Current State
Spartan Heat Exchangers Inc. is a leading designer and manufacturer of specialized industrial heat transfer equipment for more than 10 years. The company’s primary products are transformer coolers, hydro generator coolers, air-cooled heat exchangers and transformer oil coolers. Their USP – Fin tube type heat exchangers and long lasting products.
They are into highly customized heat equipments & because of new competition from European & Korean companies they have changed their corporate policy, which emphasize on reducing the product variety & standardized the product. The new business policy also states of reducing the current lead time from 14 weeks to 6 weeks.

Problem Statement
The Materials Department headed by …show more content…

• Another option that Rick will have is Consignment buying (Ref. Pg 35) (which is possible due to the space available in the warehouse since the variety of raw materials has reduced) This space can be used to keep suppliers inventory under his control (specially for Aluminum which constitutes 40% of the total inventory).
A) This will help Rick in another way as he will be able to solve the problem of stock out, specially for the basic raw material ie Aluminum.
B) Since Spartan will now need only a fixed variety of raw materials, hence the requirement of a large vendor base will not be required. This will also provide Rick more negotiation power for a fixed vendor base, for his basic raw material as explained later on.
The new business strategy being formulated for 5 years will give more negotiation power in view of a commitment of a long term relationship. As we previously mentioned, the new strategy of Spartan will enable the Supply Chain Department to restructure the procurement scenario. As we know, purchasing and supply management are critical to the success of a company. The general modern conception regarding procurement is recognizing the importance that, in addition to price, other elements may have in this relation. In this line of thought, we believe that being able to reduce significantly the number of vendors