Finding the Right Strategy for Our Company Will Be the Start of Our Supply Chain Strategy. the Main Three Are the Keiretsu Network, Virtual Company, Vertical Integration.

Topics: Supply chain management, Inventory, Management Pages: 5 (1805 words) Published: September 19, 2011
Supply Chain Report

Finding the right strategy for our company will be the start of our supply chain strategy. The main three are the Keiretsu network, virtual company, vertical integration. All three have their advantages and disadvantages. An example of a Keiretsu network would be our company working closely with a supplier, such as a motor manufacturer but not necessarily owing their company. A virtual company is network of independent companies—suppliers, customers, competitors, linked by information technology to share skills, costs, and access to one another's markets. Such organizations are usually formed on the basis of a cooperative agreement with little or no hierarchy or vertical integration. This flexible structure minimizes the impact of the agreement on the participants' individual organizations and facilitates adding new participants with new skills and resources. Such arrangements are usually temporary and dissolve once a common goal is achieved. A virtual enterprise is rarely associated with an independent legal corporation or brick and mortar identity of its own. (David Johnson, 2011)  Finally vertical integration is one that we own all aspects of the supply chain. Our company would purchase or have the resources to manufacture all of the internal components of the power equipment. Of the three I would recommend using the Keiretsu network. Using this network allows us to have lower cost than a vertical integration. We also plan on running this company for a long period of time so I don’t feel that a virtual company would do well in the long term plans of this company. While the vertical integration strategy would be effective in managing our supply chain the cost associated with it would be much more than the Keiretsu network.

The metrics we would use to measure the supply chain would be DPMO, Case Fill Rate, and Inventory Turnover. DPMO stands for defects per million opportunities this would be important to calculate how the qualities of the parts are that we are receiving and manufacturing. The most important thing here would be to make some sort of analysis as too what actually counts as a defect. Some item with a defect may not affect our products in any way. The next would be Case fill rate this is a calculation as to how many cases or units shipped compared to how many were actually ordered. Since we would be most likely responsible for the cost of any additional shipping, making sure we have enough inventories on hand to fill the orders and ship would be vital to control costs. The last would be inventory turnover this calculation divides the total cost per year by the average inventory levels. Most manufacturing companies turn inventories 6 times per year. This helps us look at both cost and revenue knowing the more we turn our inventory the higher revenue we are producing. I chose these three because the DPMO looks at the defects and quality, the case fill rate looks at shipping cost and productivity and the inventory turnover looks and revenue and cost.

Sourcing and procurement issues are one factor with our supply chain. Since we will be using the Keiretsu network is would be important for us to find quality vendors supplying the part we need. Having unreliable suppliers would increase cost, decrease shipping times and ruin our reputation as a company. We would need to make sure we do good research on the companies we decide to use. The cost of production of a product weighed against the potential profit the product can earn is the primary concern at the production phase of the supply chain. Companies always want to produce a product at the lowest cost per unit possible and sell the product at the highest price the target customer is willing to pay. In order to achieve or even approach this goal, supply chain managers must find reliable manufacturers that can meet company deadlines and product quantities, and who offer the most cost-efficient method of production. If the company...

Bibliography: David Johnson. (2011, June 6th). Virtual Companies. Retrieved September 16th, 2011, from New York Law School: Companies
EHOW MONEY. (2011, April 4). Important Issues in Supply Chain Management. Retrieved September 16th, 2011, from ehow Money:
Project Management Source. (2009, April 7th). Functional Orgazitional Structure. Retrieved September 16th, 2011, from Project Management Source:
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