Julberg Company

JULBERG, INC.

Julberg, Inc., was a manufacturer of computer output microfilm (COM) devices. These devices

transfer data from a computer directly onto microfiche storage and retrieval systems. Banks and

insurance companies were the principal user of COM. Julberg was the leading firm in this market,

and sales were $150 million per year. Its product line included ten different models of processors,

ranging in price from $75,000 to $500,000.

The supply management department at Julberg was responsible for supplying

approximately 20,000 different parts needed to manufacture the firm’s processors. Mechanical

parts, tubes, resistors, transistors, and keyboards were typical of the items purchased. The

department consisted of fifteen buyers, five supply management services clerks, and the supply

manager. The buyers’ experience ranged from two to thirty years with varying levels of

education. The younger members of the department had degrees in business or engineering while

the senior buyers had less education. Several of the senior buyers had worked their way up from

manufacturing, receiving, and inventory control. The supply manager possessed an M.B.A. and

three years of purchasing experience. Before this job, he had held a supervisory position in

inventory control. His current job required him to oversee the day-to-day functioning of the

department and to perform some supply management duties.

Under the present manual system, considerable time and effort were required to perform

supplier selection and price analysis activities. Ideally information would be gathered on potential

suppliers’ past performance, including their prices, their ability to meet delivery dates, and their

history on quality (based largely on the number of defective parts received per shipment). In order

to compile this historical data, the buyer would have to go through several file cabinets and

manually combine separate reports from supply management, receiving, inspection, and the

stockroom. Often, if a decision on a source had to be made in a hurry (the normal situation at

Julberg), the buyer would