This case features Isabella Couchet, the chief operations officer of CaLNG, a company that planned to sell liquefied natural gas (LNG) to help California utilities better match supply and demand through peak shaving. The price of natural gas drawn from the California pipeline infrastructure increased with sudden huge demand spikes during the summer and winter peaks, so the ability to use LNG to fulfill demand during peak periods would be a significant financial benefit to utilities. CaLNG planned to receive LNG at its Coos Bay terminal in Oregon and then transport it to California using specialized trailers. It had to design its LNG supply chain while considering the costs of storage facilities and transportation. CaLNG could build a centralized tank farm at Coos Bay and, from there, use a large number of trailers for on-demand delivery. Alternatively, the company could build satellite tanks at utilities, an option that would require fewer trailers because the satellite tanks could be filled during off-peak periods.
After a highly successful third round of funding in 2012, Gaurav Jain, founder of quick service restaurant chain Mast Kalandar, was looking to expand. In addition to opening new stores in other cities, Jain was also hoping to increase the profitability of his existing stores in Bangalore, Hyderabad, Chennai, and Pune. He needed to fully understand the financials of his current operations and identify the key drivers of success at the stores, at both the city and corporate levels. With this understanding, he would be able to evaluate how best to improve the performance of existing outlets and to choose an entry strategy for new cities. Students are asked to develop a financial model for outlets and use it to compare different growth strategies.
The authors note that companies want to protect their supply chains from serious and costly disruptions, but the most obvious solutions -increasing inventory, adding capacity at different locations and having multiple suppliers -undermine supply chain cost efficiency. Surveys have shown that while managers appreciate the impact of supply chain disruptions, they have done very little to prevent such incidents or mitigate their impacts. The authors argue that supply chain efficiency, which is directed at improving financial performance, is different from supply chain resilience, in which the goal is risk reduction. Although both require dealing with risks, recurrent risks (such as demand fluctuations) require companies to focus on efficiency in improving the way they match supply and demand, while disruptive risks require companies to build resilience despite additional cost. Recently, managers have become much better at managing global supply chains through improved planning and execution and building operational reserves such as production capacity and inventory. However, the authors argue that reliance on sole-source suppliers, common parts and centralized inventories has left companies vulnerable to disruptive risks. Although sourcing from or outsourcing to distant low-cost locations and eliminating excess capacity and redundant suppliers can make supply chains more cost-efficient, they also make supply chains more vulnerable. How should managers reduce their supply chain's exposure to disruptive risks without giving up hard-earned gains in performance from improved supply chain efficiency?
In 2012 several retailers, including Amazon and Walmart, experimented with same-day delivery. Home delivery of pizzas had been a very successful model in the United States and had been copied all over the world. In contrast, home delivery attempts by companies like Kozmo and Urbanfetch had failed; both of these companies went bankrupt. The goal of this case is to build a framework that helps students identify the factors that influence the success or failure of home delivery models.
"This case focuses on production and inventory management at Synthite, an oleoresin manufacturer in Kerala, India. It discusses the problems the company faced in the production of pepper oleoresin, one of its flagship products, and traces the problems to Synthite's make-to-stock (MTS) production strategy, inventory management practices and several material flow practices at the plant. Synthite, established in 1972, had grown to become the largest exporter of spice oleoresins from India, with a 35% share in the global oleoresin business. Yet, the company faced several challenges in inventory management, production planning, and ultimately, in meeting customer expectations on order lead times. Driven by uncertain demand, their ad-hoc finished goods stocking strategy came to naught. Manual transfers of materials in the plant resulted in the waste of resources labour, plant capacity and materials. Extended quality tests on a single order blocked 30% to 50% of production capacity for extended periods. The case provides quantitative data to analyze Synthite's inventory management, material flow and order lead times, and outlines the company's approach to addressing the challenges it faced. Synthite eventually decided to invest in additional production capacity and automated material flow at the plant. It also put into practice the concept of a "motherbatch," the essence of which was to stock semi-finished goods (SFGs) instead of finished goods (FGs). "
"In September 2010 Suresh Krishna, vice president of operations and integration at Polaris Industries Inc., a manufacturer of all-terrain vehicles, side-by-sides, and snowmobiles, needed to recommend a location for a new plant to manufacture the company's side-by-side vehicles. The economic slowdown in the United States had put considerable pressure on Polaris's profits, so the company was considering whether it should follow the lead of other manufacturers and open a facility in a country with lower labor costs. China and Mexico were short-listed as possible locations for the new factory, which would be the first Polaris manufacturing facility located outside the Midwestern United States. By the end of the year Krishna needed to recommend to the board whether Polaris should build a new plant abroad (near-shored in Mexico or off-shored in China) or continue to manufacture in its American facilities. "
A midwest hospital purchases new CT Scanners which are much faster than the existing technology. Processes in the radiology department are optimized to the older, existing scanners, and technicians are unable to take full advantage of the new scanner speed. The hospital finds itself working to change the processes to suit the new scanners capabilities and take full advantage of their speed.
Jim Keyes, CEO of Dallas-based Blockbuster Inc., was facing the biggest challenge of his career. In March 2010 Keyes was meeting with Hollywood studios in an effort to negotiate better terms for the $1 billion worth of merchandise Blockbuster had purchased the year before. In recent years, Blockbuster's share of the video rental market had been sharply decreasing in the face of competitors such as the low-cost, convenient Redbox vending machines and mail-order and video-on-demand service Netflix. While Blockbuster's market capitalization had dropped 47 percent to $62 million in 2009, Netflix's had shot up 55 percent to $3.9 billion that year. The only hope for Blockbuster, as Keyes saw it, was to shift its business model from primarily brick-and-mortar physical DVD rentals to increased digital and mail-order video delivery. In Keyes's favor, the studios were more than willing to provide him with that help. Hollywood wanted to see Blockbuster win the video-rental wars. Consumers still made frequent purchases of DVDs at its stores-purchases which were much more profitable for studios than the rentals that remained Blockbuster's primary business. Blockbuster had made efforts at making its business model more nimble, but the results had been disappointing, and its debt continued to skyrocket. By the end of 2009, the company's debt had climbed to $856 million, its share of the $6.5 billion video rental business had fallen to 27 percent, and its revenues had tumbled 23 percent to $4.1 billion.
The case focuses on the diamond retailing industry toward the end of 2008, with the United States in an economic downturn. All diamond retailers are hit by the downturn and are facing a critical look at their strategies. Given the basic performance information on Blue Nile, Zales, and Tiffany, students are asked to consider the strengths and weaknesses of each business model with the goal of understanding business models that are better suited to handling a downturn.
In 2003, ITC responded to the high level of obsolete inventory by shifting risk from finished products to manufacturing and raw materials. This required that their supply chain be much more flexible and responsive than it was in the past. By 2006, changes in the supply chain that included moving manufacturing in-house improved flexibility and responsiveness. Obsolete inventory was significantly reduced and the company was much better at matching supply and demand. Cost, however, continued to be higher than that at third parties. The company had to decide on the appropriate tradeoff between cost and responsiveness when structuring its supply chain.
Quality Wireless has received customer complaints about long hold times at its call center. To address these complaints, it put into place certain process changes at its call center. After one month, the company will now decide whether improvement has taken place.
This is an MIT Sloan Management Review article. The practice of pushing product by building inventory in anticipation of demand has fallen out of favor in recent years. Many companies prefer to build product only in response to actual demand. This permits firms to avoid costly supply and demand mismatches. Given how successful product-based firms have been with this approach, it is only natural to wonder how it would apply to service firms. Some argue that services cannot be inventoried. Yet, this view relies on an extremely narrow definition of inventory as finished product waiting for customers. In practice, the authors say, inventory also serves as a way to store work that functions as "service inventory." As with physical inventories, service inventories allow firms to buffer their resources from the variability of demand and reap benefits from economies of scale while benefiting customers. By using the correct form of service inventory, companies have the opportunity to offer better quality, faster response times and more competitive pricing. Using examples from the travel, hospitality, and insurance industries, discusses how service firms can use inventory as a strategic lever in designing and managing service offerings.
Discusses the structure of the Seven-Eleven Japan supply chain in terms of its facilities network, inventory management, distribution, and information.
This is an MIT Sloan Management Review article. Natural disasters, labor disputes, terrorism, and more mundane risks can seriously disrupt or delay the flow of material, information, and cash through an organization's supply chain. The authors assert that how well a company fares against such threats depends on its level of preparedness and the type of disruption. Each supply chain risk--forecasts, information systems, intellectual property, procurement, inventory, and capacity--has its own drivers and effective mitigation strategies. To avoid lost sales, increased costs, or both, managers need to tailor proven risk-reduction strategies to their organizations. Managing supply chain risk is difficult, however. Dell, Toyota, Motorola, and other leading manufacturers excel at identifying and neutralizing supply chain risks through a delicate balancing act: keeping inventory, capacity, and related elements at appropriate levels across the entire supply chain in a rapidly changing environment. Organizations can prepare for or avoid delays by "smart sizing" their capacity and inventory. The manager serves as a kind of financial portfolio manager, seeking to achieve the highest achievable profits (reward) for varying levels of supply chain risk. The authors recommend a powerful "What if?" team exercise called "stress testing" to identify potentially weak links in the supply chain. Armed with this shared understanding, companies can then select the best mitigation strategy.
Assumes an understanding of statistical process control and focuses on highlighting the usefulness of Six Sigma quality. Focuses on the issue of a worn bearing at a tire manufacturer leading to a mean shift (while producing defectives). Shows how a Six Sigma process would quickly detect the mean shift while producing fewer defectives.