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Grand Master Business Report
Nirmal Rathod, Sapan Shah Balaji Dubey, SCM 940 July 28, 2016 Words: 3031
1
EXECUTIVE SUMMARY
An efficient supply chain implies to the network of supply chain which would be feasible from all
the 4 perspectives i.e. Cost, Responsiveness, Quality as well as Productivity. All these factors are
basically dependent on the overall external and internal environment, competitive advantage as
well as Company ethics.
The following report is an approach to design a similar Improvised supply chain model, so as to
thrive in the current business environment.
In our case, the product differentiation is the first and foremost competitive advantage. There is no
product in the market which supports S4 Hana SAP application. By this, the end users of this
product would be able to access SAP platform in their e-pads. The compatibility of the consumer
experience is as simple as having a coffee in one hand and making a Purchase order in the other
hand, while travelling.
There were mainly 3 consequences which were taken into account for the designing of the supply
chain model. Firstly, the UK exit from the EU leading to a dilemma pertaining to the business
environment; secondly, the UN Conference on Green Business promotion in Paris leading to new
sustainability considerations and thirdly, the Mexican corruption issues, putting the company into
the threat of violation of its socio-cultural ethical considerations.
Apart from that, certain Distribution strategies are recommended, including the Push-pull
marketing hybrid model. Concisely, there would be a single Mega distribution centre which would
source the assembled e-pads from China and further distribute it to the other 4 distribution centres,
spread throughout the North American market. Moreover, one of it is situated at the major port
area so as to facilitate the distribution to other parts of the world.
Also a forecast system is suggested taking into account all the key considerations including
Consumer behaviour, market profile etc.
Conclusively, an eco-friendly model was estimated with certain recommendations which would
surely help the company from financial as well as branding perspectives.
Finally, an analytical competitive grid was designed to evaluate the newly designed improvised
Supply model against the current model. It showed a significant hype, supporting all our
assumptions to be worth it.
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TABLE OF CONTENTS
Executive Summary
1) Introduction 3
2) Background 3
3) Discussion 4
PESTLE Analysis of the Business Environment 4
Distribution Network Re-structuring 5
CFPR Approach 9
Environmental lifecycle analysis 11
Analytical Competitive Grid 12
4) Conclusion 13
5) References 13
6) Appendices 14
Appendix 1: Analytical Competitive Grid Table 14
Appendix 2: CPFR Model diagram 15
Appendix 3: Distribution Network Maps 16
3
INTRODUCTION
The organization is involved in the selling of electronic items and the major product is E Pad. E
Pad is the competitive product of I Pad which has almost same features and functions. This
organization has several manufacturing plants in different countries plus it has separate design
engineering unit too in UK, head quarter in UK and total 8 distribution centers in North America.
But there are some issues regarding cost effectiveness and responsiveness etc. the company
decided to relocate the supply chain network and the strategy as well. So according to the recent
news in the global market the supply chain associates and the leader has some responsibility to do
the research on relocate the distribution network system and come to a final decision.
BACKGROUND
Global situation is the key, inevitably ought to be taken into consideration for the development of
an efficient Global supply chain model.
There are three main aspects which forces the change in the current supply chain model.
1) Brexit 2016
“Brexit” is the exit of the United Kingdom from the European Union. A referendum was passed
in June 2016, whereby 52% of the citizens voted for exit.
This decision would surely affect the global marketplace, because UK contributed to a major
economy of the European Union. On the other hand, its reliability on EU can also not be
neglected.
Future predictions and consequences of this Brexit are highly controversial and vague so far;
but one thing is crystal clear that this is going to affect the Global Supply chain, in one or the
other way. Also, our company being headquartered in UK; it would be highly recommended
that certain amendments should be made within the current supply chain design, so that the
overall future could be secured and hedged against any big risks.
2) United Nations Climate Change Conference in Paris (Nov. ’15)
The conference was organised in Paris, with the intention to reduce the “greenhouse gas
emissions” in the environment.
It was concluded with a prediction of a significant hype in the Oil prices almost doubled up to
$250 a barrel. Moreover strict Carbon surcharges would be levied on the companies if the
pollution is not reduced to a certain level. On the other hand, government would appreciate
clean & green attempts and provide subsidies for the business (in order to promote green
business)
3) Mexican Border Corruption Concerns
4
Certain issues were found near the Mexican border regarding Corruption and other
racketeering scandals. Our company is known for its honesty and socio-culturally active
attributes. Thus, it has to be taken into account that our company doesn’t get affected by any
of such issues or even get involved in those activities. It is strongly recommended to change
move the operations away from those corrupted areas.
DISCUSSION
PESTLE Analysis of the Business Environment
Following is the PESTLE analysis of the Business environment wherein our company is/would
possibly be mapped. All these 6 six factors plays a vital role in aptly deciding our future
standpoints.
Political Scotland would be least likely to leave the EU after the Brexit results
and reactions. This would lead Scotland to make decisions in favor of
EU and not UK. Thereby, UK (being almost dependent on Scotland
for oil so far) would have to pay fat prices for the Oil. City of London
would get wacked. (4) (5)
Another biggest controversial Political factor is Sir Donald Trump.
If he wins the upcoming elections, he would make sure that he creates
problems with the trading agreements amongst Chinese countries as
well as TPP. Since our company is carrying out most of the
manufacturing from China, therefor this point is bit of a concern for
us. (13)
Economical It is strongly believed that this Brexit decision is going to badly affect
the economic standpoint of UK economy as well as US economy. UK
is already struggling with huge debts and budget problems.
On one hand, it seems like UK took this decision by its own (thus, they
would obviously have some strong grounds to take care of their
financial stability concerns) but on the other hand, the figures are not
in favor of them. Investors less likely would want to invest in new
products (like ours), especially when the overall economic standpoint
of the country is so unpredictable and disintegrate
(2)
Agriculture in UK would be adversely affected. Technically they
would be out of the Common Agricultural Policy (CAP), which makes
it inevitable for the government of UK to release new subsidies for
farmers. This would affect economy of the UK too. (3)
Immediate reaction to finance would be low. A great many things
would change as the negotiations proceed with EU. (10)
5
Social After the Brexit, the terms with EU countries is highly unpredictable.
It might be possible that the member countries does not support UK in
order to stay peacefully with EU. (12) Moreover, all the trade
agreements shared with EU as well as trade agreements with non-EU
countries too, would have to be amended.
Technological Merger with Blackberry:
This would be a big technological advancement for the company. We
would be able to set up a more security based efficient system. We are
providing SAP in our e-pad which would help companies access their
database with their e-pad. Thus, security concern has due significance
over here.
Moreover, Blackberry would be helpful in R&D funding and also in
the process of design engineering.
Legal The legal framework is currently based upon the EU legislations
design. These legislations legally loses its force as soon as the Britain
signs out from EU. Thereby, a strong legislation constitution is ought
to be set up in the UK which doesn’t leave behind any loopholes. Thus
technically UK Legal framework is practically unstable. (1)
Moreover, UK technically had trade deals with many countries as a
member of the EU. There are 22 trade agreements between EU and
individual countries and 5 agreements with other countries. After
Brexit, UK has to renegotiate with all these countries freshly and there
is no certainty whether or not these countries would want to remain
connected with UK with same type of agreements. (1)
Environmental The Paris conference was held in Nov. 2015 by United Nations. Its
results strongly supported the eco-friendly approaches and Green-
technologies which would help in making the world a better place with
least Greenhouse exposure.
Apart from that, it was predicted that due to the Surcharges levied upon
the pollution (Carbon foot prints); the prices of Oil would have
escalated almost up to $250 per barrel.
Furthermore, government subsidies would be provided to the
Companies and firms, stepping towards the promotion of this Carbon-
free world maintenance.
Distribution Network Re-structuring
Distribution Network is the system of distributing the products from one place to another and it
can be in any terms i.e. product, information or services, etc. This distribution network is used for
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the movement of the goods from manufacturer to customers via several distribution channels.
Those cannels could be wholesaler, distributor and retailer.
Taking into consideration the aforementioned external business environmental factors, it is
inevitable to make certain changes in the structuring (positioning) of the overall business network.
Following are the certain changes that are made in order to cope up with the current global
marketplace:
Corporate headquarter, London
Design engineering, Waterloo, Ontario (Canada)
Chip Manufacturing, Taiwan
Plastic components manufacture, China
Controls and screen module manufacture, Taiwan
Final assembly, China
Distributions Centres: New York, Washington, Minnesota, Kansa and Toronto.
We would recommend to relocate design engineering and some manufacturing locations too. So,
earlier the design & engineering was in UK that now we plan to move to Waterloo, Ontario, then
Head Quarter (UK)
Design engineering (Waterloo,
Ontario)
Chip Manufacturing
(Taiwan)
Plastic Components
(China)
Final Assembly (China)
Washington (US) New York (US) Minnesota (US)
Kansa (US) (Master
Distribution Center)
Toronto (Canada)
Controls & Screen manufacture
(Taiwan)
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chip manufacturing will be as it is in Taiwan, plastic components manufacturing in China and
controls & screen manufacturing would be moved to Taiwan. Final assembly will have the same
location i.e. China. The only reason we found that cost effective because we use the concept of
economies of scale.
For E Pad, we would like to relocate the distribution centers that covers US and Canada. The
distribution centers would be Washington, New York, Minnesota, and Kansa in US and Toronto
in Canada. The main reason behind choosing all these distribution centers in US is to cover the
whole nations including the New York because there is a port in New York so an international
trade which contributes 20% of whole sales can be covered.
As a redesign of the project we would like to introduce Kansas as a Master Distribution Center in
the USA. This is the distribution point where is located in at the central part of the nation and we
would have a plan to have a warehouse at this point so that all the final products will be delivered
at this point and then, according to the order or the demand the products will be sent to the different
distribution centers. So that we can focus on some activities such as Full Container Load (FCL)
with the cost effectiveness. In addition, we decided to import all the final products from China to
Kansa, USA. Because 80% of the final revenue comes from North America (80% from USA and
20% from Canada). So if the master distribution center will be there in the middle of the US then
we can cover the whole nation. For that we would like to use Warehouse Management System
(WMS) to control and maintain the inventory hence, the transportation activities too. A warehouse
management system is a software application that supports day – to – day operations in a
warehouse. WMS programs enable centralized management of tasks such as tracking inventory
levels and stock locations.
Following are the reasons for making certain key changes to the current Supply chain models:
Suspend Operations in Houston and Los Angeles
Houston and LA shares a substantial area with the Mexican borders. In fact, Texas (Houston)
has the longest stretch of border with Mexico. (6)
As mentioned earlier, the Mexican corruptions and scandals are currently at its pinnacle.
Moreover our company is branded to be a Socio-culturally responsible firm. Henceforth, it is
recommended to suspend the distribution centres from those locations, which proximate
towards Mexico.
Relocate Design Engineering from UK to Canada (7) (8)
Currently our Design engineering is conducted in UK. But after Brexit, the conditions doesn’t
seem prevailing for UK. Till date UK was the 3rd largest receiver of the funding from European
Union; for Research and Development. But now, EU would obviously think upon blocking
those funds to UK. They would preferably divert those funds towards the R&D affairs of other
EU member nations.
Furthermore, after leaving EU, the government of UK would also have burdens of
responsibility for issues such as competition policy and international trade negotiations. Thus,
8
it would basically prioritise their funds towards these affairs rather than R&D improvement in
the country.
Thus we need to move our Design engineering to somewhere else. So, it is recommended to
be relocated in Canada.
Why Canada?
We are planning to merge with Blackberry. So there is no way we are moving R$D to Silicon-
valley or China or any place like those. We need a place where the security infringement issues
could be properly taken care of.
Blackberry is well known to spend a lot of money in the R&D especially in the Canada
(Waterloo, Ontario). (9) This could be helpful for the company in a financial sense. (We could
have grounds to invest more on design engineering of our product). Moreover, our
technological advancements could be synchronised with that of Blackberry’s; which would
ultimately aid in the upbringing of our product.
Furthermore, Canada is a comfortable place for Blackberry too. They would not be
comfortable to do business with us, if we move our design engineering stuffs to the cheaper
markets like China, Vietnam etc. (9)
Relocating the Control and screen module manufacture from Korea to Taiwan
The manufacturing of screen modules are ought to be moved from Korea to Taiwan. Even
though Korea has a good reputation with the manufacturing of semiconductors; but in our case
Taiwan would be comparatively more feasible. The main reasons behind this prioritization are:
(a) The inflation of exchange rates in Korea is substantially dependent on the
International trade of neighbouring countries (Japan and China). Thus, it could
be stated that it is highly likely to be unstable. (11)
(b) Also moving the manufacturing to Korea would give us an opportunity to cut
down transportation expenses; because, now & then, manufacturing of Chip as
well as screen modules would be done at the same place (Taiwan)
Distributions Centres: New York, Washington, Minnesota, Kansa and Toronto
Instead of 8 distribution centres, only 5 distribution centres were designed in such a way
that it covers the entire 80% of the area of the North American market. (Appendix 3)
This would reduce costs and also make it easier to complete the supply chain loop.
One distribution centre is also set up to be the Master warehouse from where the goods
would be distributed to the other DC’s. All the assembled e-pads would be transported to
that single DC in pre decided full loads.
Push – Pull Strategy
As a distribution strategy, we decided to have Push – Pull strategy. Push based supply chain would
be better for this system in certain stages for example for cost and productivity of E Pack. Because
E Pack is the product in which we are manufacturing it based on the long term forecast and
therefore it will be make – to – stock strategy. Moreover, the manufacturer bases demand forecasts
on orders received from the retailer’s warehouses. It therefor takes much longer for a push – based
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supply chain to react to the changing marketplace. Whereas, the Pull strategy would be helpful in
quality and responsiveness of the product. The only reason for having pull strategy is we are using
SAP S4 Hana which is the fastest version of SAP and we can get the maximum advantage of this
technology.
As it is mentioned earlier that for the initial stage like cost and productivity, the push based strategy
will be helpful but after that, the remaining stages require the pull based strategy and that is why
this interface between the push and pull based stages known as push-pull boundary.
Raw Materials End Customers
Supply Chain time line
Collaborative Planning, Forecasting and Replenishment (CPFR):
This is a module or a business plan that induces or makes the trading partners to work cohesively
in providing customer demand. This is usually done by:
Linking practices of sales and marketing to supply chain planning and executing the same.
The main objective here is to provide more to the customer while decreasing the inventory,
transportation and logistics cost.
There are 3 stages of CPFR:
Basic CPFR: Less number of business processes whereby less number of supply chain is
integrated.
Developed CPFR: Here huge number of data exchange takes place between to partners.
Advanced CPFR: Here synchronization of forecasting information system and
coordinating planning and replenishment process.
Push Strategy Pull Strategy
Push –
Pull
Boundary
10
So from above, based upon the company history, it is clear we will be using the Basic CPFR model.
CPFR is usually used by value chain suppliers to co-ordinate plans that help to reduce the variance
between supply and demand.
The opportunities that CPFR creates are as follows:
Trading partners share their plans for future events, and then use an exception-based
process to deal with changes or deviations from plans
By working on issues before they occur, both partners have time to react
A supplier can build inventory well in advance of receiving a promotional order and carry
less safety stock at other times
A retailer can alter the product mix to reduce the impact of supply problems.
There are tasks which are performed under CPFR, they are:
Collaborative activities: Collaboration tasks:
Strategy and Planning 1. Collaboration Arrangement
2. Joint Business Plan
Demand and Supply Management 3. Sales Forecasting
4. Order Planning/Forecasting
Execution 5. Order Generation
6. Order Fulfillment
Analysis 7. Exception Management
8. Performance Assessment
Now let’s analyze how this part will be handled. In collaboration arrangement the company and
the retailer will set the scope of framework, define common goals and responsibilities. After this
both the parties will form a joint business plan, here those events which affects supply and demand
are identified. Next part will be to forecast consumer demand which will be executed under sales
Forecasting task this will help in building Order Planning/Forecasting schedule, where the
inventory lead times, current inventories, logistic restrictions and other factors affecting the
planning will be mapped. In the execution phase, Order Generation will be used to transform
forecast into firm demand after which Order Fulfillment process will follow where producing,
shipping and stocking the goods will be done. Finally, in the Analysis phase, Exception
Management and Performance Assessment will be used to constantly monitor any sudden changes
in quality, provide key metrics to evaluate the success of the business goals and monitor the trends
in the industry that can help change the strategy more quickly if necessary.
The following can be done to ensure this system works, the retailers will have POS system in place
to provide the sales of the day information, this information will help the retailer to place order to
11
the distribution center, now to help enable the CPFR works properly the system (the entire supply
chain) must have SAP in place to help procure and distribute the product. This will provide
information of the product, manufacturer and price and this will be stored in the centralized data
warehouse.
This information will help in analyzing daily, weekly, monthly sales data to determine which
products were sold and in which quantities. This helps in placing purchase order which helps in
providing products at right time and have it at right place. The SAP system, through its
information, will help the distribution center receive goods and dispatch them to stores in less than
a day.
Historical sales data will be stored through SAP system, this would allow the retailer to make a
demand forecast. This information will also help the distribution center to study competitor’s
product demand. Retailers will share past data, customer data, demographic data, and stock
positions. Both retailer and distribution center will forecast demand individually and then co-
operate by sharing such information’s. This will help to reduce inventory cost, and ensure product
availability across supply chain.
The outcome will be that lead time will come down. On-hand inventory will be reduced. Sales will
grow over a period of time.
Environmental Life Cycle Analysis
Apart from the efficient supply chain design, the company is recommended to implement certain
"Green business technologies" in order to add on value to the corporate structure. This would not
only build a strong positive reputation of the company but also aid the company in reducing the
carbon foot prints.
Thereby the company could develop strong grounds to become eligible for the various government
subsidies allocated for the promotion of the same.
Following are the key recommendations:
(a) The sourcing as well as manufacturing would be carried out in eco-friendly manner. Steps
could be taken to reduce the pollution as much as possible.
(b) A green business R&D department could be allocated as a part of the design engineering team
in Waterloo, Ontario. They would be involved in development of innovatory approaches towards
the sustainability in the overall business. Every approach would be surely appreciated and
financially aided by the government.
(c) As we are using SAP as the Database Management System of the company; it could be
cautiously implemented in such a way that the use of "papers" would be as less as possible.
(d) The company is advised to contribute to the various projects and awareness programs
pertaining to the sustainability and eco-friendly activities.
(e) The distribution network would be maintained properly so that the maximum efficiency could
be obtained out of it.
12
E.g. The orders could be forecasted as precisely as possible and thereby reducing carbon emissions
via transportation.
Furthermore, due care would be taken at each and every unit operation to make sure that we leave-
behind minimum carbon footprints.
Analytical Competitive Grid (Appendix 1)
Steps of Competitive Grid
Step 1: There are 4 main factors which are set as benchmarks for analysis of the 2 supply chain
models (i.e. Current Vs Improvised (New)). These are Cost, Productivity, Quality and
Responsiveness.
Step 2: Each aspect was then given a weightage factor depending upon its probable predicted
impact on the company’s integrity. It basically represents the degree of influence of the factor on
the company’s Supply chain stability.
E.g. Quality - 9, Productivity - 8 etc.
Step 3: Then the scores of each attribute are multiplied by its weighing factor.
Step 4: The resultant figures are then plotted on the Y axis with the corresponding attribute factors
on the X axis.
Following result was deduced from the grid: (Graph 1)
Graph 1: Competitive grid – Current Vs Improvised Supply chain models
01020304050
Analytical Competitive grid
13
CONCLUSION
Conclusively, the aforementioned Improvised supply chain model is analytically found to be more
efficient in comparison with the current model.
The Distribution network could be set as per the model discussed above. This would lead to
minimized lead times and a highly responsive supply model.
Furthermore, the CFPR model would aid in meeting up the supply-demand chain more aptly and
precisely.
Lastly, the Green Business initiatives would give a distinct branding image to the company as well
as it would help the company to reduce the overall carbon foot prints, ultimately making it eligible
for the various funding and appreciations from the government.
Finally, it could be strongly concluded that if the UK economy doesn’t tumble to the depth of the
well (which is in fact least likely to happen); the Improvised supply design would bear most of the
market resistance and yield high value to the company.
REFERENCES
1) "Five Models for Post-Brexit UK Trade." EU Referendrum. N.p., 27 June 2016. Web. 29
July 2016.
2) "Brexit Continues to Shock Global Markets." Yahoo Finance, 27 June 2016. Web. 29 July
2016.
3) Philippidis, G. and L. J. Hubbard (2001) ‘The Economic Cost of the CAP Revisited’,
Agricultural Economics, 25, 375-385
4) "Brexit Continues to Shock Global Markets." Yahoo Finance, 27 June 2016. Web. 29 July
2016.
5) Massie, Alex. "Why Brexit Means Scottish Independence Is Off The Table—For Now."
Time, 1 July 2016. Web. 29 July 2016.
6) "Mexico United States Border." N.p., n.d. Web. 29 July 2016.
7) Dhingara, Swati. Life after BREXIT: What Are the UK’s Options outside the European
Union? London School of Economics and Political Science, n.d. Web. 29 July 2016.
8) Ugwumadu, J. (2013) ‘Poland Takes Lion’s Share of EU Funds’, Public Finance
International, 28 November 2013. Retrieved from:
http://www.publicfinanceinternational.org/news/2013/11/poland-takes-
lion%E2%80%99sshare-eu-funds
9) "TECH R&D SPENDING IS DOWN IN CANADA; BLACKBERRY IS STILL NUMBER
ONE." Canadian Start up News and Tech Innovation. Betakit, 2 Mar. 2015. Web. 29 July
2016.
10) "Brexit's Impact on the Global Economy." N.p., 25 June 2015. Web. 29 July 2016.
11) "4 Economic Challenges South Korea Faces in 2016." Investopedia, 15 Jan. 2016. Web. 29
July 2016.
12) Gibbs, Phil. "Brexit: Do You Know the Impact on Your Supply Chain?" LLamasoft, n.d.
Web. 25 May 2016.
14
13) Banker, Steve. "Will Brexit Affect Global Supply Chains?" Logistics and Transportation.
Forbes Magazine, 2 July 2016. Web. 29 July 2016.
APPENDIX
Appendix 1: Analytical Competitive grid table
FACTORS
Weightage factor
Score (Out of 5)
Weighed Total
(Score* Weightage
factor)
Current
Supply chain Model
Cost 9 3 27
Productivity 8 3.5 28
Quality 9 4 36
Responsiveness 8 2 16
Improvised
Supply chain Model
Cost 9 4.5 40.5
Productivity 8 5 40
Quality 9 4.5 40.5
Responsiveness 8 5 40
15
Appendix 2: CPFR Model Diagram
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Appendix 3: Distribution Network Maps