Supply Chain Management GRP Systems Ltd - Essay Example

? GRP Systems Ltd. (GSL) Supply Chain Management (SCM) Leena This report analyzes GRP Systems Ltd.’s competitive position in the niche market of sewage water treatment in South Coast, England and Wales. Although the company has core competencies in providing ‘package’ treatment, it still lags behind in addressing the changing requirement of the market in terms of standards and increased capacity. Strategic planning of its operations to effectively improve its supply chain by integrating its stakeholders including its suppliers, customers and investors can be beneficial for the company in leverage its existing resources and potential to adapt the changing market conditions. This also helps it retain its competitive advantage in the future. Table of Contents About GSL Competitive analysis- SWOT analysis GSL’s competitive advantage and SCM Stakeholder analysis- BCG Matrix Conclusions and recommendations References GRP SYSTEMS LTD. – SUPPLY CHAIN ANALYSIS This report analyzes GRP Systems Ltd. (GSL) market in terms of its competitiveness to assess its ability to cater to a high-end market for 500-1500 pe in the sewage water treatment niche. This analysis is important for GSL’s sustenance in the present market conditions where its core business of catering to 50-500 p.e. (population equivalent) market is soon becoming obsolete with 500-1500 p.e. market gaining importance in the region. The company’s strengths and weaknesses and its supply chain management will be analyzed for this purpose. About GSL GRP Systems Ltd. (GSL) is a South Coast, England based manufacturing company that has grown from providing repair and maintenance operations to sailing yachts to suppliers of septic tanks for small properties which are not yet connected to the main sewage system. Over the last 6 years, GSL has become a key player in the ‘package’ sewage treatment services which they identified as a niche market. It provides services to water treatment plants, pubs and hotels among others. It serves its niche market with a 50-500 p.e. with its small ‘package’ sewage treatment solution and has a 25% market share in England and Wales. The solution includes sinking a tank into holes dug in the ground and filling the tank with structured media in which bacteria are allowed to grow that feed off the sewage to neutralize water. Competitive analysis- SWOT analysis Strengths- GSL has a 25% market share in England and Wales for its small ‘package’ sewage treatment solution that offers low cost treatment of water. This segment of the market has few players and the company has a strong hold since 6 years with potential to expand to the 500-1500 p.e. segment. Its speed of service is its major strength which the company is yet to leverage on to gain a higher market share. Its pricing is also a key strength as it offers cost-saving tanks that can be buried underground unlike the costly steel tanks that are installed above ground which is mostly disapproved. GSL’s technical expertise is also considered on par with the required standards although the tanks are not as robust as the steel tanks. Weaknesses- GSL is short of leveraging its core competencies in expanding its market to the higher-end niche of catering to 500-1500 p.e.. It is also short of manpower as it uses limited manpower who are experts in their respective fields. High lead times for sale and delivery of the services along with low profitability (5%) and high overheads (20%) is a constraint on the company’s business. Procurement of inventory for the tanks along with high cost of labour is another factor restricting GSL’s growth. Opportunities- GSL can leverage its core competencies in terms of low cost ‘package’ sewage treatment solutions to expand its business to cater to the higher end market of 500-1500 p.e.. GSL can also try to devise effective strategies to address the need to cater to custom design solutions through its expertise that it can leverage along with its effective delivery. The company can also train its staff to meet the new standards in the industry to make a smooth transition to the high end market. Its capital investment on improving technical expertise and procuring inventory for high end solution can be increased through effective supply chain management. Training relatively new staff to develop multiple skills can help GSL leverage their potential to work in multiple stages of the project which in turn makes available increased staff as it is presently limited, causing delays or increased lead time. Technical expertise can also be improved to design and develop cost effective techniques to improve inventory for long term advantage. The company can initially start with providing its expertise while lining up its supply chain by leveraging its image and customer trust. Threats- as GSL is struggling to address the high end niche market for 500-1500 p.e., there is every possibility that its competitors try to address this segment although quality and cost effectiveness may be at a disadvantage due to the need for expertise. But with high capital investment, which GSL lacks, competitors may capture this market at high speed. The total lack of presence of GSL in the high end market can be a disadvantage to the company as new entrants with innovative solutions, expertise and investment may pose a permanent threat to the company. GSL’s competitive advantage and SCM A company can increase its competitiveness by effective supply chain management of its resources and inventory through cost savings and improving quality (Jones, 2011). SCM in GSL involves procuring moulds, space saving conical tanks and components for control panels before sale and installation. During sale, the services it provides in terms of site surveys, design, estimate, assembly and testing in laboratory are carried out. Post sale, transportation of the tank and related accessories like pumps, etc., installation, testing in site and after sale visit are involved at this stage. Throughout the process, GSL needs to brace up its practices for maximum profitability. Its speed of deliver is its advantage in the 50-500 pe market. However, its expertise and customer trust in the company’s ability to deliver products and services as per needs can also be considered as an advantage for GSL as it is able to build on it for future expansion of its business. As differentiation, cost effectiveness and service delivery are the three components of SCM in its operations (Wiboonrat, 2012), GSL is in a position to gain a competitive advantage through all three components of its SCM. However, it still needs to continuously improve its processes and practices to address the changing needs of the market. While the company can start improving its supply chain within the factory where scaffolding of the moulds requires transportation of the dried moulds to the East half of the factory to reduce the manpower used and time taken for transportation, the same can be used to improve lead time restrictions in building the tanks on site. Capital investment flow can also be improved along with improving supplier services in terms of decreased inventory lead times for components and container for control panel, baffle planes, blowers and pumps, design time and complete assembly. Stakeholder analysis- BCG Matrix Stakeholder analysis for a company involves evaluating factors relating to customers, suppliers, company resources, core competencies, skills, its environment, market conditions, products and services to align its strategic thinking to devise an effective strategic plan for its operations to meet its mission and goals. As differentiation is key driver for GSL, the company gained its initial market entry. However, with 25% of market share in the 50-500 p.e. segment, the company has still a long way to go in becoming the market leader, and with the new standards introduced in the industry, GSL’s strategic direction needs revisit to address the challenges. Strategy planning is required to gain a competitive advantage (Goetsch, 2005) and GSL needs to plan again to sustain. BCG matrix can be used for strategic planning by the company through answering a series of questions that help identify its market position. This analysis can be used to identify high growth areas for product innovation and utilizing its core competencies. The matrix can be used to determine the cash cows and star products and services too. Figure 1 shows BCG matrix: Figure 1: BCG matrix. Source: (The BCG Growth-Share Matrix, 2010). GSL is highly dependent on its suppliers for control panel components, cabinets, conical tanks, pumps, baffles, blower units, etc. and it is found that the lead time for the completion of a project heavily depends on the capabilities and practices of the suppliers. GSL’s ability to plan to effectively integrate and reduce lead times and cost while not compromising the quality of its products and services is key to its survival in the increasingly competitive market. The company’s SCM is the platform through which it can achieve sustainable profits in the long term. Strategic planning not just by GSL but also its suppliers can improve the integration of its supply chain and its effectiveness in being able to give it a competitive advantage in future too. While it has been able to gain a competitive advantage initially in the niche market of 50-500 p.e. through its core competencies, it still lags behind in being able to dress the growing demand for its products and services in terms fast and customized solutions. Its high dependency on its suppliers for components and containers and other important resources that have high lead times for procurement can put the company at risk or disadvantage should the supplier(s) be not able to deliver the goods or services in future. Since there is a possibility that new entrants or late entrants along with existing competitors tie up with the same suppliers for their services, the advantage of differentiation may reduce or die down for GSL and its supply chain and ultimately the quality of its services and products may also be affected. Conclusions and recommendations GSL has a competitive advantage in the 50-500 p.e. market segment. Its increased lead times and high labour costs are the major contributors to its overheads. The company’s supply chain also is short of effectiveness to help it sustain its competitive advantage in terms of differentiation, cost effectiveness and service delivery, in the immediate future. Its capital investment is limited and the high costs of manpower and important resources make it vulnerable to competition and substitution. Further, the costs are high for some of the components for assembling of the tanks and will be even higher should it consider entering the new higher end market segment of 500-1500 p.e.. Following are recommended for GSL to sustain its competitive advantage in the niche while entering the new market segment for 500-1500 p.e. by leveraging its existing capabilities: Reduce overheads in terms of procurement, manpower, and lead times Revisit its mission and goals through strategic thinking and planning Leverage its technical expertise by increasing skilled manpower Train manpower on multiple skills to be able to work on multiple tasks during the life cycle of the project Integrate its supply chain to include customers, suppliers and other stakeholders to reduce costs and improve brand image and increase trust among the stakeholders by leveraging its competitive position in the market Strategically plan to improve brand presence and image through increased communication through multiple channels Outsource some of the less important tasks like preparing site for installation of tank, hiring of manpower, etc. to reduce overheads Increase chances of investment by other capital investment agencies by increased advertising and improving brand value and Allocate tasks and resources effectively through efficient time management and project management practices (corporate social responsibility, accounting, etc.). References Goetsch, L.D. 2005. Effective Strategic Planning for Competitive Advantage: Ten Steps for Technical Professions. Prentice Hall. Jones, O. 2011. Operations Management – Business Management Studies. Pearson Education. The BCG Growth-Share Matrix. 2010. Available online: http://www.netmba.com/strategy/matrix/bcg/ Accessed on: 18th April 2012. Wiboonrat, M. 2012. Operations Strategy in Global Environment. Available online: http://www.mbakku.com/STD/CourseSyllabus1-52/1_52/OM-Montri/Ch02-Operations%20Strategy.pdf Accessed on: 18th April 2012. Read More