Supply Chain Recommendations

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  • Published : December 11, 2012
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To:Chief Executive Officer, Mercury International, Ltd.

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Date:11/4/2012

Re:Supply Chain Recommendations

Our team organizational strategy will base on Mercury’s new vision of Operational Excellence and organization will support a vision of high automation with smaller quantity administrative personnel. Mercury’s new focus will be keyed on minimizing labor cost and yet increasing production by the use of automated mechanics. The strategy will emphasize its reliable and high quality products and services, competitive pricing, and minimal difficulty and inconvenience. This strategy entails a continual search for ways to minimize overhead costs, to eliminate intermediate non-value added steps, to reduce transactions costs, and, in general, to optimize business processes and work flow. Our intent is to minimize administrative costs and to increase our supply chain channels. This strategy will help Mercury achieve a projected increase in our top line revenue by 13% annually over the next three years. It will also keep Mercury’s SG&A Expense levels flat. It will improve our EBITDA and will make the company more attractive to investors, thus increasing stock price. Each business unit of Mercury will look to reduce expenses. Cuts will not extend to Research and Development. This is the lifeblood of the company's future. An (8) annual increase is projected in Research and Development efforts. This will require cuts in other expense areas. One method of reducing costs is to utilize a horizontal integration strategy. There are many advantages directly related to this strategy such as acquiring distribution channels, technical knowledge, enhanced profits, and finally creating a favorable brand image of existing goods. Our initial focus will be on the European division because their Administrative Expenses are running at a far higher percentage to revenue 2% than that of the Americas 7.8% and Asia 6.5%...
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