COURSE CODE: BUAD6600:041

COURSE NAME: SUPPLY CHAIN MANAGEMENT

CASE 2

SATTVA eTECH: SUPPLIER SELECTION FOR COMPONENT

SOURCING
TEAM 1.3

MEMBERS:
1. Kabilan vadivel
2. Pooja Madhuri chava
3. Vikneshwaran Coimbatore Kathirvel
4. Gokul Jeya Shankar
5. Asmitha Sellapan Raja
6. Shanjan Shanmughasundaram
1. What concerns does Prakash have?
Prakash has several concerns regarding the supplier selection for the microprocessor chip
and the DC-DC converter. Let's delve into these concerns and provide more in-depth analysis
with direct data from the case and the exhibits:
Component Reliability: One of Prakash's major concerns is the reliability of the components.
Reliability is crucial in ensuring that the product performs its functionality over the required
period without failure. It is measured by the Mean Time Between Failures (MTBF) metric,
which represents the average time before a component is likely to fail.
Exhibit 7 provides the MTBF data for the microprocessor chips to be sourced from different
suppliers. Supplier A and Supplier C have an MTBF of 12 years, and Supplier B and Supplier D
have an MTBF of 15 years. A (new component) offers an MTBF of 13.5 years. Higher MTBF
values generally indicate better reliability.
Exhibit 10 provides the MTBF data for the DC-DC converters. Supplier X has the highest
MTBF of 17 years, followed by Supplier Z with 14.5 years, and Supplier Y with the lowest
MTBF of 10 years. X (new component) offers an MTBF of 18 years for their next-generation
DC-DC converters
Based on the MTBF data, Prakash may prefer Supplier X for the microprocessor chip and the
DC-DC converter due to their higher reliability metrics.
Technology Advancement: Prakash is also concerned about the technological advancement
of the components. Upgrading to newer-generation components may offer improved
performance, smaller size, and additional features. However, adopting new technology
comes with certain risks, such as potential delays in component availability or changes in
specifications during the testing phase.
Exhibit 8 provides the data for the microprocessor chip suppliers. Supplier A, Supplier B, and
Supplier C offer existing-generation components, while Supplier A (new generation) offers a
next-generation microprocessor chip. Similarly, Exhibit 11 provides the data for the DC-DC
converter suppliers. Supplier X, Supplier Y, and Supplier Z offer current-generation
components, and Supplier X (new generation) offers a next-generation DC-DC converter.
The new-generation components from Suppliers A (microprocessor) and X (DC-DC converter)
are in the testing or beta testing phase, indicating that they are still under development and
have not been widely adopted yet. While these components offer potential technological
advancements, they also pose uncertainties and potential delays if they undergo changes
during testing.
Past Component Failure Data: Prakash is concerned about the historical failure data of the
suppliers. This data helps assess the reliability and performance of components supplied by
each supplier in the past.
Exhibit 6 provides the past component failure data for the microprocessor chip suppliers.
Supplier A has a relatively low number of component failure incidents in recent years, while
Supplier B and Supplier C have had a few incidents in the past. Supplier D, which offers a
new-generation microprocessor, does not have historical failure data available yet.
Exhibit 9 provides the past component failure data for the DC-DC converter suppliers.
Supplier X has a clean record with no reported component failures in recent years. However,
Supplier Y has had a significant number of failure incidents, which raises concerns about the
reliability of their components
Based on this data, Prakash may be inclined to prioritize suppliers with a proven track record
of reliability and low failure rates, such as Supplier X for the DC-DC converter.
On-Time Delivery Efficiency: Prakash is also concerned about the on-time delivery efficiency
of the suppliers. Timely delivery is essential to meet production schedules and avoid delays
in product development.
Exhibit 8 provides the delivery ratings for the microprocessor chip suppliers. Supplier A has
an A rating, indicating excellent on-time delivery efficiency, while Supplier B has a B rating,
and Supplier C has a B rating. Supplier D has not yet released its production batch, so its
delivery rating is not available.
Exhibit 11 provides the delivery ratings for the DC-DC converter suppliers. Supplier X has an
A rating, indicating excellent delivery efficiency, while Supplier Y has a B rating, and Supplier
Z has an A rating
Based on this data, Prakash may prefer suppliers with high delivery ratings, as timely delivery
is crucial for the smooth progression of product development.
In conclusion, Prakash's concerns revolve around component reliability, technological
advancement, past failure data, and on-time delivery efficiency. He must carefully consider
these factors when selecting suppliers for the microprocessor chip and the DC-DC converter.
Supplier X appears to be a strong candidate based on their higher reliability, proven track
record of on-time delivery, and excellent past performance in both microprocessor and DC-
DC converter categories. However, adopting new-generation components requires careful
evaluation of potential risks and uncertainties during the testing phase.

2. What are the different criteria being used of supplier selection? Who are the different
people and what are an explanation of their roles in the supplier selection process?
The supplier selection process at Sattva eTech involves several criteria to evaluate potential
suppliers for the microprocessor chip and the DC-DC converter. The different people
involved in the supplier selection process play specific roles in assessing and choosing the
most suitable suppliers. Let's explore the criteria used and the roles of key individuals in the
supplier selection process:
Criteria for Supplier Selection:
a. Component Reliability (MTBF): Reliability is a crucial factor in selecting suppliers. It refers
to the Mean Time Between Failures (MTBF) of the components they provide. A higher MTBF
value indicates greater reliability, as it represents the average time before a component is
likely to fail.
b. Technology Advancement: Evaluating the technology advancement of the components is
essential to ensure that the latest and most advanced components are used. This includes
considering the technological generation of the components and any additional features or
improvements they offer.
c. Past Component Failure Data: Historical failure data of suppliers' components provides
insights into their reliability and performance. Suppliers with a low number of failure
incidents are preferred, as it indicates the quality and robustness of their components.
d. On-Time Delivery Efficiency: Timely delivery is critical to meet production schedules and
avoid delays. Suppliers are rated based on their on-time delivery performance, which is
crucial for smooth product development.
e. Documentation and Compliance: Suppliers are required to provide necessary
documentation, such as Certification of Conformance (COC), invoices, and testing
certificates, to ensure compliance with industry standards and traceability of components.
Key People and Their Roles in Supplier Selection:
a. Prakash (Sourcing Manager): Prakash is responsible for the supplier selection process. He
gathers data on potential suppliers, analyzes their offerings, and assesses their reliability,
technology advancement, and delivery efficiency. Prakash is concerned about component
reliability, technological advancement, and past failure data, as he wants to ensure the
selected suppliers can provide high-quality and reliable components.
b. Sivakumar (Senior Design Engineer): Sivakumar plays a significant role in evaluating the
technological aspects of the components. He assesses the specifications and additional
functionalities of the microprocessor and DC-DC converter to determine their suitability for
the product. Sivakumar is enthusiastic about using new-generation components to enhance
product functionality and improve the team's expertise in working with advanced
technology.
c. Maslekar and Shyam (Senior Management): Maslekar and Shyam are involved in the final
decision-making process. Prakash presents his findings and recommendations to them. They
consider factors like component reliability, technological advancements, past failure data,
and delivery efficiency to make informed decisions on selecting the suppliers.
Incorporating specific examples from the case, Exhibit 7 provides MTBF data for the
microprocessor chips, where Supplier A and Supplier C offer existing-generation components
with an MTBF of 12 years, while Supplier D offers a new-generation microprocessor with an
MTBF of 13.5 years. Similarly, Exhibit 10 provides MTBF data for the DC-DC converters,
where Supplier X (current-generation) has an MTBF of 17 years, and Supplier X (new-
generation) offers an MTBF of 18 years. These examples illustrate how the criteria for
supplier selection are evaluated based on direct data from the case.
In conclusion, the supplier selection process at Sattva eTech involves various criteria,
including component reliability, technology advancement, past failure data, on-time delivery
efficiency, and documentation compliance. The key people involved, such as Prakash,
Sivakumar, Maslekar, and Shyam, play essential roles in assessing suppliers and making
informed decisions to source high-quality components for their product development.
3. Develop your own supplier scorecard for both sets of components. Evaluate the relative
rankings for each sourcing criterion for both components. How do these relative rankings
differ across each set of criteria and do you see an emerging pattern? What appropriate
weights would be assigned for each criterion in the final supplier scorecard (for each
component) and why?

To develop a supplier scorecard for both sets of components (microprocessor chips and DC-
DC converters), we need to evaluate the relative rankings for each sourcing criterion. Here
are some common sourcing criteria that can be considered:
Functionality: Assess the extent to which the components meet the required functionality
and technical specifications.
Reliability: Evaluate the reliability of the components based on past failure incidents, mean
time between failures (MTBF), and reliability estimates.
Delivery Ratings: Consider the track record of suppliers in terms of on-time delivery and
meeting delivery deadlines.
Price Quotes: Compare the price quotes provided by each supplier to assess the cost-
effectiveness.
CoC Availability: Check if the suppliers have the required certifications and compliance
documents.
Documentation Level: Evaluate the quality and completeness of the documentation
provided by the suppliers.
The relative rankings for each sourcing criterion for both components are as follows:

Sourcing Criterion Component A Component B

Component Reliability High Medium
Component Technology New Existing
Past Component Failure Data Low High
On-time Delivery Efficiency High Medium
Percentage of Order Size Delivered in the Past High Low
Documentation Good Excellent

Whereas the rating criteria for each sourcing criteria is as follows

1. Component Reliability
 High – 5
 Medium- 3
 Low-1
 2. Component Technology
 New- 5
 Existing- 3
 Outdated – 1
3. Past Component Failure data
 High – 5
 Medium – 3
 Low- 1
4. On time Delivery efficiency
 High – 5
 Medium – 3
 Low- 1
5. Percentage of order size delivered in past
 High – 5
 Medium – 3
 Low- 1
6. Documentation
 Excellent- 5
 Good – 3
 Poor – 1

The relative rankings differ across each set of criteria. For example, for component reliability,
Supplier A has a higher ranking than Supplier B. However, for on-time delivery efficiency,
Supplier B has a higher ranking than Supplier A.
There is an emerging pattern in the relative rankings. For the most part, Supplier A has a
higher ranking than Supplier B. This is likely because Supplier A is offering a new technology
component, which is typically more reliable and has a higher potential for performance
improvements. However, there are some criteria where Supplier B has a higher ranking, such
as on-time delivery efficiency. This is likely because Supplier B is a more established supplier
with a larger track record of delivering on time.
Ultimately, the decision of which supplier to select will depend on the specific needs of the
project. If reliability and technological advancements are the most important factors, then
Supplier A would be the better choice. However, if on-time delivery and order fulfilment are
more important, then Supplier B would be the better choice.
Here are some additional thoughts on the supplier scorecard:

 The relative rankings for each sourcing criterion should be based on the specific
needs of the project. For example, if reliability is the most important factor, then the
component reliability ranking should be given more weight than the other rankings.
 The supplier scorecard should be used as a tool to help make the supplier selection
decision. It should not be the only factor that is considered. Other factors, such as
 the supplier's price, willingness to work with Sattva, and track record of delivering on
time, should also be considered.
 The supplier scorecard should be updated regularly to reflect changes in the
supplier's performance. This will help to ensure that the best suppliers are selected
for future projects.

The following are some appropriate weights that could be assigned for each criterion in the
final supplier scorecard for component A:

Criterion Weight Explanation

This is the most important criterion, as a reliable
component is essential for the overall functionality
Component Reliability 40% of the product.
The technology of the component can have a
significant impact on the performance and
Component Technology 20% capabilities of the product.
Past Component Failure Past failure data can provide valuable insights into
Data 15% the reliability of a component.
On-time delivery is essential for meeting project
On-time Delivery deadlines and ensuring that customers are
Efficiency 15% satisfied.
Percentage of Order
Size Delivered in the This metric can provide an indication of the
Past 10% supplier's ability to meet demand.

The following are some appropriate weights that could be assigned for each criterion in the
final supplier scorecard for component B:

Criterion Weight Explanation

This is the most important criterion, as a reliable
Component component is essential for the overall functionality
Reliability 30% of the product.
The technology of the component can have a
Component significant impact on the performance and
Technology 20% capabilities of the product.
Past failure data can provide valuable insights into
the reliability of a component. However, it is
Past Component important to note that past performance is not
Failure Data 15% always indicative of future performance.
On-time Delivery 15% On-time delivery is essential for meeting project
Efficiency deadlines and ensuring that customers are satisfied.
 However, there may be occasional delays in
delivery, and these delays should not be overly
penalized.
This metric can provide an indication of the
Percentage of supplier's ability to meet demand. However, this
Order Size metric is not as important as the other criteria, as it
Delivered in the does not directly measure the reliability or
Past 10% technology of the component.

It is also important to note that the weights for each criterion may change over time, as the
importance of different factors may change. For example, if the supplier's delivery
performance has been consistently poor, then the weight for on-time delivery efficiency
might be increased.

Ultimately, the weights for each criterion should be determined by the decision-makers who
are responsible for selecting the supplier. These decision-makers should carefully consider
the specific needs of the project and the factors that are most important to them.
Here are some additional thoughts on the weights that could be assigned for each criterion:

 The weight for component reliability should be high, as a reliable component is

essential for the overall functionality of the product.
 The weight for component technology should also be high, as the technology of the
component can have a significant impact on the performance and capabilities of the
product.
 The weight for past component failure data should be moderate, as past failure data
can provide valuable insights into the reliability of a component. However, it is
important to note that past performance is not always indicative of future
performance.
 The weight for on-time delivery efficiency should also be moderate, as on-time
delivery is essential for meeting project deadlines and ensuring that customers are
satisfied. However, it is important to note that there may be occasional delays in
delivery, and these delays should not be overly penalized.
 The weight for percentage of order size delivered in the past should be low, as this
metric can provide an indication of the supplier's ability to meet demand. However,
this metric is not as important as the other criteria, as it does not directly measure
the reliability or technology of the component.

Based on the relative rating and weights for each supplier criterion, the supplier scorecard
for each component is calculated as below
Component A: CPU unit

Supplier
Sourcing Criterion A Supplier B Supplier C Supplier D
Component Reliability 5 4 2 5
Component Technology 5 3 2 5
Past Component Failure Data 2 5 5 1
On-time Delivery Efficiency 4 5 3 4
Percentage of Order Size Delivered in the Past 5 4 3 5

Component B: DC-DC converter unit

Supplier
Sourcing Criterion A Supplier B Supplier C Supplier D
Component Reliability 3 5 1 4
Component Technology 5 4 2 5
Past Component Failure Data 1 5 5 3
On-time Delivery Efficiency 4 5 3 4
Percentage of Order Size Delivered in the Past 5 4 3 5

4. Rate the suppliers based on each criterion. What are the suppliers' final scores for each
component based on your developed scorecard?
The final scores of each suppliers for two components are calculated below individually
For Component A

Sourcing Suppli Suppli Suppli Suppli

Criterion er A er B er C er D Total
Compone
nt
Reliability 5 4 2 5 16
Compone
nt
Technolo
gy 5 3 2 5 15
Past
Compone
nt Failure
Data 2 5 5 1 13
 On-time
Delivery
Efficiency 4 5 3 4 16
Percentag
e of Order
Size
Delivered
in the
Past 5 4 3 5 17
Total 21 21 15 20

For Component B

Sourcing Suppli Suppli Suppli Suppli

Criterion er A er B er C er D Total
Compone
nt
Reliability 3 5 1 4 13
Compone
nt
Technolo
gy 5 4 2 5 16
Past
Compone
nt Failure
Data 1 5 5 3 14

On-time
Delivery
Efficiency 4 5 3 4 16
Percentag
e of Order
Size
Delivered
in the
Past 5 4 3 5 17
Total 18 23 14 21
Overall
Supplier A is the best overall supplier for Component A, as it has the highest rankings for the
most important criteria: component reliability and component technology.
Supplier D is the best overall supplier for Component B, as it has the highest rankings for the
most important criteria: component reliability and past component failure data.
Supplier C should be avoided for both components, as it has the lowest rankings for the
most important criteria: component reliability and past component failure data.
Supplier B is a good option for both components, as it has high rankings for most of the
criteria. However, it is important to note that Supplier B has had some delays in the past, so
this should be taken into account when making a decision.

5. What would happen to the design of the scorecard when the products move to a large
manufacturing phase (e.g. 100,000 units)?

The design of the scorecard would need to be adjusted to reflect the different factors that
are important in a large manufacturing phase. For example, the following factors would need
to be considered:
Reliability: The reliability of the components would become even more important in a large
manufacturing phase, as a failure of a single component could lead to the failure of many
units.
Delivery: The delivery time of the components would also become more important, as
delays in delivery could disrupt the manufacturing process and lead to lost sales.
Cost: The cost of the components would still be important, but it would be less of a factor
than in a smaller manufacturing phase.
Service: The service provided by the supplier would also become more important, as the
supplier would need to be able to provide support to the manufacturing team if there are
any problems with the components.
In addition to these factors, the scorecard would also need to be adjusted to reflect the
specific requirements of the large manufacturing phase. For example, if the product is being
manufactured in a different country, the scorecard would need to include factors such as the
supplier's ability to comply with local regulations.
Here is an example of how the scorecard might be adjusted for a large manufacturing phase:
Criteria Weight
Reliability 30%
Delivery 20%
Cost 15%
Service 15%
Other factors (such as compliance with local regulations) 20%

The weights for each criteria would need to be determined based on the specific
requirements of the large manufacturing phase.

6. What are the various roles and incentives of the members involved in the sourcing
process for both components? Can the incentive structure influence the operationalization
of the developed scorecard?

Various members play critical roles in the decision-making and evaluation of potential
suppliers during the sourcing process for both components. Let us investigate these
members' roles and incentives:
Prakash is the Sourcing Manager, and he is in charge of overseeing the entire sourcing
process. His primary motivation is to find and select suppliers who can supply high-quality
components at competitive prices. Prakash's performance can be assessed based on factors
such as cost savings realized through supplier negotiations, on-time delivery performance,
and overall sourcing efficiency. He is driven to ensure that the selected suppliers meet the
company's quality standards and can support the required number of units.
Design Engineers (Sivakumar and the Design Team): Sivakumar leads the design engineers
in evaluating the technical specifications and compatibility of the components with the
design of the biomedical device. Their motivation is to select components that provide the
desired functionality, dependability, and technological advancements. They prefer to
collaborate with suppliers who provide innovative and cutting-edge components because it
increases their technical expertise and knowledge. Through supplier collaboration,
Sivakumar's team is motivated to learn and adapt to new technologies.
Operations Manager (Shyam): Shyam's role is to ensure that the biomedical device is
manufactured smoothly and on time. His incentives are aligned with sourcing components
from dependable suppliers with a track record of on-time delivery and few failures.
Shyam's performance can be measured by its production efficiency, ability to meet
production schedules, and ability to minimize disruptions caused by component supply
issues.
Financial Controller (Maslekar): Maslekar is in charge of cost control and optimizing the
company's financial performance. His incentives revolve around minimizing procurement
costs and managing the project's overall budget. He will be looking for suppliers who can
offer competitive prices without sacrificing component quality.
The incentive structure can, in fact, influence how the developed scorecard is
implemented. As an example:
If the sourcing team prioritizes suppliers with lower price quotes, they may overlook other
important criteria such as reliability and on-time delivery.
If the performance of the design team is heavily dependent on the successful integration of
new technology, they may prefer suppliers offering next-generation components, even if
there are potential risks associated with untested products.
The financial controller may advocate for suppliers who offer significant cost savings, but if
this comes at the expense of quality and reliability, it may result in operational issues and
additional costs in the long run.
As a result, it is critical for the company to carefully consider how each criterion in the
scorecard is weighted and to align the incentives of the involved members with the overall
strategic goals. The company can make well-informed sourcing decisions that align with both
technical and financial objectives by striking the right balance and ensuring a collaborative
decision-making process.

7. How would the scorecard be changed to better embrace sustainability concepts? What
additional information would you need to implement these concepts into your supplier
scorecard?
Additional criteria related to sustainability and responsible sourcing should be included in
the supplier scorecard to better embrace sustainability concepts. Here are some potential
changes and the necessary additional information:
Environmental Impact: Assess suppliers' environmental practices and commitment to
lowering their carbon footprint. This could include things like energy efficiency, waste
reduction, the use of renewable resources, and following environmental regulations.
Assess suppliers' adherence to ethical sourcing practices, fair labor standards, and social
responsibility. This would entail ensuring that suppliers do not use child labor or exploitative
working conditions.
Transparency in Supply Chains: Assess suppliers' transparency in their supply chains,
including the origins of raw materials and components. This data assists in identifying
potential risks associated with unethical or unsustainable supply chain practices.
Product End-of-Life Management: Consider how suppliers handle product end-of-life issues,
such as recycling and disposal. Suppliers who have effective take-back and recycling
programs help to make the product life cycle more sustainable.
Environmental Certifications: Inquire about the suppliers' environmental certifications or
sustainability standards, such as ISO 14001, RoHS compliance, or eco-label certifications.
Green Innovation: Evaluate suppliers' efforts to develop and market environmentally
friendly products or technologies, such as energy-efficient components or recyclable
materials.
In addition to that
Request supplier sustainability reports outlining their sustainability initiatives, environmental
performance, and social responsibility practices.
Collect information on suppliers' energy consumption, greenhouse gas emissions, water
usage, and waste generation.
Audits of Labor Practices: Conduct audits or request third-party assessments to ensure that
suppliers are following fair labor practices and ethical standards.
Mapping the Supply Chain: Obtain information about the supply chain of the suppliers,
including the source of raw materials and any potential risks associated with the suppliers'
practices.
Environmental Certifications: Obtain copies of sustainability and environmental compliance
certifications and verification documents.
The scorecard can better reflect the company's commitment to sustainability and
responsible sourcing by incorporating these sustainability-focused criteria and gathering the
necessary additional information. This will allow the company to make better decisions and
choose suppliers who share their environmental and social values. It also contributes to the
long-term development of a more sustainable and resilient supply chain.