Car Spares Case

Car Spares Case

CAR SPARES CASE 7

CarSpares Case

CarSpares Case

Oneof my major goals at CarSpareswill be to optimize the supply chain into a well managed value chain.The supply and the transportation chain network of the company is notoptimized to take the minimum possible cost of the maximum utility.When locating optimal locations for business operations, distributioncenters and the manufacturing centers, the company should considerthe transport cost, the storage costs and the distance between themarkets.Inaddition, the supply chain management practices of the company needto be changed by reducing wastefulness to make the new value chaindesign effective. This will be a major goal aimed at reducing theoperating costs and increase efficiency at the company’sdistribution and manufacturing facilities.In line with these goals, Iwill seek to create an understanding of the supply chain managementfunctions in the company. This will facilitate assistance from theother departments and managers at the firm. By doing this, I willestablish an organizational understanding of the role of the managerin charge of the supply chain.To achieve the goals of theorganization, I will seek to increase the productivity of the companythrough effective management of the supply chain. To increase theproductivity of the manufacturing of Acrylic Lacquer A and B paints,the supply chain must be effective. In addition, achieving the goalof the company depends on the time of delivery of the spare parts,their storage and the effectiveness of their delivery to the market.The center of gravity for theCar Spares has not been established because the distribution centersand the manufacturing facility are located just at the firm’sconvenience. My goal will be to reduce costs and increase supplychain efficiency by setting supply chain facilities at the centers ofgravity that increases the value chain of the firm.Environmentalscanning for the Car Spares was not well done before theestablishment of the current distribution and manufacturing centers.My goal will therefore be to carry out an environmental scanning toestablish the material factors that influence the location andactivities of the supply chain.Thebull whip effect is a trend of having large changes or swings in theamount of inventory held by the company due to the changes incustomer demand. The phenomenon affects the distribution channels asthe customer orders create the whip in the inventory required. Thismakes the entire supply chain a swing as its distribution is drivenby a forecast.In regard to customer needs,my goal will be aimed at creating a value chain that seeks to reducecosts and increase efficiency. Minimized costs will address the needsof the customer for low prices while efficiency will ensure timelydelivery of the spare parts.Relationship intensity in thecompany has not had any effect on the effectiveness of the supplychain. My goal will be to improve the procurement practice bypromoting healthy dialogues and negotiations with the firm’ssuppliers, at every stage of the procure-to-pay processes. This willincrease the level of relationship intensity and promote theeffectiveness of the supply chain.However, the internal valuechain plays an important role in the realization of an effectivesupply chain. The departments should coordinate well, with theproduction and logistics departments being core in facilitating thesupply chain. The marketing department gets more customers, promotessales while the finance department being important in making andreceiving payments.Thefour main decision areas of a strategy for a better supply chain forCar Spares is production, inventory management, transportation ordistribution, and the location of supply chain facilities. For CarSpares, the distribution is not effective, leading to low qualitygoods, despite the new technological application of the productionfunction. Location of the company’s supply chain centers is notoptimized for the best performance of the firm in the market. My goalwill therefore be to create efficiency in the four decision areas inorder to create an optimized value chain in the management of CarSpares’ supply chain.

CustomerFulfillment Questions

Thecustomer fulfillment is affected by the effectiveness of the supplychain. This is because the supply chain determines the quality ofgoods and the timely delivery of goods to the fulfillment of thecustomer needs. The channel power shifts down the supply chainbecause it limits the delivery of raw material for the production,and delays the transportation of finished goods to the market.

Inregard to people, the information about the reliability of the supplychain to deliver the goods and services is what empowers people. Morespecifically, customers are empowered when they are ascertained thatthe company will fulfill their needs by delivering the goods in time,and at the right quality and price. Therefore, to create adifferentiation in the customer’s mind, a company can provideaccurate information about the product, the time of delivery and theplans to ensure consistency in the supply of the products to thecustomer at the best price.

Thedimensions of customer value are seen as tradeoffs when they increasethe company’s competitive nature and increase sales. The valuegained by the company is considered as the tradeoff with the highquality customer service.

Customer Value

CustomerValue pre Sacrifice

0 CompanySacrifice

Fromthe above graph, the higher the sacrifice by the company, the morethe customer value and benefits.

Thecompany has customer loyalty when the customers forsake the productof the competing brands to buy the firm’s products. Customerloyalty is only realized if the customer can make some sacrifices ofconvenience and price in order to buy the product of the company atall times.

Customerservice strategies are the measures and plans by a company toreceive, handle and treat customers better. On the other hand,customer satisfaction strategies are the measures and tacticsemployed by a company to fulfill the needs of the customer. They seekto deliver the expectations of the company. However, the customersuccess strategy is a plan to implement measures that add value tothe customer in all dimensions. These are meant to ensure that thecustomer is taken care of in all ways.

Customerfulfillment strategy entails timely delivery of goods, best pricesand provision of safe products to the customer. To achieve customerfulfillment, especially at Car Spares, I will study customers andunderstand their differences and unique needs. Then I will segmentthem to address their unique needs. I will do customer segmentationin order to differentiate the needs of different customers andfacilitate their satisfaction.

TheBullwhip effect

Alsocalled the Forrester effect, the bullwhip effect is caused by thechanges in the demand for products by the customers. The changes indemand cause a trend marked by periodical orders from the customers.The causes are panic ordering due to demand, forecast errors, demanddependent processing and foreword buying among other factors. Themain consequences of the bullwhip effect are ether inefficientproduction or excessive production and stock. This is because of thedependence of the supply chain on the demands of the customers. Theperiodical nature of the order, therefore moves across the supplychain, causing a ship effect, leading to forecast-driven channels inthe business.

Tomitigate the bullwhip effect, the company should create consistentproduction and ordering system where the stock is planned to meet theexact demand in the market. The company should establishdemand-driven supply where the company produces an exact quantitythat is demanded by the market. This can be achieved through the useof point of sale technologies to estimate daily demand for products.Other mitigations include Just-In-Time replenishment method (JIT),Vendor Managed Inventory, strategic partnerships and informationsharing with customers.

Inthe experience of the bullwhip effect, the greater uncertaintyhappens at the point of sale. This is what derives a panic drivendemand for more requisition from the supply and production functionsof the company. Lead time is the period between the initiation of aprocess and the execution of the same. An example is the latency timebetween the placement of an order and the delivery of the order. Leadtimes affect the bullwhip effect by determining the timely deliveryof delay in meeting the demand of the market. Longer lead timesresult to a higher bullwhip effect while shorter lead times reducethe bullwhip effect.

Onthe chain distribution of cereals, the lead time affects the stocklevels that are held by the company at any one time. The longer thelead times the longer the amount of stock of the cereals whileshorter lead times reduce the stock levels. The 104 days of stockhappens because of the factors affecting the distribution chain. Thisis because the ordering is affected by the seasonal demand and thelead time that determines the period of holding stock.