Freqon-NorduAlu Case
Written on 9:00 AM by Shaun Hutchings
What is the root cause problem between Freqon and NorduAlu? Please be specific and thoughtful.
The root cause of the problem between Freqon and NorduAlu was the supplier relationship deteriorated between the two. When they first started their relationship they had to develop a strong relationship to develop working products together. They had joint projects running where both companies worked together in Kaizen projects which would benefit both companies and find ways to cut cost. They had an open channel where the flow of information flowed freely and openly so that both companies could benefit from this. The engineers work with the engineers at the other company to share ideas and problem solve together. They had meetings constantly where they reviewed what was good and what needed improvement, but it was a very relaxed atmosphere where both companies felt comfortable with each other. Freqon was aiding NorduAlu in developing new machinery and technical capabilities to improve their manufacturing. Freqon was able to supervise NorduAlu without hostility but they where there monitoring and helping them to make sure they were achieving. And overall they had such a good relationship that they knew how each other worked and where they stood with each other, they had great communication. When one aspect of this equation failed for faulted by whatever reason another one was affected, and then another and another until the entire structure caved in on itself. The main thing was Freqon working with NorduAlu. Freqon did a couple mistakes where they found a new supplier without consulting NorduAlu, or developing new products without any Kaizen efforts with them as well. This kind of started the spark or the wedge between the two. If Freqon worked with NorduAlu, like it was proven in the past and worked, they could have developed new working products with NorduAlu and consulted them about cost reduction. But Freqon decided to pursue other avenues which caused NorduAlu to pursue other avenues until they both got to a point where they did not want to fix the relationship they had because both had other options.
If you were in charge of managing NorduAlu for Freqon, and discontinuing business with NorduAlu is not a short-term viable option, what supplier management tools would you utilize to manage NorduAlu and why? Think back on the tools we've discussed in class.
I would try and start back at square one. Yes the relationship may be damaged and it may take some time to repair but it’s never too late to start. We could use some of the same tactics that worked in the past. Such as join Kaizen projects and collaboration between the companies again to develop a new product that would benefit both companies. Here is a list of things I would try and accomplish to repair the relationship and fix the issue.
· Joint Kaizen project of the FOQ 300 or 350 that included aluminum that NorduAlu could product and provide.
· We could use a SCAR (supplier corrective action request) in the aspect of correcting the relationship between the two.
· Make a supplier report card to show what is important to Freqon so it may improve communication between them.
· Review meetings at all levels. Review meeting at the executive level is the most important at this stage but then a Review meeting at the engineer level, at the purchasing level, and etc. I think the meetings have become hostile and little more relaxed type of meeting needs to occur.
· Awards need to be exchanged between the two companies. Especially to NorduAlu to show that Freqon still cares and they do recognize the good efforts that they are doing. This will make them feel good about themselves and what they are doing with Freqon.
· Freqon can set up some training or knowledge sharing seminars again like they use to, to share ideas and concepts that may benefit NorduAlu. And that may result in NorduAlu sharing what they are doing with their other suppliers to help Freqon out in the long run.
I think if some or even all of these practices are implemented with NorduAlu then the relationship would eventually repair itself. That over time the relationship would develop like it use to be. It is good to have a good steady relationship with NorduAlu because they have shown in the past that they are willing to cut cost, work with Freqon’s problems and issues in a timely manner, develop new product with Freqon engineers for better products. If NorduAlu has not shown this it may be difficult to trust in these developmental management tools. It is shown that they have and it has been proven in the past so I think it can and will work in the future.
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