Executive Summary
This paper is a case study analysis of Dong-In Company, which manufactures outdoor gears and equipment. Some of the company’s main customers are multinational brands, such as Black Diamond, Gregory, CamelBak, and Georgia. Its vast customer pool stems from the multinational nature of the company’s enterprise model. Although the organization has made a name for itself in the production of outdoor gears and equipment, it suffers from supply chain issues. They include quality concerns, cost concerns, trust issues (between the customer and company), and time management issues.
Considering the company intends to maintain its competitive advantage by increasing its control of the value chain process, this paper evaluates possible strategic options that the company could pursue to maintain its dominance. Consequently, it recommends that the company’s management should standardize its production scheduling and distribution systems. It also recommends that the company’s management should consider setting up factories in countries that have cheap labour, as opposed to outsourcing its practices in these locations, without exercising its control of the kind of labour practices that its partners engage in.
Generally, the predicted outcome of following the above recommendations is a reduction in supply chain inefficiencies. In detail, Dong-In should experience reduced waiting times between the ordering process and the product delivery process, improved labour practices and reduced labour costs if it chooses to adopt the recommendations highlighted in this paper.
Introduction
Companies that want to improve their processes and profitability are increasingly starting to appreciate the pivotal role of effective and proper supply chain management processes in their operations. This is why Jacoby (2010) says, supply chain management is among today’s most sought after skills. However, given the sheer volume of operations that large companies engage in and their global nature, identifying problems in supply chain management could be a difficult task. This is why Hugos (2010) says, it takes highly qualified professionals to identify and correct issues in supply chain management.
Thus, effective supply chain management could offer companies immense benefits to their operational processes. Based on this understanding, this paper highlights different issues in the supply chain management of Dong-In Company and provides recommendations to explain how the company could overcome its problems and maintain its competitive advantage.
Target Market Identification
Most customers who seek Dong-In’s services come from all over the world. This customer pool aligns with the company’s multinational nature. Indeed, some of the company’s main customers are multinational brands, such as Black Diamond, Gregory, CamelBak, and Georgia (Kim & Parmar 2015). This customer pool shows that most of Dong-In’s customers are in the outdoor adventure industry.
Nonetheless, a deeper assessment of the company’s target market shows that it is mostly comprised of high-end backpack and outdoor gear retailers. Most of them have been long-term partners, or customers, of the company. An accurate assessment of this fact shows that the company’s customers have worked with the company for about 15 years (Kim & Parmar 2015).
Market Needs
Understanding the market needs of Dong-In may help us to understand the company’s production competencies that would resonate well with its customers. In this regard, the company should understand the tastes, preferences, and attitudes of its customers because, abstractly, market needs depict customer wishes (Pride 2008). The case study shows that some of the greatest market needs for Dong-In’s customers include the availability of quality products, timely production services, availability of affordable products, and innovative product designs (Kim & Parmar 2015).
The company has outsourced some services that address these market needs. For example, it has outsourced some of its production processes. Currently, it is in the process of evaluating whether to outsource its product design process. Generally, the company has not met some of these customer needs well enough. This is why it has supply chain problems. The existence of long production processes is one example of the kind of supply chain issues that the company has encountered in its management plan.
Analysis of Case
While Dong-In Entech has developed a good name in the manufacturing of outdoor gears and equipment, its performance in supply chain management has been unreliable in the last few years. In different aspects of its supply chain management process, the company has been unable to meet its objectives and those of its customers. Quality issues, cost issues, trust issues, and time management issues have constantly characterized the company’s supply chain process (Kim & Parmar 2015).
These issues have not only frustrated its customers, but also proved to be points of concern for the company’s managers, as they struggle to find innovative ways of remaining competitive. Consequently, the company’s managers have to find out effective ways to fix these supply chain management issues. In this regard, the managers of Dong-In face the problem of improving their value chain competencies because their current supply chain model is unsustainable.
Some of their available strategic options include developing engineering competencies, to give the company cost-saving advantages in engineering, and integrating the company’s processes with the customers to improve its synergies (Kim & Parmar 2015). Nonetheless, these alternatives have serious operational, legal, and ethical implications on the company’s activities.
The supply chain problems of Dong-In did not emerge overnight; they are products of the company’s geographic expansion and growth. Particularly, the different systems and procedures of the supply chain process, which cobble together in the supply chain mix are the main causes of the company’s supply chain issues (Kim & Parmar 2015). Consequently, the company’s managers have found out that its processes are complex. Similarly, its reporting procedures have made it exceedingly difficult to track and control different aspects of the company’s supply chain processes.
Key Issues/Goals
One of Dong-In’s key goal is to make its supply chain process more efficient by improving the supply chain process from the point of order to the point of sale (Kim & Parmar 2015). Another goal of the company is to reduce its product costs and reduce the price variability associated with its different product categories (Kim & Parmar 2015). For example, its high-end and low-end products have different cost categories that complicate its pricing plan. Lastly, another key issue of Dong-In’s supply chain process is the labour management practices associated with its outsourcing process.
The company outsources most of its production processes to countries that have cheap labour, but this process exposes them to legal and ethical malpractices because some of their suppliers engage in unethical labour practices (Kim & Parmar 2015). Other issues facing the company include an affirmation that its partners have the technical ability to produce complex products, an understanding that its partners are reliable to provide timely deliveries of goods and services, a guarantee that its suppliers would produce defect-free products and a confirmation that its partners would engage in safe and ethical labour practices.
Recommendations
The decision criterion for making the recommendations highlighted in this section of the report is a product of an analysis of the company’s internal and external environment. The decision framework for developing some of the recommendations highlighted in this paper reflects the findings of an analogy of the company’s goals and key issues. In other words, some of the recommendations highlighted in this section of the paper strive to address some of the supply chain issues affecting the company and take advantage of existing opportunities that the company faces, as well. The same recommendations offer solutions to some of the alternative supply chain choices the company has to make.
Considering the nature and multiplicity of problems that have surrounded Dong-In supply chain processes, the company needs to replace its production scheduling and distribution systems with a standardized process of doing so. Adopting this strategy could help to provide a master scheduling platform and inventory planning program that would eliminate some of the inconsistencies and uncertainties associated with the supply chain process.
Golinska (2014) affirms this fact because he says that standardizing different aspects of the supply chain process would involve the use of collaborative tools for forecasting and replenishment that would eliminate different process inconsistencies in the supply chain program. Blecker (2014) also adds to this fact by saying that the standardization process would also lead to increased efficiency and cost savings in the supply chain process.
Dong-In should also consider setting up factories in countries that have cheap labour, as opposed to outsourcing their practices without exercising control over the kind of labour practices that its partners engage in. Considering the multinational nature of its operations, the company has a moral responsibility to support factory workers who are engaged in producing its products (Blecker 2014). Its responsibility also includes giving the workers safer working environments and encouraging its partners to do so.
This action is a form of corporate social responsibility (CSR) for the company and it could improve the company’s profile as a responsible member of the corporate community (Golinska 2014). This recommendation aligns with one proposal available to the company, which is to increase its engineering capabilities and move up the value chain ladder. By taking control of this process, the company could also have a greater control of the labour practices in its facilities and enjoy significant cost savings associated with the same.
Lastly, the company should refrain from outsourcing its design processes because the intellectual property and confidentiality concerns associated with this strategy could undermine the cost advantages that the company would be seeking to enjoy through this process (Golinska 2014). For example, there would be many legal considerations associated with this plan and the company may similarly suffer the problem of failing to find partners that share the same intellectual thought, or creativity, which is synonymous with the company’s products.
The predicted outcome of following the above recommendations is a reduction in supply chain inefficiencies of Dong-In’s supply chain processes. This way, we expect to see reduced waiting times between the ordering process and the product delivery process. There should also be improved labour practices and reduced labour costs for the company if it chooses to expand its engineering processes.
References
Blecker, T 2014, Innovative Methods in Logistics and Supply Chain Management: Current Issues and Emerging Practices, epubli, New York.
Golinska, P 2014, Logistics Operations, Supply Chain Management and Sustainability, Springer, New York.
Hugos, M 2010, Essentials of Supply Chain Management, John Wiley & Sons, London.
Jacoby, D 2010, The Economist Guide To Supply Chain Management, Profile Books, New York.
Kim, S & Parmar, V 2015, ‘Supply Chain of Dong-In Entech in Philippines’, Asian Journal of Management Cases September, vol. 12, no. 2, pp. 164-171.
Pride, W 2008, Marketing, Cengage Learning, London.