Student’s Name
Institutional Affiliation
Car Spares Case
One of my major goals at Car Spares will be to optimize the supply chain into a well managed value chain. The supply and the transportation chain network of the company is not optimized to take the minimum possible cost of the maximum utility. When locating optimal locations for business operations, distribution centers and the manufacturing centers, the company should consider the transport cost, the storage costs and the distance between the markets.
In addition, the supply chain management practices of the company need to be changed by reducing wastefulness to make the new value chain design effective. This will be a major goal aimed at reducing the operating costs and increase efficiency at the company’s distribution and manufacturing facilities.
In line with these goals, I will seek to create an understanding of the supply chain management functions in the company. This will facilitate assistance from the other departments and managers at the firm. By doing this, I will establish an organizational understanding of the role of the manager in charge of the supply chain.
To achieve the goals of the organization, I will seek to increase the productivity of the company through effective management of the supply chain. To increase the productivity of the manufacturing of Acrylic Lacquer A and B paints, the supply chain must be effective. In addition, achieving the goal of 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 the Car Spares has not been established because the distribution centers and the manufacturing facility are located just at the firm’s convenience. My goal will be to reduce costs and increase supply chain efficiency by setting supply chain facilities at the centers of gravity that increases the value chain of the firm.
Environmental scanning for the Car Spares was not well done before the establishment of the current distribution and manufacturing centers. My goal will therefore be to carry out an environmental scanning to establish the material factors that influence the location and activities of the supply chain.
The bull whip effect is a trend of having large changes or swings in the amount of inventory held by the company due to the changes in customer demand. The phenomenon affects the distribution channels as the customer orders create the whip in the inventory required. This makes the entire supply chain a swing as its distribution is driven by a forecast.
In regard to customer needs, my goal will be aimed at creating a value chain that seeks to reduce costs and increase efficiency. Minimized costs will address the needs of the customer for low prices while efficiency will ensure timely delivery of the spare parts.
Relationship intensity in the company has not had any effect on the effectiveness of the supply chain. My goal will be to improve the procurement practice by promoting healthy dialogues and negotiations with the firm’s suppliers, at every stage of the procure-to-pay processes. This will increase the level of relationship intensity and promote the effectiveness of the supply chain.
However, the internal value chain plays an important role in the realization of an effective supply chain. The departments should coordinate well, with the production and logistics departments being core in facilitating the supply chain. The marketing department gets more customers, promotes sales while the finance department being important in making and receiving payments.
The four main decision areas of a strategy for a better supply chain for Car Spares is production, inventory management, transportation or distribution, and the location of supply chain facilities. For Car Spares, the distribution is not effective, leading to low quality goods, despite the new technological application of the production function. Location of the company’s supply chain centers is not optimized for the best performance of the firm in the market. My goal will therefore be to create efficiency in the four decision areas in order to create an optimized value chain in the management of Car Spares’ supply chain.
Customer Fulfillment Questions
The customer fulfillment is affected by the effectiveness of the supply chain. This is because the supply chain determines the quality of goods and the timely delivery of goods to the fulfillment of the customer needs. The channel power shifts down the supply chain because it limits the delivery of raw material for the production, and delays the transportation of finished goods to the market.
In regard to people, the information about the reliability of the supply chain to deliver the goods and services is what empowers people. More specifically, customers are empowered when they are ascertained that the company will fulfill their needs by delivering the goods in time, and at the right quality and price. Therefore, to create a differentiation in the customer’s mind, a company can provide accurate information about the product, the time of delivery and the plans to ensure consistency in the supply of the products to the customer at the best price.
The dimensions of customer value are seen as tradeoffs when they increase the company’s competitive nature and increase sales. The value gained by the company is considered as the tradeoff with the high quality customer service.
Customer Value
Customer Value pre Sacrifice
0 Company Sacrifice
From the above graph, the higher the sacrifice by the company, the more the customer value and benefits.
The company has customer loyalty when the customers forsake the product of the competing brands to buy the firm’s products. Customer loyalty is only realized if the customer can make some sacrifices of convenience and price in order to buy the product of the company at all times.
Customer service strategies are the measures and plans by a company to receive, handle and treat customers better. On the other hand, customer satisfaction strategies are the measures and tactics employed by a company to fulfill the needs of the customer. They seek to deliver the expectations of the company. However, the customer success strategy is a plan to implement measures that add value to the customer in all dimensions. These are meant to ensure that the customer is taken care of in all ways.
Customer fulfillment strategy entails timely delivery of goods, best prices and provision of safe products to the customer. To achieve customer fulfillment, especially at Car Spares, I will study customers and understand their differences and unique needs. Then I will segment them to address their unique needs. I will do customer segmentation in order to differentiate the needs of different customers and facilitate their satisfaction.
The Bullwhip effect
Also called the Forrester effect, the bullwhip effect is caused by the changes in the demand for products by the customers. The changes in demand cause a trend marked by periodical orders from the customers. The causes are panic ordering due to demand, forecast errors, demand dependent processing and foreword buying among other factors. The main consequences of the bullwhip effect are ether inefficient production or excessive production and stock. This is because of the dependence of the supply chain on the demands of the customers. The periodical nature of the order, therefore moves across the supply chain, causing a ship effect, leading to forecast-driven channels in the business.
To mitigate the bullwhip effect, the company should create consistent production and ordering system where the stock is planned to meet the exact demand in the market. The company should establish demand-driven supply where the company produces an exact quantity that is demanded by the market. This can be achieved through the use of 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 information sharing with customers.
In the experience of the bullwhip effect, the greater uncertainty happens at the point of sale. This is what derives a panic driven demand for more requisition from the supply and production functions of the company. Lead time is the period between the initiation of a process and the execution of the same. An example is the latency time between the placement of an order and the delivery of the order. Lead times affect the bullwhip effect by determining the timely delivery of delay in meeting the demand of the market. Longer lead times result to a higher bullwhip effect while shorter lead times reduce the bullwhip effect.
On the chain distribution of cereals, the lead time affects the stock levels that are held by the company at any one time. The longer the lead times the longer the amount of stock of the cereals while shorter lead times reduce the stock levels. The 104 days of stock happens because of the factors affecting the distribution chain. This is because the ordering is affected by the seasonal demand and the lead time that determines the period of holding stock.