Case: Samyeong Cable Company

CASE: Samyeong Cable Company

The problem:

* Samyeong, as one of the major suppliers of Hyundai for control cables, they are pressured to make major changes in the area of cost, quality and, productivity which are Hyundai's selection criteria.

Courses of Action

In order to meet Hyundai's selection criteria, Samyeong must have a responsive supply chain which focus on innovative products and stable processes. This will utilize strategies aimed at being responsive and flexible to the rapid design changes required in the production of automotive cables. This will also cater to Hyundai's criteria of high technological capacity.

Why focus on high technological capacity and not on the acquisition of the specific product?

* It sustains Hyundai's aim of a cooperative partnership-like single supplier relationship which will also build long-term supply contracts which is prevalent in a stable manufacturing process

* It initiates suppliers to improve their long-term capability

* It will protect Hyundai from direct conflict with suppliers if specific product acquisition is used

* Previous problems with vulnerabilities to unexpected difficulties, i.e. labour disputes, are reduced

* In the long run, it will help develop in improving quality, cost and production through cooperative development

With the presence of long standing supplier relationships, the company could also negotiate lower costs and even aid the supplier company to reduce production costs and thus prices. Quality products can also be ensured by Hyundai from its suppliers.

How will Hyundai measure and ensure in developing its suppliers capabilities?

Hyundai measures supplier's capabilities using delivery reliability, cost, quality, and flexibility. A supplier's report was used: managerial (20%), technological development (25%), production management (25%), quality management (25%) and various incentives for having patents, 100ppm, ISO, and exports (5%). Through this, areas to be improved and the degree of emphasis for each are determined.

By setting up a supplier development program, Hyundai assisted its supplier's capabilities. First, Hyundai would outline the objectives of the supplier-relationship development program by which they are the suppliers and determine the areas requiring improvement. Then, they organize development teams that would stay at the supplier's plant until the problems were solved. Hyundai also established three departmental units: technical assistance, cooperation development, and parts and components development.

Since Samyeong is still a developing company and cannot afford to develop new technology, they have to rely to its buying firm's expense and experience, in this case Hyundai.

So, how did Samyeong carry out its technological change? And how did Hyundai assist in carrying out Samyeong's changes?

To start carrying out the changes, Samyeong adopted the campaigns specifically designed by Hundai. These were the C30 Overall Cost Reduction Campaign, Productivity "2x2" Campaign, Quality management "100ppm" Campaign that tries to solve the three problem areas in cost, productivity and quality, respectively.

Basically, all three campaigns have different procedures that are discussed in great detail in the case and Samyeong carefully followed these procedures:

* First, it conducts an internal assessment by looking into its current operations and