Vendor Comparison

Since the company is looking to maintain their Just in time production system and diversify
production related risk, they opted for two wheel suppliers (Hamid Ind. And Best engineering).

Hamid Ind. Best Engineering

Strengths Weaknesses Strengths Weaknesses
Production Capacity Model Mix Workforce Strength and Cost Crude SCM
Workforce Strength and Vehicle Maintenance Literate Management Rejection Rate
Cost
Zero Raw Material Cost Illiterate Management Vehicle Maintenance Production
Capacity
Supply Trolleys Single Model
Bottleneck
Rejection Rate Child Part Procured from Sister
Company
Crude Supply Chain
Model

According to the information provided by the company, Hamid Ind.’s production capacity is 52000
sets/month and Atlas Honda schedules 43000 sets per month. Whereas for Best engineering, the
production capacity is 39000 sets/month but still the company is scheduling 40,000 sets per month.
The reason behind this is the cost of production. The estimated cost of production is Rs 1754800
of Hamid Ind. on the other hand, for best engineering its cost is Rs 1511500. The company is
demanding more wheels best engineering even though they are short on capacity. The company is
avoiding increasing the wheel schedules from Hamid Ind. because due to their trolley issue the
manufacturing plant is short on space and wheels are not delivered on time.

The company is facing wheel delivery issues from best engineering’s due to lack of production
capacity and due to this Atlas Honda maintains a safety stock. Looking at Hamid’s services so due
to their lack of trolley transportation the wheels are delivered late and dealing with the management
of Hamid Ind. Has become an issue as their management is unable to comprehend the issue in one
go due to lack of education level.

The company is contemplating as to how to resolve this issue without disrupting the just in time
system. The rejection rate is high for both the suppliers but Best engineering is able to resolve the
short comings quickly as they have developed a strong vehicle maintenance system which Hamid
Ind. lacks.

If we look at the cost breakdown so the food, and fuel is the same for both the vendors but
maintenance and generator cost is higher for Hamid Ind. as compared to best engineering whose
cost was short by Rs 47300. Overall the labor cost was higher for Hamid Ind because they have
hired more labor in production and administration department compared to Best Engineering.

The company can either opt for best engineering by helping them increase their production
capacity and reduce their rejection rate. Or they can opt for another single vendor who can provide
the complete supply of wheels for different bike models.