Deere & Company - Case Study

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Deere & Company

Case Study

By

Nicola Sleiman El Hakim

MBS 640

Strategic Operations Management

Dr. Atef Harb

Submitted on 21-02-2018

We have to acknowledge that success doesn’t come that easy. Especially when we talk about successful companies like the historical Deere & Company who has been able to keep their legacy living up to 175 years. Being one of the biggest manufacturing company in the world, always striving for quality, innovation and solution, Deere & Company has been able to manage each and every action to be taken both internally and externally. In other words, the company has been dealing with a huge number of suppliers on which the company’s success and profitability depends on.  In this case, success can be defined in many tangible results such as having a competitive advantage by lowering the costs structures, faster product development cycle and reduced operational inefficiencies, which will allow the company to be always one step ahead of its competition. Therefore, suppliers will have to be integrated based upon strict selection guidelines that will prove to be critical in improving the new Deere skid-steer loader.

1. Criteria for Selecting Suppliers for integration into the manufacturing and design:

To start with, Nolan should consider choosing the suppliers based on many criteria:

First, suppliers with long experience with the skid steer machine parts will be highly considered since they already know the technicalities of all the steps to be done and can save up time in early stages of manufacturing instead of wasting it on learning the basic process plan of manufacturing such thing. Furthermore, the supplier should be up-to-date with the latest technologies that can speed up the supply chain process.

Second, it is crucial for the supplier to be able to deliver enough supplies and services in order to speed up the manufacturing process keeping the cost as low as possible. The production capacity of the supplier and their capital security is also important. The supplier will have to engage with Deere & Company in the long term with various payment terms, thus the willingness and ability of the company in this respect has to be evaluated.

Third, the interest of these companies to participate in a design and manufacturing partnership would be considered for assessing their R&D capability. The supplier has to be evaluated based on the level of association they are interested in having. Deere expects more than just supplying the parts. Deere expects technical service and support, and to benefit from the research background of the supplier to improve the product quality.

Last but not least, the supplier’s advantage of sourcing worldwide will be considered as this will enable Deere skid-steer loader to be supplied at various location with reduced supply chain overheads. Since Deere is a multinational company with market in more than 160 countries, it could take advantage of the local sourcing capabilities in those countries for some parts at the finishing stage. As when a few parts are advantageous to be sourced locally to reduce delivery time and to maintain a good price.

1. Guidelines for effective integration of those suppliers that are selected:

“An integrated supply chain can be defined as an association of customers and suppliers who, using management techniques, work together to optimize their collective performance in the creation, distribution, and support of an end product”. (www.nap.edu). But to do so, Deere & Company has to choose their suppliers carefully building a consistent and clear “Supplier Development Program” with the suppliers to implement lean transformations throughout the supply chain process.

To be successful, products must be manufactured at the right cost, place, and time. Decisions made in the early cycles of product development can make or break the product. Designs must be optimized for supply, manufacturability, and supply chain operations. All true costs to deliver must be accurately captured and analyzed to maintain balance across the end-to-end business. Thus a joint program should be initiated to radically solve supplier problems, eliminate deficiencies, and establish a transparent relationship that includes on-going feedback and progressive information sharing. This integrated program should include joint projects, training, inventory, coordination, incentives and penalties at the same time.