Ikea
Supercombra: Andean Farmers
Summary:
Supercompra is a large retailing company, who was acquired by Grupo Mazaplan. Their procurement strategy was to decentralize production facilities and source from local farmers. This strategy would help reduce lead times, mitigate some supply risks associated with transportation. Supercompra had a lot of challenges faced with this strategy; especially with low-income suppliers.
Problem:
What type of supplier selection strategy to elect, so Supercompra has a reliable source of produce and business risks would be mitigated?
Protagonists:
Pallatanga: Association of small farmers Supercompra set up, to reduce transaction costs. It failed to supply SuperCompra’s proximity platforms
Juan Zapata: CEO of Supercompra, he elected to pursue the decentralization strategy
Going forward:
Supercompra should invest in Andean farmers. From a public relations standpoint, sourcing locally will help promote a positive reputation among the consumer market in that area. From a long-term financial standpoint, Supercompra will be able to be profitable in a few years if they integrate and collaborate with local suppliers successfully. They will hold a sustainable competitive advantage over other retail chains, because their suppliers will be local (quicker lead times) and more affordable. (Higher bargaining power of purchasing will lead to lower prices)
IKEA: Indian Rugs & Child Labor
Summary:
Ikea is a Swedish furniture retailer. One of Ikea’s major suppliers for their rugs/carpets industry, Rangan Exports, is under accusation for the exploitation of child labor. This is a major reputation risk for Ikea. Marianne Barner, business are manager for carpets, evaluates alternatives of suppliers, and considers what they should do going forward.
Problem:
What actions should Marianne Barner and Ikea take, in order to protect Ikea’s brand image? Also, how should the relationship with Rangan Exports be handled going further?
Summary:
Supercompra is a large retailing company, who was acquired by Grupo Mazaplan. Their procurement strategy was to decentralize production facilities and source from local farmers. This strategy would help reduce lead times, mitigate some supply risks associated with transportation. Supercompra had a lot of challenges faced with this strategy; especially with low-income suppliers.
Problem:
What type of supplier selection strategy to elect, so Supercompra has a reliable source of produce and business risks would be mitigated?
Protagonists:
Pallatanga: Association of small farmers Supercompra set up, to reduce transaction costs. It failed to supply SuperCompra’s proximity platforms
Juan Zapata: CEO of Supercompra, he elected to pursue the decentralization strategy
Going forward:
Supercompra should invest in Andean farmers. From a public relations standpoint, sourcing locally will help promote a positive reputation among the consumer market in that area. From a long-term financial standpoint, Supercompra will be able to be profitable in a few years if they integrate and collaborate with local suppliers successfully. They will hold a sustainable competitive advantage over other retail chains, because their suppliers will be local (quicker lead times) and more affordable. (Higher bargaining power of purchasing will lead to lower prices)
IKEA: Indian Rugs & Child Labor
Summary:
Ikea is a Swedish furniture retailer. One of Ikea’s major suppliers for their rugs/carpets industry, Rangan Exports, is under accusation for the exploitation of child labor. This is a major reputation risk for Ikea. Marianne Barner, business are manager for carpets, evaluates alternatives of suppliers, and considers what they should do going forward.
Problem:
What actions should Marianne Barner and Ikea take, in order to protect Ikea’s brand image? Also, how should the relationship with Rangan Exports be handled going further?