Task 3: Supply Chain Report

Table of Contents

A.Supply Chain Strategy for Power Hand Tools3

Supplier Selection3

Goals and Objectives3

Number of Suppliers4

Integration and Supplier Relationships4

Sharing of Information4

Expertise Collaboration5

Manufacturing5

B.Metrics of Supply Chain Performance Measurement5

Lead Time5

Order Placement Time5

Late Delivery6

Rejection6

Short Deliveries6

Investment in Inventory7

Inventory Turnover7

The SCOR Model7

Plan8

Source8

Make8

Deliver8

Return8

C.Threats to Efficient and Integrated Supply Chain9

Local Optimization9

Incentives9

Bullwhip Effect10

D.Strategies for Effective Integrated Supply Chain Management11

Information Sharing11

Reduction of Lot Sizes11

Centralized Replenishment11

VMI11

CPFR12

Postponement12

E.Solutions for Avoiding Risks12

Process12

Control13

Environmental13

F.Functional Organizational Structure of Power Hand Tools (PHT)14

Finance & Accounts14

Administration15

Human Resource Management (HRM)15

Marketing15

Production15

Quality Assurance16

G.Strategic Operations Management Decisions16

Design of goods and services16

Design of process and capacity16

Quality17

Location17

Layout design17

Human resources and job design17

Supply-chain management17

Inventory18

Scheduling18

Maintenance18

Customer Focused Mass Customization18

H.Improving Cost Effectiveness19

Manufacturing Facility19

Supply Chain19

Task 3: Supply Chain Report

Supply Chain Strategy for Power Hand Tools

Today's environment is continuously changing and companies are building their competitive advantages based on their superior supply chains. While the Japanese companies have succeeded in the developing supply chains which have proved to be ideal for manufacturing companies, companies like Nissan are working to come out of the Keiretsu type of companies to capitalize on the opportunities available in global supplier market. For our power hand tools (PHT) we will recommend developing a company based on Keiretsu network, as the manufacturing sector will be able to benefit from the combined economies of scale rather than each firm having high profits, which will ultimately increase the price of the product. Our strategy will be to establish the assembling and final packing plant supported by suppliers. Our strategy regarding major supply chain decisions will be as follows.

Supplier Selection

The company will select such suppliers who have good expertise in their product areas and who has good innovation, research and development capabilities. The financial strength as well as the company's infrastructure, proximity to the factory and technological capability will also be evaluated. It is also imperative that suppliers have similar culture or are willing to adopt the culture of our company. Cultural linkage will serve as the catalyst to smooth communication.

Goals and Objectives

The selected suppliers will be involved in the development of the common goals and objectives. As a manufacturing company, our goal will be to provide high value products at competitive prices to attract market share. While the suppliers also have similar goals of profitability, the profitability of both our company and supplier will be ensured.

Number of Suppliers

The company will develop two, maximum three suppliers for its critical raw material. These critical suppliers will be monitored on continuous bases and their performance will be shared with their higher management. The suppliers which provide products which have little differentiation, suppliers with good product and low price will be preferred.

Integration and Supplier Relationships

The company will have obtain stakes in the critical suppliers so that the research and development taking place at the supplier for our products are kept confidential and they can become a part of the company. The suppliers will be vertically integrated through the use of technology and financial stake holding in them. The company will provide loans or investment in the enhancement of these suppliers.

Strong supplier relationships with critical and bottleneck suppliers ...