Running Head: SUPPLIER INTEGRATION

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Name

Institution
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Question One
“Caterpillar Woks with Delco to Achieve Mutually Beneficial Outcomes"

1. Review Caterpillar’s process for early supplier involvement. What was critical to

the success of the relationship?

Caterpillar Inc. which manufactures construction and mining equipment, approached

Delco Electronics back in 1997 to be their electronic suppliers. However, this integration was

aimed at fulfilling their customers’ needs, and therefore, caterpillar had to go through a process

to choose the best supplier. This process involved various stages which lasted six to eight

months. The team of buyers visited the Delco Electronics” headquarters, manufacturing and

engineering facilities several times (Monczka, Handfield, Giunipero & Patterson, 2011). During

the visits, it quoted a number of different situations which included build-to-print and design-

and-build which was a way of understanding the company’s capabilities. During the evaluation,

Delco Electronics met with the Caterpillar’s engineering group to demonstrate its execution,

plans in reducing the costs and the quality, in which this process involved numerous discussions.

The buyer then informed Delco Electronics that it had been chosen as the strategic supplier for

Caterpillar, making the buyer the facilitator of the strategy. The buyer then presented a draft of

an agreement between the two companies.

So as to ensure the relationship was a success, the buyer had to spend time in ensuring

that the two companies develop the right working relationship, meeting all the team members

weekly and ensuring that all deliverables are met. When a new program was identified, the buyer

attended the Sanctioning Body Approval event, which was the first formal way in the product

development process at Delco Electronics (Monczka et al,. 2011). This was to confirm that

Delco Electronics was prepared in developing a new program.

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2. How important was the role of specific individuals involved in the discussion? What

does this say about the importance of trust in managing buyer-supplier

relationships in such an environment, and the role of individuals in the relationship?

The team that visited Delco Electronics played a major role by performing benchmarking

exercises which helped in understanding its capability.

Delco electronics also played an important role by visiting the Caterpillar’s engineering groups

to present its execution, quality and cost reduction plans upon being selected.

The role of the buyer was important during the discussion as he was the one acting as the major

Caterpillar lead role. He ensured that the relationship was a success by following up on each

activity of Delco Electronics.

This shows that trust is very important in managing buyer-supplier relationships since

Caterpillar Inc. trusted the buyer in choosing the best electronic supplier and made sure that there

was a working relationship between the two companies (Monczka et al,. 2011). Therefore, it is

important to involve the right individuals in obtaining a supplier and trusting them to deliver the

best.
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How were the risks minimized? Do you believe the benefits, in this case, outweighed

these potential risks?

The risks were minimized through establishing benchmarks that were used in measuring the

supplier’s performance. The frequent visits by the Delco Electronics to the Caterpillar

engineering groups also ensured that they supplied quality electronics which also reduced the

risk. The buyer also ensured that the strategy was successfully executed and frequently follow-

up, which was necessary for minimizing the risks.

In this case, the benefits outweighed the potential risks since the frequent visits to Delco

Electronics convinced Caterpillar that they had selected the best suppliers.
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REFERENCES

1. Monczka, R., Handfield R., Giunipero, L., Patterson, J. (2011). Purchasing and Supply

Chain Management. USA: Joe Sabatino