Supply Chain Management and Concept - Crowning Glory Ltd - Case Study Example

?Crowning Glory Ltd Executive Summary Crowning Glory Limited is a private company that manufactures high moving shampoo but is to move into retail trading; however, the company wants to venture into the retail market to expand both its supply chain and sales respectively. However, the company has to make a trade-off between incurring extra transportation costs for a supply of large quantities of small moulded bottles for filling shampoo currently being supplied by Deerfield or switching to a nearby supplier for cost effectiveness. The company has a number of options for solving its problem including resourcing the bottles from a different supplier, or inviting Deerfield to set up a small plant nearby, most of which do not meet the selection criteria set. On this regard, the most feasible option is establishing its own moulding machinery and to hire the appropriate expertise, to integrate bottle production with their filling line because it would yield higher returns on investment in the long-term. Defining the problem or issue Crowning Glory Limited, a private company that has grown in leaps and bounds over the past 20 becoming a major supplier of hair-care products to the dressing table has recently contemplated the supply of products to the retail market. Therefore, the company has struck a partnership deal to supply their Crowning Glory Shampoo to a retailer, which involves shipping large quantities of their product to the retailer’s regional distribution centres. To expand their production and sales, the company will need large quantities of blow-moulded bottles, which its current supplier Deerfield, whose plant is located 200 kilometres away, would be willing to supply. However, Crowning Glory Limited will incur higher packaging costs in shipping large volumes of fresh air, which is a large proportion of the cost of producing small bottles of shampoo. In this regard, for the company to diversify its product base cost effectively, it needs to get the blow-moulded bottles at a lower and feasible cost. Analysis of the case data with focus on causes and effects A rapidly growing company like Crowning Glory Limited has to think about expanding its customer base and diversifying its product market in the most efficient way, to achieve optimum benefits while limiting costs because as global markets expand, so does competition. This makes supply chain management, which is the management of information and material flows both in and between facilities (Douglas and Griffin, 1996), an issue of concern to companies today (Wisner, Tan, and Leong, 2012). This company has achieved massive recognition due to its high-end product that has become popular with users leading to a serious need to expand its distribution, to meet the rising demand for its product, and to take market leadership. The company is anticipating to launch Crowning Glory brand through retail trade, in addition to contracting other major retailers for own brand products; this will call for the establishment of a supply chain that will be both responsive and cost effective. The company needs to ensure that their product reaches a wider market on time and cost effectively, to take advantage of short lead times over its competitors in the industry. In this regard, the company needs to rethink its supply chain strategy, which involves restructuring its distribution lines to get rid of unnecessary steps that could potentially lead to disruptions in the supply chain (Sodhi, and Tang, 2012). It is no longer feasible for the company to acquire moulded-bottles from its current supplier due to cost implications, and possible delays in packaging, which could stall the supply chain. Current Supply Chain and Product range Characteristics Future Supply Chain and Product range Characteristics A fully flexible product focus production with an emphasis on a specific line as opposed to different lines of product An agile cycle Inventory strategy, enough to satisfy demand for the product A continuous replenishment location strategy, with facilities in fewer locations to gain economies of scale Lean transportation network strategy, fairly responsive and efficient for moving product Agile information strategy, fairly accurate, timely, and complete Functional focus production, which is a focus on a few operations in making different kinds of products, based on the continuous replenishment strategy A fully flexible safety Inventory, with buffer stock held against uncertainties A full flexible location, with decentralization of facilities in many locations in proximity to suppliers and customers for responsive operations Agile transportation network strategy with a more responsive and efficient route for moving product Continuous replenishment Information strategy, more accurate, timely, and complete Probable solutions/options A number of solutions to the company’s problem include resourcing the bottles from a different supplier, investing in moulding machinery and integrating bottle production with their filling line, or inviting Deerfield to set up a small plant nearby. Additionally, Deerfield can set up a filling line so that Crowning Glory can ship its shampoo in bulk to the site for filling and distribution. Nevertheless, the two companies can establish a joint venture where they would share resources, investment, profits, and losses or request the assistance of the retailer in managing a section of their supply chain. Decision criteria In coming up with the most viable solution from the suggestions listed above, the company will have to consider a number of factors, such as short and long term market risks, demand uncertainty and return on new investment, supplier relationships, transportation issues, in addition to, the cost of operation. The most viable solution must ensure that the supply chain is integrated in such a way that raw materials are converted to finished products, which are then distributed to customers efficiently (Benita, 1999). In this regard, the cost of operation, levels of uncertainty, in addition to, short and long-term market risks must be kept as low as possible while the return on investments is maximized, thus, a continuous replenishment supply chain strategy that focuses on costs, quality and long term solutions. Options against the decision criteria A rigorous assessment of all the options suggested before reveals that not all of them will be feasible for adoption by the company because most of them do not meet the selection criteria highlighted above. For instance, asking the retailer to manage part of the supply chain and entering into a joint venture might compromise the return on investments, and their profits might be low due to high short term and long-term market uncertainties. Asking Deerfield to set up a filling line and shipping shampoo in bulk to their site for filling will lead to extra operational costs of transportation thereby further delimiting the company’s profit margins. Inviting Deerfield to set up a small plant near the company is not cost effective either because it might take long for a new plant to be erected, thereby stalling the supply chain, while saying goodbye to them and resourcing might harm supplier relationship, which might cost the company its competitive advantage (Mahour, 2013). The final option then would be for Crowning Glory Limited to invest in moulding machinery by hiring the appropriate expertise and integrating bottle production with its filling line, which has potential for a great return on investments in the long-term. Recommended Option The most feasible option is for Crowning Glory Limited to establish its own moulding machinery and to hire the appropriate expertise, to integrate bottle production with their filling line because it would yield higher returns on investment in the long-term. This integration of functions might take a while but the ultimate success of the company in the long term will highly depend on the management’s ability to integrate the company’s complex chain of relationships (Lambert, and Cooper 2000). This option will enable the company to be in charge of its own inventory, to have a flexible response to market shifts and customer needs; additionally, this option provides a long-term solution, and the impeccable quality of the product will be assured through a continuous replenishment supply chain strategy that focuses on costs, quality and long-term solutions. Implementation plan 1. Develop a comprehensive plan including a time line for all the activities to be carried out in the establishment of the moulding machinery and defining the outcomes, benefits, inputs, and methods of execution of the project 2. Allocate resources for the entire project including appropriate expertise, to ensure they are enough to carry out the project to completion successfully and efficiently 3. Manage the risks by carrying out a SWOT analysis to identify the strengths, weaknesses, opportunities available, in addition to the threats foreseen 4. Identify and engage the different stakeholders and communicate the detailed plan to them for further considerations and approval of implementation 5. Implementation of the plan is the last thing to be done after the detailed plan forwarded to the stakeholders has been reviewed and approved; if it is rejected, the plan should be corrected by including the suggested changes before it is taken for approval for implementation 6. Review, monitoring and evaluation of the plan under implementation is necessary to ensure everything is going on as planned, and where necessary, changes are made to ensure it is implemented fully. Conclusion Crowning Glory Limited can achieve further growth and success by diversifying its product range and distribution channel, and rising above competition by establishing its brand in the retail market. First of all the company needs to act quickly, to establish a supply chain system that will not only be cost effective but that will also be responsive to customer needs to remain competitive and profitable. By venturing into retail market and supplying its shampoo product to retail stores, the company will be able to reach wider markets thereby increasing its profits and sales considerably. First, the company needs to establish its own moulding machinery and to hire the appropriate expertise, to integrate bottle production with their filling line because it would yield higher returns on investment in the long-term. This will not only save the company transportation costs, but also save it will also enable the shampoo manufacturer to be highly responsive to customer needs by using the shortest lead times. References Benita M. Beamon. 1999. Measuring supply chain performance. International Journal of Operations & Production Management, Vol. 19 Iss: 3, pp.275 – 292. Douglas J. Thomas, and Paul M. Griffin. 1996. Coordinated supply chain management. European Journal of Operational Research. Volume 94, Issue 1, Pages 1–15. Lambert, D.M, and Cooper, M.C. 2000. Issues in Supply Chain Management. Industrial Marketing Management. Volume 29, Issue 1, Pages 65–83. Mahour Mellat-Parast. 2013. Supply chain quality management: An inter-organizational learning perspective. International Journal of Quality & Reliability Management, Vol. 30: 5, pp.511 – 529. Sodhi, M.S., and Tang, C.S. 2012. Managing Supply Chain Risk. Oklahoma: Springer Wisner J.D., Tan, K.C., and Leong, G.K. 2012. Principles of supply chain management: A balanced approach. Third Edition. Stamford: Cengage Learning. Read More