Supply Chain Essay Example | Topics and Well Written Essays - 5250 words

Supply Chain - Essay Example II. Options of recommendation of a supply chain strategy: Keiretsu network The business will utilize the keiretsu network for the power tool company. Keiretsu is a network of organizations linked together by having a stake in each other's organization. The structure is usually likened to a spider's web and was designed to diffuse the adversarial relationship between buyer and supplier. The supplier also becomes a stakeholder of the organization and this set up induces the parties to work for their mutual benefit. This kind of relationship promotes cooperation and collaboration as each organization becomes a stakeholder in each other's organization whereby all stakeholders will share the fruit of profit or in the case of loss, also a share in the financial setback (Miyashia and Russel, 1994). The parts needed for the power tools (electric drills, saws, and sanders) are highly specialized and costly. It has a high learning curve and cannot be procured with any supplier overnight becaus e its specifications must be met before it can purchase from a certain supplier. Needless to say, a collaborative long-term and non-antagonistic relationship with suppliers is favorable for the company due to the requirements of its parts. The keiretsu procurement network serves this purpose. This kind of procurement strategy is aligned with the company's vision of producing the highest quality for its power tool because the company will be working close with its suppliers. Keiretsu is basically a collaborative supplier-client networking where each player has a stake in each other and this kind of supplier chain relationship serves this purpose. Power tools depend on the quality, timeliness and reasonability of the cost of its parts and it is imperative that the supplier that provides the parts of the power tools is committed to delivering its supplies according to those requirements. Of all the supply chain strategies, keiretsu network is the best option that serves the company's o bjectives. The best way to commit suppliers to provide supplies of quality, timely and cost effective is to build a relationship with them whereby the company can work with the supplier on how to better achieve these business objectives. This will not only produce better power tool products, but also allow better prices making the company more competitive in the market making keiretsu a top choice. The only downside of keiretsu network is that if a non-performing (tardy on delivery) and substandard (not meeting specifications) supplier is wrongly chosen, it would be difficult shake it off because the company has committed itself on a long-term basis, especially if there is a contract between the two parties. These issues can be easily remedied. For the issue of incorrectly choosing non-performing and substandard supplier, the power tool company must first establish a strict criteria before looking for a supplier. These criteria must reflect the objectives, quality standard and timel iness of the company and must be met by the supplier in consideration. This would avoid incorrectly choosing a wrong supplier. For the issue of binding the company to a wrong supplier, it can be remedied by stipulating an opt out and a fine in the event that supplier will renege the contract. This will compensate the company for any