2. Background 

As the leader in motion subsystems industry, Johnson Electric (shorted as JE in following) was founded in 1959. Its growing history can be easily seen from following series data: in 1970, sales of Johnson Electric reached $1.7 million; in 1980, this number came to be $16 million; sales of 1990 increased to $ 126 million; and in 2000, this number was swelled up to $677 million; in 2012, total sales amounted to $ 2,060 million. Even like this, comparing with the number of 2011, sales of Johnson Electronic decreased 4% (http://www.johnsonelectric.com/en/company/the-johnson-electric-story/index.html). This decreasing cannot stop evaluating Johnson Electric as one rapid expanding company. 

 

 

In Johnson Electronic, Supply Chain Management Department has another name: SCS, which is the combination of Supply Chain Service’s 1st letters. Headquarter of JE's SCS department is located at Shajing, Shenzhen. The main business of SCS covers three aspects: purchasing, quality controlling, shipping and custom. At the end of 2012, Karen, as the General Manager of JE SCS’s Global Sourcing Team quitted the job. Along with Karen’s leaving, three managers also left the office. One disaster after another, since the gloomy of whole world economy and rising cost, so many suppliers ask for price increasing. It can be said that Global Sourcing Team is in turbulent period now. Besides, General Manager and three other managers’ quitting also means there will be a blanking period in the aspect of keeping and maintaining Supplier Relationship, since this has always been in charge of General Manager. For keeping and improving Supplier Relationship, Rob Gillete decided to hold 2013 Global Supplier Conferences. For conferences’ successfully holding and achieving setting objectives, Rob Gillete consulted Win-Win. 

 

 

Through communicating with Rob Gillete, he wants to identify key and strategic suppliers, ensure a good and smooth transition in the personnel changing period, maintain one stable and good supplier relationship, and control purchasing cost effectively. Toward these requirements, win-win recommended to hold 2013’s Global Supplier Conference.   

 

 

3. Overall aim and purpose 

The overall aim can be described as successfully holding the Global Supplier Conference. For measuring whether the conference is success, there are following specific targets:

※ Before holding the conference, establishing one measuring mechanism to identify strategic suppliers; this mechanism should include three evaluation indexes and be implemented in IT system. 

※ Strategic Suppliers Sinorama is one part of this conference. Each sub-team should hold its own Strategic Suppliers Sinorama. Rob and the new General Manager should participate first 5 largest strategic suppliers sinorama (purchasing amount will be the only 1 measuring index over here) and sub-teams of the three managers who left the office.

※ Toward the suppliers asking for price increasing, the acceptable range is 5% of negotiation range and 3% of all suppliers asked price increasing.

※ Clearly stating and explaining the supplying management strategy; Releasing the information that Karen resigned and announced the successors. 

It should be stated first that in the period of this conference, price negotiation will not be one topic. Price negotiation is also not allowed. This project will last about 15 days. 

 

 

4. Objectives 

Totally 4 SMART objectives are defined toward this conference:

Objective one: participation rate reaches 85% (which means participants occupy all suppliers 85%).

 

 

Objective two: successfully illustrating the purchasing strategy of Johnson Electronics and getting the understanding and cooperating in following years; especially in this Staff fast flowing and economy continually gloomy period.

Objective three: successfully dividing suppliers into different groups: strategic suppliers, qualified suppliers, potential suppliers and new suppliers; clearly defining the dividing standards and transiting this information to all suppliers; encouraging suppliers to make effort for coming to be higher level suppliers.

Objective four:  purchasing cost’s controlling. Through communicating and discussing with suppliers, finding out the improvement, such as minimum order quantity, lead time, raw materials’ successfully changing, localization purchasing and so on. 

 

 

5. Outcomes 

Through Global Suppliers Conference’ holding, Johnson Electronics reached following results:

In the first aspect, around 100 strategic suppliers have been identified through the measuring system. Three conditions should be satisfied in the process of defining strategic suppliers. For illustrating each condition, internal situation of Johnson Electronic SCS Department should be understood or illustrated first. According to the purchasing items, SCS’s purchasing team can be divided into direct material and indirect two large teams. Each team also contains different sub-teams basing on the specific purchasing materials and these sub-teams are named with commodity code. Direct Material Team totally has 53 commodities. Commodity one is about the raw steel. Commodity two is sintering parts. Here will not list each commodity. Then about the three conditions requirement of strategic suppliers: Condition 1: suppliers should be on the list of actual suppliers within one year. Condition 2: purchasing amount should occupy the total purchasing amount’s 30% of each commodity. Condition 3: the supplier evaluation should be above 75 points. All of these three conditions can be detected in software. Under the base of strategic suppliers’ identifying, Top Management Level of Johnson Electronic SCS Department can take more targeted dialogue measures. It is also the base of supplying management’s improvement. 

 

 

In the second aspect, outcome two is successfully establishing mutual understanding and mutual trusting relationship with strategic suppliers through meetings holding. SVP (senior vice president) and the new GM (general manager) participated into nearly all One-on-one talks with strategic suppliers. They stated the current situation of Johnson Electronic SCS Department sincerely, analyzed the whole market situation and the trend of electronic industries. This is one good step to improve supply relationship of Johnson Electronics. In the history of Johnson Electronics, it has never talked and contacted with its suppliers in so close distance. For taking just-in-time inventory management and supplying localization strategy, this provides one good pre-job. 

Outcome three of this conference is internal management’s improvement and advancement. Through this conference, new GM knows each commodity. This is a good supporting for future job’s implementing. For holding this conference, each commodity well prepared materials, such as commodity review, current issues, working scopes and so on. One will be used as an example in the appendix part. 

 

 

6. Approach and methodology 

Gantt chart, responsibility matrix and milestones are used as the main tools of this project. With Gantt Chart, following information of this project can be clearly understood: the whole conferences’ time plan, work arrangement and responsible parties. Responsibility matrix is one effective tool to observe the authorization of power, the duties and rights of suppliers and purchasers, standardization and improvement of cooperation. Milestones can be used to record the main history issues of the organization. Here all of these will be stated one by one:

 

Gantt Chart of 2013’s Global Supplier Conference

Activities Responsible for Activities Feb.15, 2013 Jan.10 – Feb.10, 2013 Feb.15-Feb.29, 2013 Mar. 2013

Opening Ceremony SCS of Johnson Electronics’ Administrative Team √ 

 

Preparation job of the conferences, including strategic suppliers’ identifying, conference materials preparing, invitation letters’ sending out and confirmation of participation 53 commodity Teams

Administrative Team

 General Manager

Senior Vice President √ 

Strategic Suppliers One-to-One Talk Commodity Teams,

General Manager & Senior Vice President √ 

Price Negotiation  Commodity Team, including senior  manager, manager, assistant manager and buyer.  √

Responsibility Matrix of 2013’s Global Supplier Conference

Code     Sub-Team

Standard Responsibility Senior Vice President General Manager Commodity 1 …… Commodity 53 Administrative Team

Purchasing System Team

1 Strategic Suppliers Evaluation Index’s definition  □ ★ ★ ★ ★  

2 Strategic Suppliers Identifying □    ★

3 Commodity Review Report  ★ ★ ★ 

4 Invitation Sending Out ★ 

5 Participation Confirmation ★ ★ ★  

6 Conference Materials’ Printing     ★ 

7 Conference Places’ Booking and Confirming  ★ 

8 Conference Schedules’ Arrangement □ ★ 

(Note: ★ in charge of;  supporting; □ Approving )

Milestones of 2013’s Global Supplier Conference

Jan. 5, 2013  New General Manager Took Office 

Jan. 9, 2013  Held GM Meeting for declaring the information of 2013 Global Supplier 

 

Conference

Jan. 30, 2013  Strategic Suppliers’ Successfully Identifying and Summarization

Feb. 3, 2013   All commodities finished Commodity Review Reports

Feb. 6, 2013   All Invitation Letters should be sent out

Feb.9, 2013   Confirming with Suppliers about the participations

Feb. 13, 2013  Conference Room’s Booking and Confirming Finished Date

Feb. 15, 2013   Opening Ceremony of 2013 Global Suppliers Conference

Feb. 29, 2013   Closing Ceremony of 2013 Global Suppliers Conference

Mar. 30, 2013   Closing of Johnson Electronics Price Negotiation in 2013

 

 

7. Resources 

For holding 2013 Global Suppliers Conferences, following resources are needed: Human Resource, Information Resources and some capital.

Specifically speaking, in the human resource aspect, materials needed include: Organizational structure of Johnson Electronics’ Supply Chain Service Department and Direct Material Team; Internal labour division of Supply Chain Service Department and Direct Material Team.

In the aspect of information resources, following materials are required: targets and expectations of 2013 Johnson Electronics’ Purchasing and Sourcing, Suppliers’ List of Johnson Electronics within one year; Last Year’s Purchasing Report, Purchasing amount of each supplier and each commodity.

Capital used into this conference is for materials’ printing, rooms’ booking, hostel accommodation and so on. 

 

 

8. Risk 

Risk exists at everywhere and at all times. For successfully doing anything, risk management is must. According to the definition of Hubbard Douglas, risk management is a process covering risks’ identifying, assessing, minimizing, monitoring and controlling. Risk management can minimize cost and maximize opportunities' realization (2009). For successful controlling, avoiding and transferring risks into opportunities, the first job which needs doing is risks' identification. This is also the basic job and also first link in risk management. So many ways and approaches can be used to identify risks, such as analyzing production process, analyzing financial reports and sheets, in-depth investigation, experts' researching and so on.   After successfully identifying the potential risk, following job is risk predication. Risk predication means evaluating and balancing the size of risk. This job is founded on the systematically analyzing, researching and investigating materials in hand (Bjarne Kousholt. 2007). Generally speaking, risk predication includes jobs in two aspects: frequency predication and strength predication.  On the basis of risk predication, there will be different responses toward different types of risk. Negative response is shying away from risk. But this is not the recommended way, since new risks might wait for you in this process. The second approach is preventing risks' happening positively or transfer risk into acceptable degree (Dorfman Mark S. 2007). In the third aspect, company can purchase insurance to transfer the risk, such as employment injury insurance. After dealing with the risk, there is risk tracking and researching. This also can be seen as another beginning of new risk management.  

 

 

Toward the project of 2013 Global Suppliers Conferences, risks can be identified from following aspects: suppliers’ participation situation, especially about the strategic suppliers; data’s situation (whether all needed data are complete?); safety risk in the transportation process and meeting holding process, risks of information’s correctly spreading and illustrating etc. After identifying risks, following job is controlling and monitoring these risks. For encouraging all suppliers participating into this meeting, advocating is one must job. Invitation letters’ writing and wording are also very important. Data’s completely collecting needs purchasing system staffs’ fully supporting; safety risk can be minimized through centralizing meeting places. Risk plan can be found in the appendix part. 

 

 

9. Recommendation/Conclusion 

In conclude, Johnson Electronics’ SCS department faced extreme volatility in human resource aspect, along with the gloomy economy environment. For whole company’s cost controlling, global sourcing and purchasing come to be the key and critical aspect. For successfully transition, Global Suppliers Conferences is must, also needed. Considering about the leaving time of predecessor and joining time of current General Manager, holding time is arranged at the middle of Feb. 2013. Main content of this conference is about the communication of Johnson Electronics’ purchasing strategy. For getting the understanding and supporting of core and key suppliers, one-to-one talk is recommended, which also invited the joining of SVP and General Manager. Conference lasted about 15 days. After conference’s closing, following challenge job is about the price negotiation of this financial year.  

10. Appendix

Commodity Review of D001 (Commodity 1, For business secret, original data will not be left)

 

 

 

SCS Department Organizational Chart

 

(information got from the internal part of Johnson Electronic)

SCS Direct Material Team’s Organizational Chart

 

(Information got from the internal part of Johnson Electronic)

Risk plan of 2013 Global Supplier Conference

Risk Identification Risk Controlling Risk Evaluation and Monitoring

Before Feb. 13, 2013 From Feb. 25 to Feb. 29, 2013 Mar. 2013

11. References

 

Doug Hubbard. (2009). The Failure of Risk Management: Why It's Broken and How to Fix It. Wiley

Dorfman Mark S. (2007). Introduction to Risk Management and Insurance. Englewood Cliffs, N.J: Prentice Hall

Bjarne Kousholt. (2007). Project Management –Theory and practice. Nyt Teknisk Forlag

 

Official Website of Johnson Electronics

http://www.johnsonelectric.com/en/company/the-johnson-electric-story/index.html