| dc.description.abstract | As market matures, customer requirements diverge, and mass customization becomes an industrial norm. Facing this environmental trend, the electronic assembly industry is gradually shifting into small-volume large-variety production with ever shortening order delivery time. Company A is one of the electronic manufacturing services (EMS) companies that are faced with these challenges. For Company A, material accounts for 70% of its total production costs. As a result, the procurement operation has become a vital issue for profitability. This study attempts to analyze the procurement processes, and propose an improvement plan.
The shift to high-mix, low-volume and short delivery period requirements have created severe problems for Company A. These include explosive increase in numbers of purchasing order, excessive time for supplier quotation time, expediting orders with higher costs, and missed delivery times. These in turn result in loss of sales, lower profit margin, and excessive processing costs and errors in order processing, all seriously hurting the company’s bottom line.
After analyzing the current procurement processes, this study proposes a plan to improve the existing system. The major changes include a new material classification scheme, a system-assisted quotation system, an automated purchase order placing mechanism, and a customer service escalation system. These are coupled with appropriate risk controls. The proposed portfolio of changes is expected to achieve a cost reduction of 2.5 million NTD, $2,500,000, in addition to reducing loss of sales due to prompt quotations, and higher customer satisfaction. | en_US |