Topics: Supply chain management, Supply chain, Management Pages: 16 (4228 words) Published: September 23, 2013

JCT Task 3

Business Report Based on a Scenario

JCT2 Supply Chain (V2 GRADUATE-0610)-PA

A. Recommend, with sufficient support, the adoption of one of the following strategies by the power tool company: a Keiretsu network, a virtue company, a vertical integration, or a different supplier chain strategy:

Supplier chain strategies are one of the most important aspects of supply chain management. The key to success of an organization is the supply chain strategy. The supply chain makes up 55-85% to total costs for a business, so it is understandable why so many people are searching for newer and better strategies. (Bruce O. Bartschenfeld)

A Keiretsu Network:Keiretsu network is a network composed of manufactures, supply chain partners, distributors and financiers who remain financially independent but work closely together to ensure each other’s success. The formation of a keiretsu allows a manufacturer to establish stable, long-term partnerships, which in turn helps them to stay lean and focus on core business requirements. (

Virtual Company:Virtual companies rely on a variety of supplier relationship to provide services on demand. In this strategy, a company forms a network with other companies. All companies are dependent upon one another. Each member of the network performs essential functions to the project. (Bruce O. Bartchenfeld)

Vertical Integration:A vertical integration refers to a firm’s ownership of vertically related activities. The greater a firm’s ownership extends over successive states of the value chain for its product, the greater its degree of vertical integration. The extent of vertical integration is indicated by the ratio of a firm’s value added to its sales revenue: the more a firm makes rather than buys, the lower are its bought-in goods relative to its sales revenue. Vertical integration can be either backward, where the firm takes over ownership and control of producing its own components or other inputs, or forward, where the firm takes over ownership and control of activities previously undertaken by its customers. (

Having discussed the definition of these terms I would recommend Vertical Integration strategy for the following reasons. 1. The power tool company will have more control by adopting Vertical Integration over the value chain. (Neil Kokemuller) 2. Vertical integration offers significant ability to control costs throughout the distribution process. By selling the products directly to end buyers, the power tool company can “eliminate the middle man”, removing one or more steps of mark-ups along the way. (Neil Kokemuller) 3. Vertical integration gives the power tool company to access to more production inputs, distribution resources and process and retail channel. Each of these offers opportunities for the company to distinguish itself from competitors through effective marketing. (Neil Kokemuller) 4. Vertical integration offers the power tool company to control the end product as well as its component parts.

B. Discuss metrics that could be used to measure performance of the supply chain. Supply Chain Performance refers to the extended supply chain’s activities in meeting end-customer requirements, including product availability, on-time delivery, and all the necessary inventory and capacity in the supply chain to deliver that performance in a responsive manner. (Warren H. Hausman)

Supply chain measurements or metrics such as Backorder Reporting, Cycle Time, Defects per Million Opportunities (DPMO), Fill Rate and various other metrics are used to track Supply Chain performance. These metrics can helps a company to understand how your company is operating over a given period of time. Supply chain measurements can cover areas including Procurement, Production, Distribution, warehousing, Inventory, Transportation and Customer Service. (John Taras)

i. Backorder Reporting: An unfilled customer order. A backorder is...

References: Stanford University, June 21, 2002
Supply Chain Performance Metrics
Published May 16, 2013
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