Supply Chain Process for the Electric Fans
Riordan’s China plant operates as a decentralized unit of Riordan. It prepares its own forecast of electric fan sales throughout the world. It schedules production of these fans to meet the forecasted sales. The electric motors used in the fans are completely assembled units purchased from a local Chinese company. While this company attempts to maintain adequate quantities of electric motors in stock to meet all its order requirements, its on-time deliveries over the past year have averaged only 93% (Chase, Jacobs, & Aquilano, 2006). The current supply chain process is similar to the “responsive supply chain process” which is characterized by having the ability to quickly adapt products to the unique requirements of each customer. They also use built-to-order and customization processes. It would be beneficial to adapt the “agile supply chain process” to build upon the current process and address the issue of electric motor deliveries by the existing supplier. The agile supply chain process utilizes strategies aimed at being responsive and flexible to customer needs, while the risks of supply shortages or disruptions are hedged by pooling inventory and other capacity resources. These supply chains essentially have strategies in place that combine the strengths of “hedged” and “responsive” supply chains. They are agile because they have the ability to be responsive to the changing, diverse and unpredictable demands of customers on the front end, while minimizing the back end risks of supply disruptions (Chase, Jacobs, & Aquilano, 2005). In order to use the agile supply chain process it would need to pull together inventory from several resources due to the on-time deliveries over the past year being an average of only 93%. If they had two suppliers for the electric fan motors, one could supply 75% and the other could supply 25%, which would be an increase of at least 7% equaling a goal of 100%...
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