Application of vendor rationalization strategy for manufacturing cycle time reduction in engineer to order (ETO) environment: A case study
Journal of Manufacturing Technology Management
ISSN: 1741-038X
Article publication date: 12 October 2018
Issue publication date: 7 January 2019
Abstract
Purpose
The purpose of this paper is to demonstrate the application of vendor rationalization strategy for streamlining the supplies and manufacturing cycle time reduction in an Indian engineer-to-order (ETO) company. ETO firms are known for a large number of vendors, co-ordination hassles, rework problems and its impact on cycle time and operational excellence.
Design/methodology/approach
The research demonstrates the case-based application of Kraljic’s matrix for supply and leverages items, on-the-job observations, field visits, discussions and analysis of supplies reports.
Findings
The study guides on the rationalization of supplies and the necessary strategic alignments that can significantly reduce supply risk, costs, manufacturing and delivery cycle time along with co-ordination hassles. The study depicts the challenges of ETO environment with respect to supplies, and demonstrates the effectiveness of vendor rationalization application for the case company and weaknesses of commonly practiced vendor management approaches.
Practical implications
To be competitive, companies should rationalize supply items and vendors based on the nature of items and their subsequent usage by applying Kraljic’s matrix-based classification. The immediate implication of vendor rationalization is misunderstood as reducing supply base, but it does much more and includes review of supplies, nature of items and strategic alignments, leading to win-win situation for company and suppliers.
Originality/value
For the rationalization of supplies, while procuring and dealing with vendors, executives should envisage engineering nature of components, considering cross-functional requirements and integration of components in context to ETO products/projects environments. There is a dearth of studies focusing on vendor rationalization aspects in ETO setups in fast-developing country context.
Keywords
Acknowledgements
The authors wish to thank PQR management for providing necessary resources, committed support and in ensuring availability of employees for discussions, clarifications and suggestions. The authors also express sincerest thanks to learned referees for guiding and encouraging this application-based research. Their constructive feedback led to the considerable improvements in the earlier versions of study. Authors also wish to put on record the authors’ indebtedness to the Chief Editor Professor Harm-Jan Steenhuis for his timely help, support and giving the authors an opportunity to revise the paper.
Citation
Seth, D. and Rastogi, S. (2019), "Application of vendor rationalization strategy for manufacturing cycle time reduction in engineer to order (ETO) environment: A case study", Journal of Manufacturing Technology Management, Vol. 30 No. 1, pp. 261-290. https://doi.org/10.1108/JMTM-03-2018-0095
Publisher
:Emerald Publishing Limited
Copyright © 2019, Emerald Publishing Limited