Question

John Tuckland, the CEO of the Storedalsgatan (STI), believes that the company can significantly increase its operating profit by implementing supply chain management. STI manufactures a variety of consumer electronic products, from hair dryers to humidifiers to massagers, for the world market.

John believes that STI has already integrated its internal processes and is ready to proceed with external integration. However, he is uncertain as to which direction to take. Should the company work on integrating the suppliers or the distributors first? Currently, STI uses approximately 1250 different components and/or raw materials in manufacturing its product line. Those components and raw materials are purchased from approximately 275 different suppliers around the world. In terms of distribution, STI currently sends its finished products to a central warehouse that supplies 10 regional distribution centers (RDC); 6 are domestic and 4 are located outside of the United States. Each RDC supplies an average of 12 local distributors that each supply an average of 25 retailers.

John is looking for some advice.

1. Briefly describe STI's supply chain.

2. What are the advantages that STI can gain by implementing supply chain management?

3. What would you recommend STI attempt next? Should it work on integrating the suppliers or the distributors first? Or should it work on both simultaneously?

4. What are your recommendations with regard to the external distributors?

Answer 1

Answer 1= The supply chain of STI involves 270 suppliers which provide the required raw material to the company Once the products are manufactured, there are transported to the centralized warehouse that supply the products to 10 different regional distribution centers (RDC) that includes both the foreign RDC and the ones which are situated in the USA. Every RDC facilitates the demand of  12 local distributors that each supply an average of 25 retailers.

Answer 2- The main advantage of implementing the supply chain management in STI is that it has better management of is inventory and the products can be provided and distributed to the different location depending upon the demand of the different location, SCM also facilitates the integration of both internal and external processes that provided better flexibility and demand management

Answer 3= STI must integrate both the supplier and distributors simultaneously so that the demand and supply can be matched. If the integration is not done at the same time, this can lead to the mismanaged operations and demand

Answer 4= external distributions must be made the part of ERP or SCM system and they must be given the access of the internal inventory so that they can also understand the availability of the products. The company needs to have better coordination and regular evaluation of these distributors so that greater results and improved demand management can be accomplished.