Simply Bergaya is experiencing a supply crisis after one of their Cambodian supplying factory exploded. This paper is an analysis of steps to take in the process of solving the problem. The core problem of the case is the explosion of a major supplier factory which will cause supply shortage and reduced revenues. At least three alternatives exist to resolve this situation but only one of them is most convenient. Simply Bergaya under the authority of Sareh, the operating manager will have to choose between closing business with the Kosal factory, planning for rebuilding, or relying on other suppliers for unmet supply by the exploded factory. The defining criterion is the time taken to resume normal business and the cost associated. The concluding decision is for Simply Bergaya to seek supply from its existing suppliers and later consider working with the Kosals again or end the contract.
Simply Bergaya is a Canadian fashion company and works with three Cambodian factories as their suppliers. Sareh Ahmadi, Simply Bergaya’s operational manager oversees most of the firm’s activities. One of the Cambodian factories exploded killing 23 workers and leaving many injured (MacDonald, 2017). The Kosals, the factory owners blame the fireworks factory for having failed a series of safety inspections. Sareh has in the past hired local safety inspection for the supplying factory and received reports of poor safety precaution practices by the managers. As told by a local labor activist, the Cambodian workers need the factory to continue running so Sareh has to make a tough decision about the situation (MacDonald, 2017). While making this decision, Sareh fears that people will question Simply Bergaya’s decision to outsource their supply from a poor country like Cambodia.
Sareh as the operational manager for Simply Bergaya practices an authoritarian leadership style. Authoritarian, also known as an autocratic style of leadership involves an individual being in control of all decisions with only a little input from other group members. According to Demirtas and Karaca (2020), autocratic leaders make choices for the organization based on their judgments and ideas and barely accept advice from their co-workers. These types of leaders are also held responsible for organizational problems and make resolving decisions on their own (Demirtas & Karaca, 2020). In this case, Sareh is responsible for a tone of duties including hiring workers for 238 retail outlets, initiating contracts with various factories, and approving new marketing campaigns among other things. As an autocratic leadership situation, Daniel Yoon, the firm’s purchasing manager has to report the explosion incident to the operating manager. In other words, Sareh has control over all the company’s activities as well as other subordinate workers.
The major problem, in this case, is the destruction of one of Simply Bergaya’s supply factories. The destruction caused by an explosion means stopping supply to the clothing company. As a reliable source of fashion clothing, this incidence is an inconvenience for Simply Bergaya. From a far angle, Simply Bergaya will experience supply shortage and reduced sales before Sareh can figure things out. The primary cause of this problem is poor working safety practices by the managers in the Cambodian factory. The local inspection which was done under Sareh’ authority shows that the factory managers have been cutting corners regarding work safety practices.
Some of the terrible practices include storing toxic chemicals in the lunchroom which in this case puts workers at the risk of inhaling the chemicals among other things (MacDonald, 2017). Another wrong practice is failure to maintain fire extinguishers in the right working order. When fire extinguishers are placed in the wrong places, it could be hard to trace them during fire incidents. Another example of poor practices is blocking fire exists with garbage barrels thus making it hard for workers to leave the building in case of danger. These among other practices attributed to the fiery explosion and death of 23 factory workers (MacDonald, 2017). The local authorities equally blamed the factory managers for leaving flammable cleaning fluids near an old electrical connection box.
There are three main possible solutions to the problem which include closing business with the Kosal factory, planning for rebuilding, or relying on other suppliers for unmet supply by the exploded factory. The first option for Sareh to solve the explosion problem is to end the contract with the Kosals and find another new supplier to meet the required materials. The second alternative is for Simply Bergaya to work without the factory’s supply while helping the owners rebuild it. The last option is for Simply Bergaya to allocate more supply orders to the rest of its factories to meet the exploded factory’s supply. In this option, the firm can choose to either renew the contract with the Kosals after rebuilding or keep receiving the supply from other suppliers.
To decide on the best solution for the problem, there are a few things to consider. The effectiveness of each option must be based on its benefits to Simply Bergaya especially in the continuing smooth flow of materials for the firm. An option that causes a delay in supply, reduces sales and general income, or is expensive to maintain should be the least to consider in making the last decision. A preferred option will ensure a normal supply of clothes at minimal disruption and cost. Therefore, all the alternatives must weigh time of disruption, affordability, and convenience.
Analysis of Alternatives
The first option is for Simply Bergaya to end the contract with Kosals and find a new supplier. Finding an immediate solution for supply is important for this firm to continue meeting its targets. Promptly ending the contract with the Kosals may cost Simply Bergaya for breach of contract especially if the agreement never considered such fire incidents. Secondly, the process of searching and vetting new suppliers to hire the best is tedious and expensive.
The second option for Simply Bergaya is to operate without the exploded factory’s supply while helping the Kosals rebuild the factory. This option will mean incurring a shortage of supply, reduced sales, and reduced revenues for the fashion firm. In other words, Simply Bergaya will be operating at losses until the rebuilding of the Kosal factory; which could take years. The third option for Simply Bergaya is to reallocate the Kosal factory supply orders to the rest of its factories and either continue this plan or renew a contract with the Kosals upon reconstruction. This option will mean the firm’s supply will continue although the other factories may experience difficulties in producing extra supply.
Decision and Justification
The best decision is to take the third option or alternative to ensure the smooth running of the business. The third option will cause Simply Bergaya the least supply disruption time thus incurring the least losses. Allocating more supply orders to other factories may cause shorter time inconvenience before adapting to more production compared to searching for a new supplier. Furthermore, this is the one option that helps Simply Bergaya to get back to normal business in the shortest time possible. In the meantime, Kosal’s contract may not prevent the company from seeking other sources of supply.
Choosing the third option may also give Kosal’s factory time to reconstruct their firm for the sake of the Cambodian workers. Since this factory has a positive supply history except for this incidence, Simply Bergaya may choose to continue the contract with them. That way, Simply Bergaya will continue to receive the additional supply from other factories and allocate new supplies for the Kosal factory or bring supply orders to the way they were before the explosion.
The implementation of the third alternative will require immediate sending increased supply order notifications to the rest of the factories. Simply Bergaya will have to adjust their ongoing contracts with the rest of the suppliers to accommodate the changes. The fashion company will then need to pause their contract with Kosal factory because ending it in such incidences may require paying them due to breach of contract. Pausing the contract will give Simply Bergaya a convenient time to work with the existing suppliers. If the firm decides to end the contract after rebuilding the Kosal factory, it will not experience major disruption or expenses compared to ending it during such a crisis. Continuing the contract with the Cambodian factory will require Simply Bergaya to demand appropriate work safety practices in the firm.
Demirtas, O., & Karaca, M. (2020). A handbook of leadership styles. Cambridge Scholars Publishing.
MacDonald, C. (2017). Chaos in Cambodia: Responsibility for worker safety in the global supply chain. Web.