Safe-Run Group: Greening the Customer's Production

Tire-building machinery producer Safe-Run Group (Safe-Run) was a second-tier supplier in the automotive industry. Responding to “green supply chain” initiatives in the industry, including by Safe-Run’s major clients, the company started working on a new environmentally friendly meridian machine. The results of a pilot test led by Zhijun Li, vice-president and head of research and development at Safe-Run, proved very promising both in terms of energy consumption and productivity, yet senior management remained skeptical. In a meeting with Li, senior executives expressed concerns about the higher production costs and the reaction of Safe-Run’s main customers. Li needed to build a better business case for the new machine.

This case can be used in a supply chain management course at both the undergraduate and graduate level. This case deals with the topic of environmental sustainability, which has become central to most manufacturing operations and supply chains, and will only continue to grow in importance. This case delves into the business of a second-tier supplier of an automotive supply chain and will help students realize that, despite misconceptions, producing car tires involves extensive research and development, and there is room for further innovation. This case seeks to engage with the concepts of value proposition and value creation in relation to the company’s corporate strategy, and to underscore that value creation needs to be done while minimizing possible “headaches” resulting from changing materials and searching for new suppliers. After working through the case and assignment questions, students will be able to do the following:<ul><li>Gain an understanding of the different challenges linked to production equipment development in a business-to-business (B2B) setting.</li><li>Make a business case related to value creation for customers in a B2B context.</li><li>Develop a value proposition for customers that includes environmental benefits.</li></ul>

• green product development
• supply chain management
• environmental sustainability
• research and development
• innovation
• value proposition
• value creation
• production equipment development
• business-to-business