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Assignment 1

Supply Chain Management

Topic: Understanding the Supply ChainSubmitted by: Submitted to:

Md. Faisal Hossain Md. Md. Akram Hossain

EMBA Spring Semester 2013 Assistant Professor

ID: 61120-13-017 MIS, University of Dhaka

Date: 23-01-2013Department of Management Information Systems

Gateway

Why did Gateway have multiple production facilities in the US? What advantages

or disadvantages does this strategy offer relative to Dell, which has one facility?

US was main market of gateway

No inventory stores direct supply no contract with any shipping company

Advantages

Low price raw material

Cheaper logistics

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Shipping

Tax Incentives

Disadvantages

cost increases

Difficult to manage quality

Different polices for employees

What factors did Gateway consider when deciding which plants to close?

The markets which were saturated

showing poor results,

specially Malaysia plant were have high loses

Why does Gateway not carry any finished goods inventory at its retail stores?

Gateway was really clever in deciding whether to keep such items in inventory ornot.

As gateway knew that people dont wait for FMCG product for the alternative butwhen

its about computers, customers could wait. Doing so, they had no inventory on risk.

Should a firm with an investment in retail stores carry any finished goods

inventory?

Yes, it can

Is the Dell model of selling directly without any retail stores always less

expensive than a supply chain with retail stores?

Yes, the DELL model of selling directly without retail stores is always less expensive

than a supply chain with retail stores because of a number of cost cutting factorswhich

make the product available to consumers at a cheaper cost, few of which are:

Manpower (it is always the largest cost in running a business)

Retail outlets (rents, energy, law and order situation)

Logistic support ( transport, display items)

What are the supply chain implications of Gateways decision to offer fewer

configurations?

Supply chain is not of the view of fewer configurations, extra ordinary configurations

help the product reach masses and grow bigger.

Few implications are as follows:

Holding a fixed inventory

Suppliers inflexibility

Ineffective assembly line

7-Eleven

4. Where are distribution centers located and how many stores does each center

serve? How are stores assigned to distribution centers?

5. Why does 7-Eleven combine fresh food shipments by temperature?

Fly UP



1. What factors influence decisions of opening and closing stores? Location ofstores?

2. Why has 7-Eleven chosen off-site preparation of fresh food?

3. Why does 7-Eleven discourage direct store delivery from vendors?

5. Why does 7-Eleven combine fresh food shipments by temperature?

6. What point of sale data does 7-Eleven gather and what information is made

available to store managers? How should information systems be structured?

Ans.

1. The Demand of the stores, New stores opened in the same area where seven-

eleven stores already exist based on demand.

2. To save space for the introduction of more demanding products and services and

because the stores were smaller.

3. Because stores managers can order what they need from same place, adedicated

DC, using a graphic order terminal.

4. The DC's are located near to the stores for reliable delivery, each DC supports

around 50 through 60 stores.

5. The way seven-eleven combined the fresh food in four categories of temperature

controlled trucks was because that way the trucks can make delivery to multiple

retail stores, get a rapid delivery and a good processed food.

6. When placing an order the store manager had access to detailed analysis of POS

data related to a particular item. This included sales analysis of product categories

and SKUs over time, analysis of waste, 10-week sales tends by SKU, 10-Day sales

trend by SKU....Toyota

Where should plants be located, what degree of flexibility should each have, andwhat

capacity should each have?

Should plants be able to produce for all markets?

How should markets be allocated to plants?

What kind of flexibility should be built into the distribution system?

How should this flexible investment be valued?

What actions may be taken during product design to facilitate this flexibility?

Ans.

1.

Toyotas global strategy is to open factories in every market it serves. Additionally,

Toyota has adopted a strategy of global complementation which allows itsspecialized

local factories to export to non-local markets in times of local economic downturn.This

allows Toyota the flexibility of capturing the demand of non-local markets toremain

profitable.

It would be wise for Toyota to choose the location of its parts plants in a way that

complemented its assembly factories and maximized profitability. For parts plantsto

operate only locally may have prohibitively high costs, while parts plants thatoperate

only globally may reduce relevance in local markets. Logically, Toyota should applyits

global complementation strategy to its part plants, and locate the plants in areasthat

minimize costs (currency exchange, freight, inventory holding, etc). This will allowthem

to achieve local/regional agility and remain flexible enough to supply non-local

The capacity of the part plants shouldn't exceed the forecasted demand of

local/regionally located factories/assembly plants that each part plant will supply.The

ability to supply factories adequately is critical, and each plant should be designedwith

the capacity to supply its regional factories.

Apply its global complementation strategy to its part plants

Each plant should be designed with the capacity to supply its regional

factories

2.

Depending upon the location and production capacity of each plant the decisioncan be

made as to produce for all markets or only specific contingency market.Furthermore,

by applying the strategy of global complementation to Toyotas part plants, it willhave

developed parts plants with the flexibility to supply other markets when their local

market demand is weakened. For this reason parts plants must be able to supply at



factories/assembly plants however necessary.least one more market/region than its normally responsible for supplying.Depending

on the requirements of global parts, it may be appropriate for parts plants to beable to

supply to all markets. But in the case that markets are so differentiated that theability

for a parts plant to provide global supply is cost prohibitive, then a specificcontingency

market should be designated for each regional parts plant.

A parts plant in a certain region should only serve markets in that specific region;

otherwise costs will inevitably go up. Since Toyota makes different cars in different

regions, it does not make sense for EVERY parts plant to carry parts for EVERYmarket

right.

Flexibility to supply other markets when their local market demand is

weakened

Plants must be able to supply at least one more market/region

3.

Japanese plants are more flexible than U.S. plants, since most assembly plants are

located in Toyota City, which means that employees can be moved from one plantto

another if demand shifts from one model to another. In the U.S. such arrangement isnot

feasible, and building a flexible line that can assemble different car models is more

expensive.

The allocation of markets to parts plants should be as efficient as possible. The

standard allocation should be optimized during the planning phase. However, as

markets mature, currency rates fluctuate, and demand changes, it is possible thatan

adjusted allocation will provide more efficiency and higher returns for Toyota. Forthis

reason allocation should be adjusted when necessary, reviewed either annually orbi-

annually, and optimized to increase efficiency and take advantage of the part plants

flexibility.

Standard allocation should be optimized during the planning phase

Adjusted when necessary, reviewed either annually or bi-annually

4.

The distribution will closely follow the flexibilities of the global complementationstrategy.

Distribution should be optimized regionally between the factories and theirsupplying

parts plants. However, in times of adjusted allocation, it will be necessary for cost

effective distribution to occur between plants & factories to non-local markets.

Optimized regionally between the factories and their supplying parts plants

It will be necessary for cost effective distribution to occur between plants &

factories to non-local markets

5.

The investment in flexibility will allow Toyota to capture demand and revenue fromnon-

local markets when local profitability/demand/etc declines. The flexibleproduction and

distribution will prevent idle facilities and reduced profits during economicdownturns.

By integrating flexible production and distribution, Toyota's supply chain will have

greater access to markets and has the potential to capture greater value. Therefore,

this investment should be regarded as highly valuable.

Toyota to capture demand and revenue from non-local markets

Toyota's supply chain will have greater access to markets and has the

potential to capture greater value

6.

Uniformity among global products will provide the most cost effective means tofacilitate

the flexibility between non local plants and factories. However a uniform globalproduct

may not be the most profitable and may result in a loss of customer interest andlocal

relevance. During product design engineers should craft elements that bothmaximize

uniformity and satisfy local needs. This will aid the flexibility of plants and factories

seeking to produce parts for non local markets and reduce the dependencies and

vulnerabilities of operating in specifically localized markets.



vulnerabilities of operating in specifically localized markets.

Uniformity among global products for flexibility among markets

Product design engineers should craft elements that both maximize

uniformity and satisfy local needsAmazon

Why is Amazon building more warehouses as it grows?

Ans.

Since its size get bigger, it need to keep the inventory to meet the customers

need in order to fulfill orders quick and effectively. Also, as more warehouses

being built, the distance for delivery will decrease so the delivery cost will reduce

as well.

How many warehouses should it have and where should they be located?

1.2 How do you decide the amount of warehouse?

Scale economy

When the main purchase power reach a certain extent, we will intuitively build a

warehouse to cover the sales in this region.

Strategically arrangement

Take future development into consideration.

Convenient communications

With a better communicating location, it could cooperate with the delivery

company more efficiently and lower the delivery cost.

Renting cost

After considering reasons above, the renting cost should come in now. Cost is

always one of the reason for choosing the location.

What advantages does selling books via the Internet provide? Are there

disadvantages?

Ans.

Advantages:

1. Reduce physical and administrative cost

2. Fulfill various customers needs

3. Build up database system

4. Develop additional channel

5. Chain selling

Disadvantages:

1. Privacy problem



(/download/link/solution-scm-ch1-2) 3 of 7

1. Privacy problem

2. Payment security

3. Gap in perception

Q. Why does Amazon stock bestsellers while buying other titles from distributors?

3. Should Amazon stock every book it sells?

No.

We can consider the question by dividing by two categories

Standard inventory

Amazon should store physical inventory of the popular books it sells as standard

inventory in order to fulfill these customers needs in a certain short time.

Just In Time inventory

Amazon doesnt have to stock books not in popular demand. When Amazon

receives orders which arent in stock, it can cooperate with the publisher to meetthe

unexpected demand. Furthermore, it can save lots of space to reduce the inventory

cost.

Q. Does an Internet channel provide greater value to a bookseller like Borders or

to an Internet-only company like Amazon?

Maximum advantages:

1. By internet, we can collect more detailed information about customers so that we

can make customer database. With that, we can build up the optimal marketing

strategy.

2. Providing two channels to customers makes it more convenient and also fit their

own needs. At the same time, it could also save unnecessary cost to the company.

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Assignment 1 Supply Chain Management Topic: Understanding the Supply Chain Submitted by: Md. Faisal Hossain EMBA SpringSemester 2013 ID: 61120-13-017 Submitted to: Md. Md. Akram Hossain Assistant Professor MIS, University of Dhaka Date: 23-01-2013Department of Management Information Systems Gateway Why did Gateway have multiple production facilities in the US? Whatadvantages or disadvantages does this strategy offer relative to Dell, which has one facility? US was main market of gateway Noinventory stores direct supply no contract with any shipping company Advantages Low price raw material Cheaper logisticsShipping Tax Incentives Disadvantages cost increases Difficult to manage quality Different polices for employees What factorsdid Gateway consider when deciding which plants to close? The markets which were saturated showing poor results, speciallyMalaysia plant were have high loses Why does Gateway not carry any finished goods inventory at its retail stores? Gateway wasreally clever in deciding whether to keep such items in inventory or not. As gateway knew that people dont wait for FMCG productfor the alternative but when its about computers, customers could wait. Doing so, they had no inventory on risk. Should a firm withan investment in retail stores carry any finished goods inventory? Yes, it can Is the Dell model of selling directly without any retailstores always less expensive than a supply chain with retail stores? Yes, the DELL model of selling directly without retail stores isalways less expensive than a supply chain with retail stores because of a number of cost cutting factors which make the productavailable to consumers at a cheaper cost, few of which are: Manpower (it is always the largest cost in running a business) Retailoutlets (rents, energy, law and order situation) Logistic support ( transport, display items) What are the supply chain implications ofGateways decision to offer fewer configurations? Supply chain is not of the view of fewer configurations, extra ordinaryconfigurations help the product reach masses and grow bigger. Few implications are as follows: Holding a fixed inventorySuppliers inflexibility Ineffective assembly line 7-Eleven 1. 2. 3. 4. What factors influence decisions of opening and closing stores?Location of stores? Why has 7-Eleven chosen off-site preparation of fresh food? Why does 7-Eleven discourage direct storedelivery from vendors? Where are distribution centers located and how many stores does each center serve? How are storesassigned to distribution centers? 5. Why does 7-Eleven combine fresh food shipments by temperature? 6. What point of sale datadoes 7-Eleven gather and what information is made available to store managers? How should information systems be structured?Ans. 1. The Demand of the stores, New stores opened in the same area where seven-eleven stores already exist based on demand.2. To save space for the introduction of more demanding products and services and because the stores were smaller. 3. Becausestores managers can order what they need from same place, a dedicated DC, using a graphic order terminal. 4. The DC's arelocated near to the stores for reliable delivery, each DC supports around 50 through 60 stores. 5. The way seven-eleven combinedthe fresh food in four categories of temperature controlled trucks was because that way the trucks can make delivery to multipleretail stores, get a rapid delivery and a good processed food. 6. When placing an order the store manager had access to detailedanalysis of POS data related to a particular item. This included sales analysis of product categories and SKUs over time, analysis ofwaste, 10-week sales tends by SKU, 10-Day sales trend by SKU.... Toyota Where should plants be located, what degree of flexibilityshould each have, and what capacity should each have? Should plants be able to produce for all markets? How should markets beallocated to plants? What kind of flexibility should be built into the distribution system? How should this flexible investment bevalued? What actions may be taken during product design to facilitate this flexibility? Ans. 1. Toyotas global strategy is to openfactories in every market it serves. Additionally, Toyota has adopted a strategy of global complementation which allows itsspecialized local factories to export to non-local markets in times of local economic downturn. This allows Toyota the flexibility ofcapturing the demand of non-local markets to remain profitable. It would be wise for Toyota to choose the location of its partsplants in a way that complemented its assembly factories and maximized profitability. For parts plants to operate only locally mayhave prohibitively high costs, while parts plants that operate only globally may reduce relevance in local markets. Logically, Toyotashould apply its global complementation strategy to its part plants, and locate the plants in areas that minimize costs (currencyexchange, freight, inventory holding, etc). This will allow them to achieve local/regional agility and remain flexible enough to supplynon-local factories/assembly plants however necessary. The capacity of the part plants shouldn't exceed the forecasted demandof local/regionally located factories/assembly plants that each part plant will supply. The ability to supply factories adequately iscritical, and each plant should be designed with the capacity to supply its regional factories. Apply its global complementationstrategy to its part plants Each plant should be designed with the capacity to supply its regional factories 2. Depending upon thelocation and production capacity of each plant the decision can be made as to produce for all markets or only specific contingencymarket. Furthermore, by applying the strategy of global complementation to Toyotas part plants, it will have developed partsplants with the flexibility to supply other markets when their local market demand is weakened. For this reason parts plants must beable to supply at least one more market/region than its normally responsible for supplying. Depending on the requirements ofglobal parts, it may be appropriate for parts plants to be able to supply to all markets. But in the case that markets are sodifferentiated that the ability for a parts plant to provide global supply is cost prohibitive, then a specific contingency market shouldbe designated for each regional parts plant. A parts plant in a certain region should only serve markets in that specific region;otherwise costs will inevitably go up. Since Toyota makes different cars in different regions, it does not make sense for EVERY partsplant to carry parts for EVERY market right. Flexibility to supply other markets when their local market demand is weakened Plantsmust be able to supply at least one more market/region 3. Japanese plants are more flexible than U.S. plants, since most assemblyplants are located in Toyota City, which means that employees can be moved from one plant to another if demand shifts from onemodel to another. In the U.S. such arrangement is not feasible, and building a flexible line that can assemble different car models ismore expensive. The allocation of markets to parts plants should be as efficient as possible. The standard allocation should beoptimized during the planning phase. However, as markets mature, currency rates fluctuate, and demand changes, it is possiblethat an adjusted allocation will provide more efficiency and higher returns for Toyota. For this reason allocation should be adjustedwhen necessary, reviewed either annually or bi-annually, and optimized to increase efficiency and take advantage of the part plantsflexibility. Standard allocation should be optimized during the planning phase Adjusted when necessary, reviewed either annuallyor bi-annually 4. The distribution will closely follow the flexibilities of the global complementation strategy. Distribution should beoptimized regionally between the factories and their supplying parts plants. However, in times of adjusted allocation, it will be

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