SUPPLY CHAIN MANAGEMENT AT REGAL MARINELike most other manufacturers, Regal Marine finds that it must spend a huge portion of its revenue on purchases. Regal has also found that the better its suppliers understand its end users, the better are both the supplier's product and Regal's final product. As one of the 10 largest U.S. power boat manufacturers, Regal is trying to differentiate its products from the vast number of boats supplied by 300 other companies. Thus, the Orlando firm works closely with suppliers to ensure innovation, quality, and timely delivery.

Regal has done a number of things to drive down costs while driving up quality, responsiveness, and innovation. First, working on partnering relationships with suppliers ranging from providers of wind-shields to providers of instrument panel controls, Regal has brought timely innovation at reasonable cost to its product. Key vendors are so tightly linked with the company that they meet with designers to discuss material changes to be incorporated into new product designs.

Second, the company has joined about 15 other boat manufacturers in a purchasing group, known as American Boat Builders Association, to work with suppliers on reducing the costs of large purchases. Third, Regal is working with a number of local vendors to supply hardware and fasteners directly to the assembly line on a just-in-time basis. In some of these cases, Regal has worked out an arrangement with the vendor so that title does not transfer until parts are used by Regal. In other cases, title transfers when items are delivered to the property. This practice drives down total inventory and the costs associated with large-lot delivery.

Finally, Regal works with an Orlando personnel agency to outsource part of the recruiting and screening process for employees. In all of these cases, Regal is demonstrating innovative approaches to supply chain management that help the firm and, ultimately, the end user.

Discussion Questions:1. What other techniques might Regal use to improve supply chain management?2. What kind of response might members of the supply chain expect from Regal in response to their "partnering" in the supply chain?3. Why is supply chain management important to Regal?4. How Regal Marine is achieving strategic fit between its competitive and supply chain strategies?

SOURCE: Render and Heizer, Operations Management, 8th edition, Pearson Education.

SOLUTION - SCM AT REGAL MARINEAnswer#1: Regal could make some use of virtual companies that use suppliers on an as needed basis; therefore it would make it easier to respond quickly to changing requirements, & to meet changing market demands. Using the latest IT, computer & transmission technologies to schedule & manage the shipment of parts in & finished products out, would help to increase the efficiency of the company. Ensuring alternative sources would be another important point in the Supply Chain. For the wide range of raw materials that they need to make a boat, they use different strategies for different areas. For example, they use a few suppliers strategy for some part in order to improve the final quality of the product according to the feedback from engineering enterprises. In other pieces of the boat, not as critical as it is an engine, they might use many suppliers techniques in order to reduce the cost of the product. Vertical integration: they could even improve this aspect in order to reduce inventories and save some money.Answer#2: The typical response by members of the supply chain through partnering is to further the understanding of end users needs (feedback from customers) as the suppliers become increasingly integrated. Regal can be expected to develop long-term contracts & integrate suppliers into their strategy, aggregate scheduling, & detail scheduling so they understand Regal Marines requirements. There are a lot of opportunities for unethical behaviour in a Supply Chain so in every Supply Chain there is a code for acceptable behaviour Members of Regal's Supply Chain expect: Loyalty to their organization: loyalty to Regal by following the lawful instructions, using reasonable care & granted authority. All the members should encourage support for small, disadvantaged & minority-owned businesses that are not able to manage & progress on their own. Some types of conduct should be avoided as accepting or soliciting money, loans, & credits from potential suppliers that might influence the supply management decisions. Justice to those with whom they deal: avoiding any personal businesses that would create a conflict between personal interests & the interests of the employer. All the activities conducted by any member in the chain should be in accordance with national & international laws, customs, the organization's policies, & these ethical principles & standards of conduct. Faith in their profession. Every component of the supply chain should work their best in order to fulfil the needs & products that are expected from him. Answer#3: Because a huge amount of Regal Marines dollars are spent on purchases. Additionally, the quality of those purchases has significant impact on the quality of Regals end product. Consequently, enhancements in terms of quality, delivery, & price have substantial impact on Regal Marines market & bottom line. Reduced Inventory (JIT), SRM, CRM, Inter-Company Inter-Functional Scope Management, Forecasting are the advantages of SCM that are crucial of Regal Marine Using the Supply Chain, Regal can reduce costs & improve the products they offer to their clients whilst maintaining core competence. There would be a lower product cost assuring to the diverse clients their desired quality. It would help small companies to specialize in the products they make &, therefore in the global chain obtaining a better success than on their own. The acquisition cost of the diverse products is lower, & it makes more reasonable the price for the customer.Answer#4: Steps to achieve Strategic Fit by Regal Marine: Step 1: SC Uncertainty: Competitive Strategy: Innovation, Quality and Responsiveness (Timely-delivery) Predictable Supply but Uncertain Demand Step 2: SC Capability: Somewhat Responsive Step 3: Achieving Strategic Fit: Make one stage more responsive to enable others to be more efficient i.e. different functional strategies should be inline of SC strategy to achieve Competitive Strategy.

MUMBAI DABBAWALAS: SUPPLY CHAIN STRATEGYIf asked about the best-managed organization in India, the stunning answer is the organization of the dabbawalas of Mumbai. In 1998, Forbes Global magazine conducted an analysis and gave them a Six Sigma rating of efficiency, implying just one error in 6 million transactions. Their punctuality and indigenously developed management system have now attracted the interest of global management gurus and awed the Prince of Wales too, who came down especially to meet them in November 2003 and learn more about their business art. Mumbai dabbawalas are an excellent example of how firms can manage their value chains to gain a competitive advantage.

The HistoryThe service of dabbawalas came into existence way back in 1890, and the sheer necessity prompted its development. At that time, the distance between residential areas and the business district made it very difficult for the workers/employees to go back home for lunch. A Parsi banker finally found a solution. He employed a carrier to fetch his lunch every afternoon. By early twentieth century, people were migrating to Mumbai in search of employment. Home-cook food had a comfort level among these workers not only because it was relatively inexpensive but also because it was tried and tested. Therefore, the idea caught on and this inspired many people to become dabba carriers. Soon each dabbawala had a handful of customers, and they differentiated between dabbas by tying colored strings. The system that was developed in the 1890s continues till date with some modification to facilitate the identification and delivery of dabbas. Presently over 5,000 dabbawalas, drawn from rural Maharashtra and operating in Mumbai, deliver over 200,000 dabbas at a reasonable price.

Working StyleTo reiterate, it all began with colored strings to distinguish between one dabba from another. The system was driven by only one objective and that was to deliver dabbas on time for lunch. The system has remained the same since inception except for fine tuning in 1966. When the population to be catered increased, it became difficult to separate one lunchbox from another with colored string alone. A set of rules were subsequently evolved as mentioned below:1. Each dabba is picked up by a dabbawala and taken to the railway station, where these are sorted and loaded by the other dabbawala. These are unloaded and resorted at the destination station by a third dabbawala and delivered at home from where these are picked up by a fourth dabbawala. This requires a well-mentioned supply chain.2. Each dabba lid is now marked with a particular code, denoting the dabbawalas number, the building, the floor number of that building where the Tiffin box has to be delivered, and the railway station where the Tiffin box has to be off-loaded, followed by an alphabet indicating the station of pickup. With this interesting color-coding scheme, the dabbawalas reach out to the length and breadth of the city seldom faltering.3. The maximum load that a dabbawala handles a day is 25 to 35 dabbass, which snuggle in 100-kg crates. Monthly income of a dabbawala varies from INR 5,000 to 6,000. A client pays anywhere from INR 150 to 250 a month to his dabbawala of this ,he pays INR 15 to the association, INR 60 for a crate and INR 120 to the railways.4. The association, which has a corpus of INR 50,000, doles out cash to the needy whenever the need arises. The association acts as a watchdog and helps out with substitutes when dabbawalas have to go on leave.

By carefully managing their flow of goods and information, the Mumbai dabbawalas are able to operate more efficiently than any other company.

SOURCE: Krajewski, Ritzman and Malhotra, Operations Management, 8th edition, Prentice Hall.

Discussion Questions:1. What other techniques might Regal use to improve supply chain management?2. What kind of response might members of the supply chain expect from Regal in response to their "partnering" in the supply chain?3. Why is supply chain management important to Regal?4. How Regal Marine is achieving strategic fit between its competitive and supply chain strategies?

SOURCE: Render and Heizer, Operations Management, 8th edition, Pearson Education.

SOLUTION MUMBAI DABBAWALASAnswer#1: Answer#2: Answer#3: Answer#4:

JOHN DEERE & COMPLEX PARTS, INC.Dollars. Looking ahead to 2007, international crude oil market is still there are many variables, the global economic situation, the geopolitical situation and the Organization of Petroleum Exporting Countries on how to act will oil prices have an important impact.Add the implicit interest rate(1) increase in the possibility of a U.S. recession, U.S. economic recession, the biggest impact may come from the real estate bubble burst leading to consumer landslide. The real estate market has accounted for 15% of U.S. GDP in ~ 20%. The first quarter of the U.S. economy, a substantial increase of 5.6%, but substantial cooling of the housing market factors, in the second quarter and third quarter to 2.6% and 2.2% respectively. Falling house prices in 2007 will make U.S. economic growth to 1.5% reduction is heavily dependent on the expected increase in U.S. market economies of East Asia will inevitably fall.(2) of the international financial markets face greater risks. From 2000 to 2005, the world's total bank loans jumped from $ 2.3 trillion to $ 3.5 trillion, formed on the basis of the global credit derivatives market size, by 2006 had reached $ 26 trillion in 2003 seven times the size of the market and is still the rapid expansion of hedge funds (Hedge Fund) and investment banks play an important role. In 1990, the disposable funds of hedge funds (Hedge Fund) less than $ 50 billion, and now grasp the amount of investment increased to $ 1.2 trillion. The lack of transparency in the operation of hedge funds (Hedge Fund), as well as the derivatives market to the lack of effective supervision, so once a serious breach of contract and financial panic, the whole financial system will face a great risk.(3) the major Western central banks to prevent inflation have been tightening, as of the end of June 2006, two years, the U.S. Federal Reserve Board for 17 consecutive rate of 0.25% each in the regular meeting to raise interest rates, the federal funds interest rate increased from 1% to 5.25%. As the economy has become increasingly evident signs of cooling down, the U.S. Federal Reserve Board decided to suspend the regular meeting in August 2006 to raise interest rates, and decided to maintain the rate unchanged at the next regular meeting.

Question 1:Discuss the strengths and weaknesses of John Deeres Achieving Excellence Program. Consider and discuss other criteria to include in the analysis.

Strengths of Achieving Excellence Program

1) Win/Win Situation

One of the strength offered by this program is a promised Quality product, which is equally important and beneficial for both parties, Deere & Complex Parts Inc.

2) Performance based volumes

This compliance system yields a bench mark for the suppliers and they are supposed to follow it. This ensures that the supplier performing best will get more volumes thus creating an environment of competence to achieve the excellence.

3) Improved Relationship between Buyer and Vendor

In order to implement this program a good deal of communication and coordination is required. Which in turns become a strength of this program to boost up the good relationship between Buyer and Vendor.

4)Further benefit

Suppliers can use the benefits of successful implementation of this program with their other clients as well.

5) Comprehensiveness

AEP is designed keeping in view all the aspects of Supply Chain Management. Its comprehensiveness to cover all the areas is one of its Strength.

6) Dynamic System

Its property of being dynamic and absorbent to new changes, ideas and improvements is also one of its major strength.

Weaknesses of Achieving Excellence Program

1) Absolute Qualitative & Quantitative

Few of the areas such as Cost Management, Wavelength and Technical Support are totally qualitative while areas like Delivery and Quality are absolutely quantitative. This makes it as one of the weakness of this program. Specially absolute qualitative measure can be at times influence by perception and inaccuracy, thus effecting the judgment.We think a mix of both attributes can be assigned to each area.

2) Suppliers short or under-deliveries are not considered in Delivery measurement...

CJ Industries and Heavey Pumps1

In October 2007, CJ Industries (CJI) had just been awarded a 5-year contract,amounting to $10 million per year, commencing on July 2007 to supply Great LakesPleasure Boats a number of key engine components for their luxury line of pleasureboats. The award marked an important milestone for CJI, in that it was the culmination ofseveral years of hard work and dedicated service, supplying Great Lakes parts for theirboats on an as-needed basis. The contract had significant long-term follow-on potential aswell, if they could continue to show Great Lakes they had the capabilities to be one oftheir valued, alliance partners. In addition, with this contract, Great Lakes wouldrepresent approximately 30 percent of CJIs annual sales, so performing adequately onthis contract had a significant long-term financial impact on CJI.One of the parts, a bilge pump, was an item that CJI had been purchasing fromone of their suppliers, Heavey Pumps, a small local specialty pump manufacturer, on aninformal, noncontract basis. The remaining items were all built in-house by CJI andsupplied to Great Lakes from one of their two finished goods warehouses located near theGreat Lakes production facilities. Heavey Pumps was producing and delivering 50 bilgepumps at a time at a cost of $1,500 per unit and built to Great Lakes specifications toone of the CJI warehouses, whenever an order was telephoned in by CJI. The deliverycosts (about $500 per 50 pump shipment, depending on the carrier used) were included inthe $1,500 per unit price. This scenario typically occurred about every four to six months.Normally, CJI would order another batch of 50 about eight to ten weeks ahead of time,and Heavey had always been able to supply the pumps before CJIs stock was depleted.Though CJI had sufficient excess capacity to ramp up production on the parts tobe supplied in the Great Lakes contract, they were not sure about the ability orwillingness of Heavey to increase their production of the bilge pumps. The new demandfor bilge pumps starting in July would be 50 pumps per month, and potentially more,depending on Great Lakes demand, and the ability of CJI to perform on the contract.There were a number of issues that Nik Grams, the purchasing manager who putthe contract together with Great Lakes, needed to work out with both Heavey and theproduction manager at CJI, for this contract needed to be met with as few problems aspossible. The issue with Heavey Pumps was whether or not they could guarantee deliveryof 50 pumps per month to one of the CJI warehouses. This had been the one item that hadslipped through the cracks on the contract with Great Lakes, and it now loomed assomething that could conceivably put the contract in jeopardy. There were potentiallyadditional equipment, labor, and other production costs for Heavey associated with theextra demand for bilge pumps, not to mention extra delivery costs as well. Heavey hadbeen a reliable supplier for CJI for a number of years, but nothing else had ever beenpurchased from them. In addition, because the demand for these pumps was rather lowand the deliveries were sporadic, no performance records had ever been kept for them.Mr. Grams had also not known specifically about the quality history of the Heavey bilge

Joel Wisner, PhD, C.P.M., University of Nevada, Las Vegas (joel.wisner@unlv.edu). This case wasprepared solely to provide material for class discussion. The author does not intend to illustrate eithereffective or ineffective handling of a managerial situation. The author has disguised names and otheridentifying information to protect confidentiality.

pump; although he could not remember ever getting one returned by Great Lakes for anyreason. Up until now, the pump issue did not seem like anything to worry about.Another possibility for CJI would be to make these pumps in-house. Nik Gramsknew that CJI had the capability to make this pump, but it would require an initial capitalinvestment of approximately $500,000 according to the CJI production manager, alongwith the clearing out of some space, and the hiring of three additional employees. Withonly about nine months remaining until the contract start date, it would be tight, but theproduction manager had assured Nik that they could do this, if needed. Though Mr.Grams didnt doubt the production managers assurances that the production line couldbe ready, he wasnt sure that going to this added expense was a good investment for CJI,given their lack of pump manufacturing experience. There were also at least two otherbilge pump manufacturers that Mr. Grams knew of, but both of them were about 500miles further away from the CJI warehouses, and he had never used either of these firmsin the past.This whole thing seemed to Nik like an ideal job for his special project buyer,Bob Ashby. He figured he had maybe a week or two to hammer out a plan to assurecontract compliance with Great Lakes, and Bob was known for his ability to put thingstogether quickly. So, he called Bob.

1. What are all the issues here, from both CJIs and Heaveys perspectives, thatneed to be researched by Mr. Ashby?

2. Should CJI continue to use Heavey to supply pumps, should they make themin-house, should they consider one of the other suppliers, or should they dosome combination of these alternatives? Discuss the advantages,disadvantages, and risks of each of these alternatives.

3. How can CJI assure continued contract compliance and additional contractbusiness from Great Lakes in the future?

Solution: CJ Industries and Heavey Pumps1

Q1 : What are all the issues here, from both CJIs and Caollins perspectives, that need tobe researched by Ms. Stanley? Tell me the factsConcerned about the current supplier will able to increase output. Negotiated contractwith Great Lakes to supply pumps. One issue, they have to get together with Caollinpumps to figure out if can up their output. What is capacity? What is desire? Shouldhave figured out before signing contracts.Jumped the gun signing the contracts. Should they have jumped the gun? Or letsomeone else take?Worth it for CJI to make or buy? Do a make/buy analysis.Other two suppliers. Have they evaluated other suppliers? Get other performance data from Caolinn.Is 9 months long enough to setup shop? Q2 : Should CJI continue to use Caolinn to supply pumps, should it make them in-house,should it contact one of the other suppliers, or should it do some combination of thesealternatives? Discuss the advantages, disadvantages, and risks of each of thosealternatives. Long term agreement with CJI?If the price is right.What should CJI do?Should they continue to use caolinn?YesMaybe, add another supplier. Other suppliers dont need to know about other suppliers. Some cases, it would be good to let them know , be straightforward. Maybe, take all three, take internal, take CJI, take other suppliers, do a mpv, after 5 years,make determination of whos the best and come up with one solution. Not much choice for Caolinn. Caolinn can say that they can supply up to a certainamount and then thats it.Page 23Transportation costs can decrease if there is a better transportation system. If scheduledproperly.Think that they would want local business. Depends on capacity of the supplier.Could buy out Caolinn. Cost 500,000 to make pumps in house. Advantage, take fullcontrol. Disadvantage, less focus on real business. Possible quality problem.Most risky thing to do?Nothing. Go with a unknown supplier. Make in house, no idea on cost, no idea on quality. Least experience on making in house. Q3 : How can CJI assure continued contract compliance and additional contract businessfrom Great Lakes in the future? Meet Great Lakes demand.Short term - Need to meet great lakes demand.Long term, worry about quality. Develop excess capacity.Need to evaluate suppliers. Need to develop a better relationship. Develop performancemeasurement system. Monitor ongoing performance. Document their processes.Need to integrate supply chain with supplier. Get embedded. Work on customerrelationship management. Guarantee future business. Let them know that they are aloyal customer. Hook up with customers in the long term.