The company board of directors has asked for assistance and expertise of myself for the purpose of identifying and evaluating the various alternatives available to them in the supply chain. Therefore the main motive is to select and suggest the management with the best supply chain strategy that ensures the sustenance of the business in the long run through cost effective measures and efficient outcomes.
Crowning Glory is passing from the phase of development and growth. Therefore the company is getting the chance of becoming a major supplier of hair care products and other hair dressing trade. The company has a supplier named Deerfield who is equally excited about the new opportunities of expansion and diversification coming in the way of Crowing Glory. Deerfield is ready to make investments and changes in the production process for the purpose of meeting the changing demands of packaging for the business of Crowing Glory. However the management of Crowing Glory has various options open for the selection of the best course of action that could be followed to achieve the most desired outcome from the diversification of the business. The issue with the management is to deal with the problem of distantly placed Deerfield plant which is actually 200 kilometers away from the company. Also for shipping of the large quantities of shampoo bottles requires shipping large volumes of fresh air. Along with that the cost of packaging is a huge quantity of the cost of manufacturing small bottles of shampoo.
There are number of alternatives available to the company from which the management has to decide the best course of action. These identification and evaluation of these alternatives can be done as follows.
1. Re-source the bottle from new supplier:
The company has the option of selecting the new supplier which is nearer to the company establishment. This way the old supplier that is Deerfield can be bid goodbye for no trade benefit in future. However a sense of loyalty is holding the management.
This is a valid factor that should be respected. Actually the company has not dealt with the new supplier. Therefore the management cannot be sure of how responsibly the new supplier will deal with the company requirements. Also Deerfield is ready to make investments and changes as per the business needs of the company. Therefore leaving the old and trustworthy supplier does not makes a good and ethical business sense.
2. Investing in mould machinery:
The second option available with the company is to invest in mould machinery. This could result in adding expenditures to the company’s account as the hiring of the appropriate expertise will be required along with the installation of the new bottle producing plant. Therefore becoming a bottle maker from a shampoo maker is a tough and confusing task which the company should avoid. Therefore it is recommended to take the help of the expert with years of experience in making bottles, than applying greed for saving money by creating self manufacturing plant for bottle making.
3. Setting up Deerfield plant nearby:
The third option with the company is to invite the Deerfield company to invest and establish a new plant near to the company. This would be a better option by which the expert in bottle making and the old friend in business can be supported to develop business along with the company. Since Deerfield has been an efficient supplier to the company for bottles, the company should give top priority in developing more business relations with Deerfield. The company should offer assistance to Deerfield to open a bottle making plant near to the company establishment so that the expenditures over transport can be saved. Also the new establishment near to company office could help in achieving swiftness in the business operation of bottling and packaging of the shampoo.
4. Offering Deerfield to create a filling line:
The fourth option available with the company is to offer Deerfiled to create a filling line so that the company could ship shampoo in bulk to the 200 km away already established company’s filling and distribution destination. This process however may result in loss of quality and even quantity during transit of the goods. Also the control and checks over packaging will reduce which may cause hampering with the product quality and quantity during packing. This way the serious mistake of giving controls in the hands of other company could cost the company lose its business in the long run.
5 .Proposing a joint venture with Deerfield:
The fifth option can be proposing a joint venture with Deerfield for than just manufacturing of bottles for shampoo. The company can therefore make Deerfield its partners by sharing resources, making equal investments, profits and other things.
This decision is completely vague as to make a bottle company become a business partner just because it supplies bottles. Since the company has expertise in supplying bottles therefore efforts should be made to exploit that particular expertise than creating a new mess where the bottle making company may not prove to be a good business partner.
6. Taking assistance of the retailer:
The sixth option is taking the assistance of the retailer in managing business in the supply chain. However only the efficient and resourceful retailers will be able to offer assistance in the supply chain and that also not assured in the long run. Therefore it will really become difficult to manage so many retailers to let them participate in the supply chain.
After reviewing and evaluating all the alternatives available to the company the best option selected is inviting the Deerfield company to set up a small plant nearby. Through this option the business with years old business supplier Deerfield will continue to sustain. Deerfield which is ready to make investment and changes in the business process will be happy to establish a new plant near to the company establishment. This way Crowing Glory will be able to utilize the expertise of the Deerfield in making shampoo bottles without adding any expenditures or work pressure on the existing business. The company will also be able to direct Deerfield with the latest requirements in the form of bottle design, color combinations etc such that the most appropriate and desired outcome is reached.
The different benefits of this recommendation includes the following.
- The company will not have to invest on anything.
- The company will not have to add pressure on the business operation by hiring new employees and machinery for the manufacturing purpose.
- The company will get the bottle making old friend and efficient supplier near to its establishments.
- The company can develop strategy of overtaking the new establishement in future from Deerfield, if the later does not want to continue operation with the compnay.
- The company will be in a position to utilize the expertise of Deerfield which has twenty years of experience in this field.
- The company will be able to secure consistent flow of material from the supply chain management.
- The testing of a new supplier can be avoided, who may or may not achieve up to the expectations of the company.
- The company will be able to transfer its products to nearby facility and take proper care and personal attention through out the packaging process.
- Wastage and tempering in the product could be avoided.
- The extra expenditures on transport of goods to the 200 kilometers away establishment of Deer Field could be avoided.
- Cost effectiveness can be achieved in packaging.
- New designs and package system can be developed by the synergy effect reached through the new ideas of the company employees along with the Deerfield employees.
This way inviting Deerfield to open a new small plant near to the company establishment is the best alternative available to the company. This alternative should be selected by management as it provides not only cost effective measures for business diversification but also the maximum utilization of the available expertise could be made. This way the new plant could fulfill the demand of the company in producing number of bottles and supplying them in time with the application of required designs and colors, needed as per the requirements of the business strategy.