Global Logistics Management

Please include your name, section and date on the first page of your submission and number your pages.Submission should be between 3 and 4 pages in length, double spaced, 12 point font with 1 inch margins.  Case Questions ” article will be uploaded “udy Discussion Questions Explain how conducting an organized and systematic sourcing process would benefit the purchasing department at KiwiMart (KM). What form of supplier partnership would help improve both KM and Plexet’s supply chains? How would Plexet benefit from adopting a JIT (Just in Time) approach to production? Explain the advantages KM and Plexet would receive from implementing an inventory management system.  

BICG9502

Case Study #2: Global Supply Chain Management and Planning

Signed, sealed and delivered?

Plexet is a mid-sized manufacturing firm located in Auckland, New Zealand. The company
produces a range of plastic containers that includes their flagship product range, Goodseal. The
Goodseal brand includes a range of plastic food storage containers, designed to be sold to
retailers and grocery stores for home use. The containers are sold in 3 and 6 packs, in three
different sizes: 0.25L, 0.5L and 1L. They are typically marketed to consumers for food storage in
the refrigerator or freezer. Currently, Plexet has achieved a 9 percent annual sales growth over the
past five years. Within the manufacturing plant, the company is running three shifts at full capacity,
although the plastic molding equipment is running at only 58 percent of its optimal production
capacity. Production levels fluctuate frequently, and Plexet adjusts its labour schedule around their
forecasted sales demands. The sales manager is concerned about sluggish sales over the past six
months, and is aware that manufacturing targets are based on the recent sales forecasts. Having
an excess of product is of concern with Plexet management. Therefore, increasing production is
not a strategy considered to help boost quarterly sales targets. Instead, Plexet is considering
offering a discount to their suppliers, as well as adopting a new marketing strategy that will offer
consumers coupons to buy one Goodseal product and receive a 3 pack of 1L containers free.

Plexet do not receive as many orders for the 1L Goodseal container from their suppliers as they do
for other container sizes. As a result, Plexet has decided to discontinue the 1L product and focus
manufacturing efforts on the more popular sizes. This will enable the manufacturing plant to
replace the 1L molds with 0.25L and .05L components. This is may help alleviate the low 58
percent rate of production because there will be more equipment to handle the production of the
two remaining product lines. Managers believe this will increase their production levels. The
coupon strategy is designed to help move some of the obsolete 1L product from their inventory, in
addition to retaining consumer loyalty with the smaller sized products. The manufacturer will
implement the sales and production strategies over the next fiscal year.

What is promising for Plexet is a recent order from Chinex, an exporting agent that sells to China.
The agreement stipulates that Plexet will ship 25,000 cases of the entire Goodseal line to Chinex.
This could not have come at a better time, because the order will be placed in time to meet
Plexet’s quarterly sales target. To expedite the sale, Chinex has been offered a significant
discount. Chinex has agreed to send payment within seven business days, and pay by letter of
credit from a reputable Australian bank.

Meanwhile, back at the retail store

Plexet has a reliable supplier relationship with a large retail chain, KiwiMart (KM). The head of
purchasing at KM acquired 4000 cases of containers this quarter at a 4 percent discount from
Plexet, but has sold only 1800 over the last two quarters. She decided that KM’s in regions outside
of Auckland would also benefit from the discounted price, and has sold 1800 to them. In addition,
she has sold 400 cases to a wholesaler at cost, with a negotiated deal to buy them back at a 3
percent premium within 90 days if KM needed the supply. This has helped the other KM’s
throughout the country, as well as solved any inventory issues with the Auckland KM. The plan is
for the Auckland KM to discount 1000 cases for a special in-store promotion.

Soon after the deal with Plexet had been negotiated, Chinex contacted the head of KM’s
purchasing department. They offered a significant 7 percent discount on 5000 cases of assorted
Goodseal products. The deal was far too good to be ignored and KM accepted the deal. The sales
department contacted Plexet and cancelled their next three orders. KM received the Chinex
products over a month late.

Unfortunately, the purchasing manager was unaware of the situation on the ground in the local KM.
The shelves holding the Goodseal line had an ample supply of the 1L six packs, but no other size
was on the shelf. Worse yet, Plexet’s competitors were stocked next to the Goodseal line, and had
a full line of product sizes and quantities per pack.

What’s the problem?

Plexet is under the assumption that they have a sales crisis. Forecasted demands are higher than
their current rate of sales. They have decided to help resolve this by adjusting their product line,
and adapting their production line to manufacture more products that sell faster. Offering coupons
would help boost sales and consumer loyalty. The purchasing department at KM believes they
have addressed a potential inventory crisis, are secure in the amount of supply they have acquired,
and have perhaps even boosted their bottom line through the recent acquisition of the cheaper
Goodseal product from Chinex.

Case Questions Study Discussion Questions

1. Explain how conducting an organized and systematic sourcing process would benefit the
purchasing department at KiwiMart (KM).

2. What form of supplier partnership would help improve both KM and Plexet’s supply chains?

3. How would Plexet benefit from adopting a JIT (Just in Time) approach to production?

4. Explain the advantages KM and Plexet would receive from implementing an inventory
management system.

Please include your name, section and date on the first page of your submission and number your

pages.

Submission should be between 3 and 4 pages in length, double spaced, 12 point font with 1 inch

margins.

This assignment is work 5% of your final mark.

Criteria Marks
Available

Q1.  Summary of the problem and situation
 Benefits of a systemic sourcing process for KM

1.5
3.5

/5

Q2.  Type of partnership/business relationship that improve the supply
chains for KM and Plexet

 Benefits of this approach

1
4

/5

Q3.  What will JIT help eliminate and improve
 Benefits of adopting a JIT approach at Plexet

1
4
/5

Q4.  Advantages of implementing and inventory management system for
both organizations and technology or tools that might be used

5

Total 20

The mark for the above will then be converted to a mark out of 5.

This case will be discussed in class and you will then need to submit your response to the

questions via BlackBoard.

Please check the date in the assignments area.