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OM05

Supply Chain Management

(For CNM Cases)

Assignment - I

  Assignment Code: 2016OM05A1                                            Last Date of Submission: 30^th April 2016

                                                                                            Maximum Marks: 100

Attempt all the questions. All the questions are compulsory and carry equal marks.

                                                                         Section-A

1.         A supply chain encompasses three important flows. What are these three flows? Why      are they important to effective supply chain management? Discuss the direction of     these flows.

2.         Logistics comprises a relatively large number of managerial activities. Discuss five of      these activities and why they are important to logistics systems.

3.         What is meant by Bull Whip Effect?  In which ways can the effect of Bull Whip effect be reduced in the supply chain?

4.         What are the basic types of traditional forecasts? Does collaborative planning,     forecasting and replenishment differ from these traditional approaches?

SECTION-B

Case Study

“We have to do something about our customer service levels and out inventory turns” complained Lisa Williams, CEO for Walton Seed Company, to Jason Greaser, the new director of logistics. Jason immediately wanted to know the details of the problem, since he had just joined Walton Seed and had not had an opportunity to really delve into any of its problems. Lisa responded, “Let me give you some of the background and you can put that education to use that you received at Penn State”.

Jason smiled and said,” I am really interested in addressing some of the major problems and issues that Walton Seed has in the logistics area, so I can put my education and experience to good use. We had a similar problem at CBL Electronics, where I did my internship. While I realize that the products are different, there may be some common threads.”

Background:

Walton Seed Company was founded by Eric Walton in Toledo, Ohio, and subsequently moved to York, Pennsylvania. Traditionally, Walton’s niche was a high quality seed company selling grass, flower, and vegetable seeds through a mail-order catalog. But it subsequently started to distribute through small, family owned hardware and variety stores. As the business grew, the company expanded it distribution to several smaller wholesalers, who gave Walton additional market coverage in Ohio, Indiana, Illionois, and New York. Walton still continued its catalog business in the Middle Atlantic States and served retailers directly in Penssylvania, Maryland and New Jersey.

The seed business is such that sales are traditionally very heavy in the spring and early summer and drop off dramatically for the rest of the year. Catalog sales help to spread out demand a little by making sales promotions in the January / February mailing when people start thinking “spring” to help get through the winter; but, overall, sales are still very concentrated. Therefore, Walton pushes inventory out into its warehouse during the fall and winter to be ready for the big spring and summer sales spurt.

During the season, the company runs out of certain types of seeds and has an abundance of others. The wholesalers and retailers complain about the stockouts. Sometimes they will accept substitutions but not often enough. The wholesalers and retailers do not provide in- season sales information and tend to buy large quantities pior to the start of the season.

Another matter worrying Lisa Williams is the decline in the number of independent hardware and variety stores, with the growth of Wall-Mart, Home Depot, Lowe’s and others of similar size. Walton does not sell to these stores, directly or indirectly, because Walton has positioned itself at the higher end of the market with high quality seeds.

Walton really wants to increase its late summer and fall sales of grass seeds and prrennial flower seeds, to spread out demand and also to avoid stockouts which result in lost sales and customers.

The problem:

“Well Jason, there you have it in a nutshell,” said Lisa. “It is an exasperating situation, and we need your help in solving these problems.

‘Wow, you are right!” replied Jason, “There are really challenging issues; I won’t be able to claim tht you didn’t give me anything significant to sink my teeth into. Do you have any thing specific that you want me start with, since this is such a comprehensive set of problems?

5.            Case Questions:

a.       How can we improve in-season sales forecasting and develop a logistics system that is more responsive to demand and sales?

b.      What are some of the special logistical issues that we will need to consider if we attempt to sell to the mass merchandisers?

c.       What standard of performance should we use for measuring customer service?

d.      What E-commerce alternatives do you feel should be considered.