Rolls Royce

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Starting a new business, management of every company has to decide what competitive strategy will be; whether focus will be on low price, speed, high quality or other. Depends on that decision, organization can develop its supply chain strategy, work on performance objectives and make trade-offs needed to achieve strategic fit. Drucker (1995, cited in Elgazzar et al., 2011) posts words of William Durant, founder of General Motors, that profit is the result of a ‘cost stream that spread throughout the supply chain’, showing that only analysis of the whole chain makes the difference. To analyze supply chain performance there are following drivers to consider: facilities, inventory, information, transportation, sourcing and pricing. Rolls-Royce’s business is on the products with long life cycle. Gas turbines are not a commodity product and it takes years to come up with a new system. This fact allows the company to achieve strategic fit, stay competitive and generate revenues over the long term. Obviously, each of the performance drivers is considered in order to get the results shown in the annual report. Facilities are the physical locations where product is fabricated, assembled or stored. Possible choices for a company are to have one facility, so that increase efficiency, but lower responsiveness or to have a few of them, so that increase responsiveness by sacrificing efficiency. Exact location, capacity, variety of products should be considered. Rolls-Royce, competing on a market with high-value products, initially goes for responsiveness and locates facilities closer to customers: UK, Germany, USA, Asia; all together service centers or manufacturing bases in 50 countries (Datamonitor, 2008). This decision also helps to lower business risks. However attention started being paid to efficiency as well; £400 million invested in the UK in order to achieve better efficiency and productivity of operations (Rolls-Royce, n.d., p.5). This...
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