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In the early 2000s, the new director of logistics at Holt Renfrew, a high-end retailer of men's and women's fashions, has been asked to prepare a detailed plan for dealing with the company's $40 million warehoused inventory and its chronic stock out problems. Given the opportunity to prove how logistics can benefit the company's profit margin, the director prepares a three-fold strategy: improve the physical layout and process flow in the distribution center, upgrade the distribution systems and business processes, and re-allocate human resources. His challenge is augmented by the need to receive merchandise from international suppliers and distribute it quickly to compete in the fast-paced fashion industry.

Because companies can no longer possess all competencies themselves, strategic partnerships between customers and suppliers are becoming more and more essential. In fact, firms rely on strategic partners to achieve and sustain a competitive position. Theory helps explain the choice between arm's-length and cooperative relationships, and practice provides some valuable examples. Strategic partnerships, however, need to be set up and managed--a process not yet well understood. Companies often lack strategic thinking and the necessary supplier management capabilities. Advanced corporations continuously improve internal and external collaboration. Moreover, they allocate their scarce resources and time by selectively managing the full range of relationships--from "discrete exchange" to "relational exchange"--across the supplier portfolio.

Considers the issues facing Richard Effress, MedSource's chairman and CEO, as the firm approaches the Precision Cut project--the first test of MedSource's capabilities as an integrated, contract manufacturer in the medical device industry. MedSource Technologies was formed in 1999 by the simultaneous acquisitions of seven component manufacturing companies serving original equipment manufacturers in the medical device industry. The firm's model of integrated manufacturing aimed to leverage its expertise in manufacturing to become a single-source supplier of customized services in product design and development, rapid prototyping, component manufacturing, device assembly, and supply chain management.

Describes the development of ShareNet, an innovative knowledge management system used by a division of Siemens. ShareNet attempts to capture the knowledge and experience of Siemen's many dispersed sales and marketing units around the globe, making it available to all. ShareNet has to date been funded as a corporate initiative, free to all who use it. But as the telecommunications market has collapsed, the group that runs it is under increasing pressure to cut costs. As a result, it is considering charging users who subscribe to the tool in the belief that these users will willingly pay for it. This relies, however, on being able to demonstrate that the tool/system has a positive return on investment--a notoriously difficult task.

Senior managers often feel frustration--even exasperation--toward information technology and their IT departments. The managers complain that they don't see much business value from the high-priced systems they install, but they don't understand the technology well enough to manage it in detail. So they often leave IT people to make, by default, choices that affect the company's business strategy. The frequent result? Too many projects, a demoralized IT unit, and disappointing returns on IT investments. What distinguishes companies that generate substantial value from their IT investments from those that don't? The leadership of senior managers in making six key IT decisions. The first three relate to strategy: How much should we spend on IT? Which business processes should receive our IT dollars? Which IT capabilities need to be companywide? The second three relate to execution: How good do our IT services really need to be? Which security and privacy risks will we accept? Whom do we blame if an IT initiative fails?

Supplements the (A) case.

The chair of the compensation committee of Bezner Bonder Lambert & Murphy LLP, a law firm, was trying to decide on appropriate compensation levels for the firm's 70 partners. The committee would first deal with a sample of six partners. He is also concerned about the firm's compensation system, which had changed eight years ago from one based solely on seniority to one based significantly on merit. He must decide how to recognize and reward the different contributions individuals make while ensuring that the complete range of necessary activities are performed.

Canada's Cleaners Inc. is a dry cleaning company. The owner is considering selling a piece of shirt-pressing equipment and investing in one of three available machines. The current machine's quality is no longer meeting the company's standards and most likely will only last for another three years. He must do a cost and benefit analysis to determine which machine he should purchase.

During a short vacation, the owner of Rae and Jerry's Steak House read a book on family businesses that prompted him to think of succession planning for his own company. His daughters, ages 21 and 17, were not yet ready to take over the business and he was not sure that they would be interested in doing so. He would also like to reduce the number of hours he spends at the restaurant to spend more time with his wife. He must assess his options and develop a reasonable plan of action.

Electrosteel Castings Limited, based in India, had been the largest domestic manufacturer of iron pipes for over four decades. Although it had achieved solid growth in recent years, the market was under increasing pressure as overall growth slowed and new competitors entered the market. The chief executive officer believed that international expansion was critical to future growth and would also provide additional currency for further investment in new process technologies. After extensive study, management had narrowed the options to Europe (France) or Southeast Asia (Vietnam). Given limited resources, Electrosteel could only enter one market, either with a new marketing office or a new manufacturing plant. Building an overseas plant was particularly attractive, as it would effectively translate into Electrosteel being considered a local competitor in that market, reducing costs and improving customer service. In recent weeks, the need for a decision had increased significantly, as management had become aware of foreign competitors investigating similar international expansion options. (A video highlighting the manufacturing process of the iron pipes is available, product 7B02D016.)

Case (A) describes how a major player in the agricultural chemicals industry struggles to transform a fragmented group of newly acquired businesses into an integrated supply chain. The case highlights the firm's operational and organizational problems from the perspective of the European supply chain manager, whose primary objective is to streamline operations and cut costs.

The case briefly outlines the European strategy for a major player in the agricultural chemicals industry. This description provides the basis for developing a Balanced Scorecard program to help align the firm's European supply chain operations with the company's strategic goals.

John Crowley, CEO of Novazyme Pharmaceuticals, a start-up biotechnology firm developing an orphan drug to treat a rare lysosomal storage disorder from which his children suffer, must choose between a partnership and a buyout to have sufficient funds and support to get the drug to the market. Accompanying this dilemma are questions relating to Novazyme's clinical trial strategy, marketing, sales, production, and pricing. This case introduces students to the FDA drug approval process and government-supported financial inducements to develop drugs for small patient populations. Also provides insight into the nature of strategic relationships in the biotechnology and pharmaceutical industries.

eShip is a small Israeli start-up with a potentially exciting new concept for the residential package-delivery value chain--the Automatic Delivery Machine (ADM). Much like today's ubiquitous ATMs, ADMs would allow consumers to have parcels delivered to a nearby ADM rather than to their residences. When a package is delivered, the consumer would be contacted, given a PIN, and could retrieve the package anytime, day or night. Currently, carriers (FedEx, UPS, and the U.S. Postal Service) bear huge costs for local deliveries (the so-called last-mile cost), perhaps as much as $6 billion annually. Most of this cost would disappear if packages could be delivered to ADMs rather than to residences. At the core of eShip's concept is a sophisticated information system that links all the ADMs over the Internet. This case focuses on eShip's attempt to formulate a business model to facilitate entering the U.S. market. The dilemma centers on the role that eShip should play in the value chain and with whom it should partner. Although the ADM concept potentially creates huge value, capturing some of that value is a daunting challenge, particularly in the face of the size and power of U.S. carriers.

Supplements the (A) case.

Supplements the (A) case.

While grappling with glitches in the design and operation of its production system, Andover Assembly must also launch a new sensor product line to meet ultimatums issued by frustrated Signatron vice presidents. The financial returns of the division are not meeting corporate's expectations and plant manager Jan Havel has been sent in to turn around the plant's operations under 2 (6- and 12-month) deadlines. To turn the unhappy customers into cooperating customers, the Andover division is faced with the challenge of reaching nearly 100% ontime delivery performance within weeks. The introduction of the new product line, which requires some of the same resources, compounds the team's problems.

The night before the launch of the Challenger shuttle, officials from Morton Thiokol (Solid Rocket Booster manufacturer) and NASA participated in a teleconference to discuss whether to postpone the shuttle launch due to predicted low temperatures at Kennedy Space Center. This case provides background on the history of NASA's shuttle program, engineering firm Thiokol and Thiokol SRB, and O-ring expert Roger Boisjoly, who was adamant that the shuttle not be launched.

ING Direct Canada is a retail banking operation and a subsidiary of one of the top global providers of integrated financial services, ING Group of the Netherlands. ING Direct Canada needs to meet the operational demands of a growing client base, while maintaining its current staffing levels, physical space, and commitment to same-day account processing. The senior vice-president of operations must implement procedures to cope with the immediate challenges of the company's growth, as well as develop a long-term strategy. Options to consider include new technology, increased efficiencies, or relaxing the same-day processing requirements.

McDonald's has over many years built an operating strategy based on consistency and quality through a limited product range. Competitive forces have drawn the company into a much wider variety of foods and services to maintain growth. Now, new competitors threaten to beat McDonald's at its own, original game.