Chain Design

· Fabric is produced by Guildford, vinyl by Sandusky (Ohio) – with then shipped to a laminator. Travel time for vinyl is 3 days to Southwest Laminators, located in El Paso, Texas.

· From there, it is shipped same day to Saltillo in Mexico, where the fabric is cut and sewn. Another 3 days of shipping time and it arrives at Romulus. The fabric arrives in packets of ten similar seat covers, tied together in a bundle. Each truck contains 1 ½ days of supply for the plant. Each truck contains enough seats to cover the requirement projected through the Chrysler frozen schedule – which requires a bit of scheduling on the part of downstream suppliers.

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