Global Operations and Supply Chain Management

Section A

Question 1: B

The second phase results in a greater reduction in waiting time. Initially the average capacity utilization of the room is at 95%. The first phase reduces this capacity utilization by 10%. The second phase reduces it further to 75%. This is a 20% reduction from the initial capacity as compared to only 10% reduction by the first phase. It therefore makes sense to say that phase two results in greater reduction.

Question 2: A

The Seven-Eleven Japan’s supply chain is more adaptable. An adaptive supply chain is one that responds fast to market structures and strategies as they evolve. The modern world business is becoming more digital and this chain has responded to these changes by having an integrated information system network available in many places. It is utilizing localized promotions and developing new products to suit the current market structure.

Question 3: A

While aiming for higher capacity utilization, it’s only logical that the output which is the product be more than the input. If the costs of production outweigh the value of the produce, then by no means shall capacity utilization be realized. Capacity utilization is only achieved when the returns are more.

Question 4: C

The Dabbawala system keeps watch on the whole supply chain as one and not as individual components. In simple terms a supply chain is a system of several moving pieces. When attention is given to the individual units, the system becomes less efficient. When concentration is drawn onto the entire system, flow of products and information, the results are awesome. That’s what Dabbawala owes its success to.

Question 5: D

It’s not precise to compare the two supply chains which deal with different products. Foxconn is a major dealer in electronics while Li & Fung supply chains deals with high volume and time sensitive goods. Two thirds of its products are garments. It would only make sense if the supply chains to be compared are of the same level in product type.

Question 6: A

If the people who need to use the restaurant are many and its capacity is less, it’s then obvious that batching will help create more space and hence more customers will be accommodated. Getting the customers to fully occupy one table instead of one or two customers per table will create more space for other customers and hence no need for more space in the bar.

Question 7: B

The demand is likely to be higher at Komag than Office Depot. One reason for that is to account for the damages that may occur at the different levels of production. Office Depot is the last company which handles the products before they are bought. Demand at this level depends on the buyers. For HP demand is dictated by Office Depot. At the highest level (Komag), all other companies to some extent influence the demand.

Question 8: C

By handling all forms received throughout the week, the team makes their work easy and reduces the workload as well. Dedicating one’s concentration at all the forms at a given short period of time is more efficient since the mind is only tapped by that particular kind of work. It then becomes easy to complete the work in a short span of time.

Question 9: E

Tracking how a commodity sells on frequent bases will help determine its demand. Unlike the other practices, it indicates the actual quantity or number of items that have been bought and the ones that yet. It therefore yields comprehensive and precise to use information/results. Appropriate action it then taken from that point.

Question 10: D

Buffering is a useful tool used in the manufacturing processes in order to compensate for variations in processes of production. Since Zara cannot predict the pattern of demands for its products, operating a buffer capacity would take charge of the unforeseen future of its produced products.

Section B

Question 11

Possible exploitation of the company.

Where only one supplying company is trusted in the delivery of products, chances are that it will exploit its consumers. As there are no competing companies, the end result is that the consumer is treated with very raw deals in terms of the quality, quantity and price of the product. The producing company will find it easy to produce substandard and inferior products. This is because it understands well that its items will have to be purchased as it’s the only supplier.

Such companies tend to inadequately satisfy their consumers.

When such a company is involved in a contract that runs for several months or years, its products consumers may end up getting a low deal. A low in such that, quality is comprised and the company fails to deliver products on time. This over time will result in complains from the consumers. Toyota motor was noted on not emphasizing on automation. Later automation of their products has received a warm welcome in the market (Dawson 2011).

Increasing the products price

As long as the company remains as the sole supplier or contractor and there is no competition from other companies, the company can raise its prices. Raising the prices of the products results in over exploiting the company thereby inconveniencing it. In Korea, Trigem offered their services at high cost were forced to reduce their rates. This was after Samsung reduced its prices (Dedrick & Kraemer 1998).

Supplying inferior or completely different products

The supplying or producing company is aware of the fact that there is minimal competition or competition is totally absent. In such a circumstance, the company may decide willingly to produce inferior products. This is because of their knowledge that after all, their products have a ready market and will not fail to sell.

Variation and discrimination in pricing their products.

The producing companies have been known to supply the same products (goods and services) to different companies or individuals at varying costs. A company that receives such products at high prices than others will strive to be a major competing business/party in a given industry. This is because its operational costs are high and may tend to reduce the profitability.

Question 12

The scope of fright distribution around the globe has been changed by the introduction of larger container shipping. The global supply chain has been influenced positive because container shipping increases the freight distribution velocity. In concise, large container shipping has increased and opened new global markets (Branch 2007). This is because use of larger shipping containers enables importers and exporters to trade larger quantities of products. In addition, the time used to transport goods is reduced as well as the cost of freight distribution. The time and cost reduction improve and increase the velocity of the shipments, consequently increasing the efficiency of the global supply chains (Kotabe, 2006).

The process of shipments takes into consideration the entire procedure from shipping to storing and warehousing. Larger containers influence the entire freight distribution network up to the warehousing stage. This not only increases the velocity of the freight, but the effectiveness of the distribution centers. The time used to load small containers and the time used to load large containers is the same if time management is properly utilized (Branch 2007). The logistics controlling demand based and supply based structures in containerization ultimately benefit the distribution network, hence improve the effectiveness of the global supply chain (Infrastructure, 2005).

Larger containerization improves flexibility, cost of freight distribution and reliability. Furthermore, use of larger containers expands the global supply chains and inflates international markets. The use of larger container use is an effective strategy in improving distribution capacity and global supply effectiveness and efficiency (Infrastructure, 2005). Larger containers cater for freight velocity, time and distribution at the same time.

Question 13

Benihana simulation offers insights on how to increase and maximize profitability in a restaurant. He has various strategies that could result to customer loyalty and profit increment. Benihana observes that through changing the dinning time, batching and contemporary bar service, the restaurant can increase profits.

The bar contemporary service is very instrumental in gaining customer loyalty. Hotels are busy during peak hours and customers may miss the seats at the dining table. When this happens, a customer may opt to visit another hotel and carry forward that sentiment in future. To avoid this, Benihana observes that increasing the size of the bar may help to retain such customers.

Increasing the size of the bar will enable the restaurant to retain customers during peak hours. In this, customers can wait at the bar while other clients finish dining at the tables. In addition, customers tend to drink beverages as they wait to be served. In this way, the restaurant is able to retain the customer, and also increase the profit because the customer buys drinks.

This service helps to keep customers engaged during this time. This is very important because if customers are bored, they leave the restaurant. However, the restaurant must also reduce the dinning time during peak hours to ensure that customers waiting at the bar do not wait for long. Ultimately, this strategy by Benihana increases the overall profit. In addition, this treatment helps the restaurant to retain customers.

Question 14

The financial analysis is very important when a company intends to acquire another through merger or full acquisition. Before acquiring the company, Nestle has to evaluate the viability of this opportunity to ensure that it is a productive business venture. A total factor productivity analysis is, therefore important to ensure that Nestle makes the right decision by acquiring the candy firm.

First, the tale shows that the company’s profit has increased from 2011 to 2012. This profitability is caused by three factor namely, productivity, volume changes and price changes. The productivity of the company has increased from 2011 to 2012. In the year 2011, the company’s total inputs on productivity were 73 million. In the following year, the company’s input was 81.35 million, consequently increasing the profit from 77 million to 108 million.

The productivity is supported by an increase in volume of goods produced. This can be seen from the table because the volume of material is higher, energy higher but the labor is higher in the year 2012. This results to an increased volume input of 90 million in the year 2012. Prices of material are the same for both 2011 and 2012, although the price of energy and labor is higher in 2012. With this factor analysis, the company should push forward with the acquisition plan, this is because;

Although growth of the company from 2011 to 2012 is stagnant, and the company did not grow in output, the increment in profit is notable.
The growth in productivity is evident. The range of productivity growth is what a successful business venture should show.
Although the prize change is minimal, the company’s output increased. This shows that the company has potential.

Question 15

Zara stormed the fashion industry and changed the dynamics of the traditional biannual fashion change. In addition, Zara’s target market makes it hard for traditional competitors to emulate the strategy. Tradition retailers target age specific fashions and produce expensive clothing. This is because they take 3 to 6 months to parade the clothing. In contrast, Zara targets price-conscious, young and fashion sensitive trends. This trend gives Zara a wide range of fashion designs and market. Zara has segmented its fashion designs into 15% for children, 60% for women and 25% for the men. The fashion line now operates in more than 70 nations (BorraseÌ, 2009).

Zara’s strategies

Affordable and Fashionable

Zara provides customers with affordable and fashionable clothing. Traditional retailers offer fashionable but expensive clothing. In this regard, Zara remains competitive because young customers who cannot afford expensive clothing but love fashion stick to the brand. Zara gets hot styles within a month or so. Traditional retailers take 3 to 4 months to get fashionable trending clothes on the shelves (BorraseÌ, 2009).

Scarcity

Zara ensures that the fashion styles provided are regulated to avoid production of large quantities. This eliminates the risk of stale stock and creates scarcity for Zara’s fashion. A marketing executive in Zara noted this trend that unmasked the winning strategy utilized by Zara to this day. According to a case study by Ferdows, Machuca & Lewis (2002), Isabelle Borges realized that some of their products that were attractive to customers were bought instantly. These products were just brought to the store to test waters. Since then, Zara utilizes the scarcity strategy to attract customers. Customers all over the globe love scarce fashion because they look unique; In addition, customers buy clothes immediately because they fear the brand may sell out before they get the chance to buy (Kelley, 2013). In addition, scarce production ensures that there are little or no disposed clothes after the end of the season. Moreover, Zara’s discounts rates are half the average market rate because of its fashions’ scarcity.

Variety of styles

Zara is the hub of fashion diversity. The fashion trend produces over 12, 000 fashions per annum. The traditional retailers have a hard time catching up since their average production is about 3000 per annum. A customer who visits Zara is assured of fresh fashion trends each time. Mr Diaz, an executive from Zara attested that Zara as a fashion business, in contrast with other competitor who are clothing business (Ferdows, Machuca & Lewis, 2002). Furthermore, the wide range of styles makes it easier for Zara to produce a winning fashion style. Customers visit Zara often than they visit tradition retailers.

Delivery

Zara delivers new fashion trends twice every week. This is a trend that is very difficult for traditional retailers to keep up with. The flexibility of Zara’s supply chain makes it easier to restock every week with new styles. Clients buy cloths instantly because they are aware that the fashion last only a few days in Zara (Ferdows, Machuca & Lewis, 2002).

Question 16

Among the disruptive and pervasive effects of the globalisation trend, regarding the effective production of products representing luxury brands, it has also appeared an international phenomenon of in-shoring concerning the manufacturing process: companies producing luxury brands are splitting the manufacturing process over different locations situated in various countries, “as a cost-reducing strategy with respect to an integrated technology where all phases of the production cycle take place within the same location” (Hines & Bruce, 2001). Therefore, in-shoring provides the opportunity to take advantages of available human resources in countries and consequently obtaining a cost reduction by using an international network of production (Kapferer & Tabatoni, 2011).

Many companies producing luxury brands are extremely interested in this phenomenon, especially those which are in traditional manufacturing domains, such as clothing, textiles, apparel, leather, furniture or footwear. The strategy of in-sourcing the production line appeared due to increasing competition companies are facing in the marketplace because of “low labour cost producers in emerging economies” (Hines & Bruce, 2001).

The performance of this British fashion brand came especially from the adoption of business strategies which, occasionally boosted the company on short term but have been unhealthy for the company on long term. Apparently, the major changes in the production organisation came from the “increasing globalisation trend” (Chevalier & Gutsatz, 2012).

On the hand, available evidences show that, at a national level, the global competition fosters a massive phenomenon of fragmentation concerning the production processes “through in-sourcing of low value-added activities abroad” (Hines & Bruce, 2001). On the other hand, evidences also prove the fact that the constant increasing number of fashion brands and the major focus on distribution is decreasing manufacturers’ power on some crucial aspects as branding, design, marketing and sales.

Overall, as these situations are decreasing the possibility of line production in the provenience country, and tend to in-source the entire production to international networks. Consequently, as traditional sources and manufactures are changed, brand image and quality may be altered (Kapferer & Tabatoni, 2011).

Question 17

An integrated supply chain refers to a number of businesses and contractors that usually provide raw materials, aid in their transportation, manufacture them distribute and offer warehousing and retailing services. Every business aims to make a profit through customer satisfaction (Petersen et al, 2005). This can be achieved via efficient supply chains whose sole responsibility would be to offer a high level customer service. Integrated supply has a number of advantages. First, there is the advantage of the flexibility.

Tight supply chain integration gives management flexibility to respond to other external events such as, actions of competitors and changes in the demand of customers. Companies that participate in supply chain integration have the advantage of gathering intelligence and, therefore, becoming aware of what their rivals are planning. Secondly, integrated supply chains make inventory management better (Petersen et al, 2005).

This translates to fewer overstocked and under stocked conditions. The danger of overstocking is incurring higher storage costs while that of under stocking is losing customers to competitors. Again profit margins are realized under supply chain integration. By prompt response to changing customer and competitive environments, small businesses have the capability of remaining competitive and growing. Lastly, supply chain integration can sometimes serve as early warning system hence help in adverting oncoming problems or difficulties.
Recommendations

To remain relevant, the two supply chains must learn to advance and devise business functions. Management practices that observe quality have been used since time immemorial to address a number of supply integration issues. Management of supply chain can be thought of as a system-based approach in order to improve performance that assimilates leverages opportunities and supply chain partners developed through upstream and downstream linkages (Pope, 1999).

Management of supply chain is a way used to bring vendors and other people in the chain together so that goods are manufactured and distributed to the specified location, at the required quantities and at the specified time (Schilling& Hill, 1998). Important processes in supply chain include supplier-customer relationship, product design, delivery, support; production and. Quality is critical to the relationship between customers and suppliers. Quality has been so important that some companies nowadays consider engaging in global sourcing of suppliers (Pope, 1999). As already established, there exists direct and good relationship between management of supply chain and quality, and since quality improvement came into being, developments in a given section make the results in the other better. Regular improvements on quality have a positive impact upon inventory levels, responsiveness and many other areas.

References

BorraseÌ, R. (2009). Clearance pricing optimization at Zara. New York: Pearson.

Branch, A. E. (2007). Elements of shipping (8th ed.). London: Routledge.

Chevalier, M., & Gutsatz, M. (2012). Luxury retail management how the world’s top brands provide quality product and service support. Singapore: Wiley.

Dawson, C. (2011). Lexus: the relentless pursuit : the secret history of Toyota Motor’s quest to conquer the global luxuty car market (Rev. ed.). Hoboken, N.J.: Wiley ;.

Dedrick, J., & Kraemer, K. L. (1998). Asia’s computer challenge: threat or opportunity for the United States & the world?. New York: Oxford University Press

Ferdows, K., Machuca, J., & Lewis, M. (2002). Zara. London: Indiana University Center for international Business Education and Research.

Hines, T., & Bruce, M. (2001). Fashion marketing: contemporary issues. Oxford: Butterworth-Heinemann.

Infrastructure, S. (2005). Assessing container security: a framework for measuring performance of the global supply chain.. Santa Monica: Rand.

Kapferer, J., & Tabatoni, O. (2011). Is luxury really a Financial dream?. Journal of Strategic Management Education, 7(4), 8-53.

Kelley, R. A. (2013). Inventory redistribution optimization in the fast fashion industry. New York: Pearson.

Kotabe, M. (2006). Global supply chain management. Cheltenham: Elgar Reference Collection.

Petersen, K. J., Handfield, R. B., &Ragatz, G. L. 2005. Supplier integration into new product development: coordinating product, process and supply chain design. Journal of operations management, 23(3), 371-388.

Pope, H. G., Olivardia, R., Gruber, A., &Borowiecki, J. 1999. Evolving ideals of male body image as seen through action toys. International Journal of Eating Disorders, 26(1), 65-72.

Schilling, M. A., & Hill, C. W. 1998.Managing the new product development process: strategic imperatives. The Academy of Management Executive (1993-2005), 67-81.