LOG 302 MOD 3 CASE LOG 302 MOD 3 Casestudy

TRIDENT UNIVERSITY

LOG 302 MOD 3 Casestudy

DR LI

Q1. Discuss the major factors responsible for making yesterday’s supply chain networks less relevant today. Be sure to include in your discussion any other issues the authors may have missed that you would consider important.

There are several reasons why the networks of yesterday have become less relevant. One of the first reasons is the need to do a cost and service level study before developing a supply chain network. The cost and service levels that were relevant yesterday have become redundant in today’s market because of changes in the fuel/transportation costs and the level of competition. In this context it is important to consider the rapidly changing costs of transportation. Those supply chains that were valuable yesterday could become irrelevant today simply because the transportation costs have increased rapidly.

Further, the level of service demanded by the customers may increase or change in the level of competition may force the firm to change its supply chain. For instance, changes in service levels may compel the firm to locate distribution centers close to customers and high rates of interest may compel firms to hold lower levels of inventory. Further the development of outsourcing in Asian and other countries that have lower labor costs have made it necessary to have distribution centers located abroad. These centers must so be located that the overall costs of the supply chain decrease. Further, governments and regulatory bodies are studying the environmental impact of transportation and burning of fossil fuels.

Yesterday’s supply chains have become less relevant today because the level of processing that needs to be done at a distribution centers have changed. The processing ranges from simply repacking the goods of the right size to making packages of pre-determined assortments. The supply chain of yesterday has become irrelevant because today the supply chain forms the common thread between purchasing, storing, distribution, manufacturing, dispatching, and sales/marketing. The supply chain needs to balance supply and demand so that unnecessary inventory holding costs are eliminated. Yesterday’s supply chain solutions are irrelevant today because the supply chain now forms a fundamental basis of competition. There is a need for looking at common issues across business units.

Q2. Assess the feasibility of the design solutions provided in the Napolitano article for addressing the challenges faced in today’s “down” economy.

The feasibility of the design solutions provided in the Napolitano article are limited. The solution suggests that the frequency of supply chain network strategy assessment should be increased. However, without a well-developed supply chain network plan and well-defined objectives, the assessment will be meaningless. Further, the article suggests that network changes and transport costs improvement are necessary for improving supply chain network.

However, the article does not give a well-defined plan for improving the variables. In reality it is necessary to set objectives and set priorities, there is a need to identify common issues across business units; the supply chain network needs to be analyzed at different levels using flow diagrams, diagnostic criteria, and best practices. The article prescribes that network design technologies can help company’s incorporate local and regional trends into their supply chain strategy. However, this depends on the overall marketing strategy of the firm. If the firm wishes to have a global strategy then it gives limited consideration to the local trends. Further, far-reaching changes in the supply chain network have to be pilot tested, evaluated, and then rolled out.

In the down economy it is important to assess which channel configuration will meet the customer expectations and financial goals. The design solution should consider the levels of production capacity and inventory required to satisfy demand, the optimal number of supply chain participants, and their location, the role of each supply chain members, and the decision whether to outsource or make in-house.

Q3. Determine if Burlington Coat Factory, IKEA, and Electrolux effectively utilized the design suggestions discussed in the Ironside and Napolitano articles in the redesign of their logistics networks 85

Burlington Coat Factory distribution system is exemplary because it uses different types of distribution centers for different distribution needs. Each distribution center has a distinct capability. The Ironside and Napolitano articles have each stressed the need for redesigning of the logistics network. In case of Burlington Coat Factory as its business grew aggressively, it there was a need for distribution centers with specialized capabilities. So Burlington set up a network with four distribution centers.

IKEA is an international home products Dutch firm that designs and sells ready-to-assemble furniture. The warehouses of IKEA are located below the store. Some stores have a separate warehouse but since this inconveniences the customers, the warehouses are built below the stores. To a great extent the designs suggested in the Ironside and Napolitano articles have been incorporated. Consider this; the warehouses are located just below the store or in the same structure so that the warehouse is close to the customer. The waiting time for the customer is reduced, improving service level.

Electrolux has a third party logistics provider that supports the Electrolux logistics network and provides the service of transportation, forwarding, warehousing, processing and IT development. From the point of view of the Ironside and Napolitano articles having a third party logistics service provider helps the company lower its transport and warehousing costs. Further, its agreement with the third party logistics provider ensures that a high level of service to the customer is maintained.