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krm8_ism_ch10 - 10 Chapter Part 3 Managing Value Chains...

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Chapter 10 Part 3 Managing Value Chains Supply Chain Strategy DISCUSSION QUESTIONS 1. This is a move towards cooperative supplier relations. The self-policing element of the Defense Industry Initiative calls for contractors to investigate suspected wrongdoing internally and to voluntarily report fraud and waste to the Pentagon. They also are to conduct ethics training sessions and establish company hotlines for employees to report problems. The right choice is for you to report the friend to the Pentagon and give the information back. Many managers might have second thoughts about turning in a friend of 20 years, but the core purpose of an ethics program is to expose the truth, however unpleasant it is, so that the firm takes a fair and honest approach to business. This is not much different than (b). You need to weigh what is right and bill what is usual and customary. If you plan to do business in the future, this will go a long way in establishing a positive relationship. If you bill the entire amount – your competitor may turn you in for the overcharge. 2. The experiences of GM and Chrysler are indicative of two differing approaches to supplier relations. GM’s posture is indicative of a competitive orientation because going to lunch at the request of a supplier may give certain suppliers an edge when competing for GM’s business. Chrysler’s position is indicative of a cooperative approach to supplier relations. If the suppliers have been chosen for a certain product line, the goal is to develop a cooperative working relationship. Going to lunch promotes that atmosphere. 3. Wal-Mart’s approach is to generate a competitive situation between suppliers and to drive down prices. One of the major competitive priorities in Wal-Mart’s business is low cost, thereby keeping retail prices to a minimum. Wal-Mart is dealing with standardized goods in high volumes, and consequently uses an efficient supply chain. The Limited deals with fashion goods that have shorter life cycles. Therefore, the Limited needs a more flexible supply chain and also more control over the supply channels. Mast Industries provides the capability to produce fashion goods quickly. 4. Canon has chosen to keep its manufacturing process close to its manufacturing process to take advantage of concurrent engineering. They have chosen a strategy of speedy introduction of new products. Separating the manufacturing process by offshoring to a low cost country (such as China), would delay the introduction of new products, even though manufacturing costs would be less. Locating design engineers close to the manufacturing process allows for quick changes to new designs to overcome initial production problems. GM has initiated the joint venture with Shanghai Auto Industry Corporation to gain a foothold in a growing market for cars. The lower labor rates enables margins to be maintained, and overcomes any additional logistical costs for shipping components to China
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l PART 3 l Managing Value Chains or for exporting the cars to other countries.
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