Fairmead Marine Case Study

Fairmead Marine Case Study

Prepared by: Jason Heans

TABLE OF CONTENTS

Executive Summary……………………………………………………………………………………2

Issue Identification……………………………………………………………………………….…... 4

Environment and Root Cause Analysis……………….……………………………………..…...….. 5

Alternatives or Options…………………………………………………………………………........ 7

Recommendation………………………………………………………………………….………....11

Implementation……………………………………………...………………………………....…….12

Monitor and Control………………………………………………………………………..…..…....13

EXECUTIVE SUMMARY

Fairmead Marine is a relatively small seven year old boat manufacturing company started by Bud Fair and Clint Mead. Since taking over the business, Bud and Clint have overseen the growth of Fairmead Marine into a well-known regional business. Sales were estimated to be in the range of $10 to $12 million. Fairmead offers two lines of high-end recreational boats with in a variety of customizable combinations. Fairmead Marine caters to an upscale market, focusing on customers who want to create an impressive luxury boating experience. Therefore, wherever possible, Fairmead has specified high-end materials from its suppliers in order to ensure longevity and a higher-end look and feel.

Daniella Morales has been in the role of Supply Chain Manager at Fairmead Marine for one year. She has made great strides in improving Fairmead Marine’s supply chain, but is now confronted with a variety of issues from one supplier which threaten to compromise the quality of Fairmead Marine’s product, as well as its reputation. The supplier, Boat Parts & More, has had problems in the past with the stitching of the seams of fabric covers, poorly fitting bimini frames, and delivery delays. In these cases, Boat Parts & More had promptly resolved the issues at hand. It should be noted that the bimini frames issue was a result of Fairmead Marine’s error, and not the supplier, however the supplier fixed the frames free of charges nonetheless. Most recently, Boat Parts & More have been experiencing on-time delivery issues, causing delays in Fairmead Marine’s production, as well as substituting product without prior approval from Fairmead Marine. Despite these issues, the notes on file concerning Boat Parts & More were generally favorable; remarking on their willingness to meet Fairmead Marine’s shifting needs.

The principal issue for Morales to resolve is whether or not to continue to use Boat Parts & More as a supplier. At this time, the vendor represents a small portion of Fairmead Marine’s overall spend; however, there is potential for this vendor to take on a larger role.

After identifying the issues and analyzing their root causes, it has been determined that Fairmead Marine should continue to use Boat Parts & More as a supplier. Fairmead Marine should establish a supplier scorecard with Boat Parts & More with clear expectations and measurable metrics communicated between both partners. Both parties should meet quarterly to review results so issues can be addressed at an early stage.

ISSUE IDENTIFICATION

The principal issue faced by Morales and Fairmead Marine is whether or not to continue to use Boat Parts & More as a supplier and they grow their business. In the year since Morales has been in her role as Supply Chain Manager at Fairmead Marine, there have been issues with product quality, substitutions, as well as on-time delivery. In each case, Boat Parts & More have promptly addressed the issue, and have shown a great deal of flexibility, which Fairmead Marine considers a key asset in a supplier.

A further issue regarding Fairmead Marine’s relationship with Boat Parts & More includes the lack of communication of decisions from Fairmead’s ownership to the supplier. In the case of the issue of the bimini frames, Fairmead Marine’s ownership had made changes to the design, but had not communicated these changes to the supplier. This resulted in incompatible frames being shipped to Fairmead Marine.

ENVIRONMENTAL AND ROOT CAUSE ANALYSIS

Fairmead Marine is a small manufacturer of power boats near Okanagan Lake, British Columbia, specializing in high-end luxury boats. Fairmead Marine is experiencing problems with a supplier, Boat Parts & More, meeting their expectations on quality and delivery. This results in production delays for Fairmead Marine while they either wait for orders to be received, or fix incorrect shipments.  

Root Cause Analysis of Issues:

1. Communication – There is a lack of communication existing between Fairmead Marine and Boat Parts & More. The owners of Fairmead Marine are prone to making last minute changes in designs and requirements. These communications are not always properly communicated to the supplier. This has resulted in production delays as the supplier has not been made aware of design changes and have been unable to pivot their designs accordingly.
2. Late Shipments – Fairmead Marine is experiencing an influx of late product shipments from Boat Parts & More. Late shipments result in production delays for Fairmead Marine. When questioned, Boat Parts & More have responded that they believed the shipments in question had arrived on time. This shows there is a disconnect between the expectations being delivered to Boat Parts & More and the actual expectations of Fairmead Marine.
3. Product Quality - There have been issued recently of Boat Parts & more making substitution unknowing to Fairmead Marine. The substitutions seem to correspond when tight deadlines are imposed on Boat Parts & More. These substitutions have been for lower quality products that would reflect poorly on Fairmead Marine’s commitment to provide its customers with a high-end luxury boating experience. Last minute substitutions for lower quality product would indicate there is a larger problem with Boat Parts & More’s supply chain.

ALTERNATIVES AND OPTIONS

Option 1: Keep Boat Parts & More As A Supplier With The Potential For Larger Role In The Future

Advantages

Boat Parts & More is a local company and is in a position to accommodate Fairmead Marine’s needs as long as such needs are communicated to the supplier.

Boat Parts & More offers a large degree of flexibility and works well with Fairmead Marine’s style of conducting business.

Boat Parts & More has shown they are willing to come in to meet with Morales face to face to resolve issues, regardless of whether or not the issue was their fault.