Case Study Analysis

This case study analysis examines the issues faced by Sapphire Energy and AusCotton, two subsidiary firms of Laburnum Group. It discusses the challenges in supply chain management and provides recommendations for improvement. The analysis covers topics such as cost management, inventory control, transportation, and supplier relationship management.

Case Study Analysis
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Table of Contents
Introduction......................................................................................................................................3
Analysis of Sapphire Energy...........................................................................................................3
Recommendation for Sapphire Energy............................................................................................4
Analysis of AusCotton.....................................................................................................................4
Recommendation for AusCotton.....................................................................................................5
Conclusion.......................................................................................................................................6
References........................................................................................................................................7
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Introduction
Laburnum Group was founded in year 1920 and considered as one of largest listed Australian
firm that operates business from Victoria. Company is having operations in diverse sectors such
as home improvement, office supplies, chemicals, energy, industrial and safety products and
clothing. In order to maintain the quality parameters and accomplishing the key values properly
the business firm is well focused towards shareholder values. However, the issues are being
faced by the businesses in diverse manner such as supply chain management. Present report will
cover the analysis of two subsidiary firms of Laburnum Group. Classification of case studies can
be as Sapphire Energy and AusCotton.
Analysis of Sapphire Energy
Sapphire Energy is considered as one of reliable electric service cable provider and attracts the
customers on the basis of geographical area. Currently the products are being sold in areas like
Geelong, Melton, Shepparton, Wangaratta and Wondonga. Currently the customers are being
attracted to have better sales of aluminum triplex cable. It also helps in delivers the electricity
from the distribution pole. It means the supplier plays a critical role in sales and success of the
organization (Christopher, 2016).
Currently the business firm is having a carrying cost of cable per meter is 1.35 dollars.
According to standards and policies the Eastern Power Storeroom has to take the one twelfth of
the total production. Policy is being framed to manage the balance in production and sales. In
addition to this, it can be said that the company has also framed the policy that the suppliers must
order a minimum of 4500 meters so that company can have better opportunities in the market.
Currently the cost of operation and carrying cable is high that affects the overall process
effectiveness. It influences the inventory cost and sales per unit in negative manner (Hugos,
2018). It has been witnessed that currently the cost of cable shipment is very high and it is
recorded at the 50 $. However, it includes the cost of production and requisition. Additional 10
percent inventory carrying cost is also affecting the overall development in negative manner. It
also enhances the financial burden on the Sapphire Energy (Swink et al. 2017). Moreover,
current carting cost of cable per meter is 1.35 $. Such kind of measures and financial calculation
indicates that company is not having cost coverage in effective manner due to lack of sales
(Monczka et al. 2015).
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It also indicates that current order system of Sapphire Energy is not accurate as per standards. It
indicates that standards and policies need to be improved accurately so that long term
development can be prompted. Currently the inventory standards are also not accurate that also
influences the overall outcome (Cooper, 2017). Shareholders need to ensure that supply chain
measures are being improved as per future demand and goals. As it is being projected that in
upcoming years the Eastern Power will require a 155,000 meters of cable. It indicates that
current capacity of the inventory room and store is also not proper to meet the future goals.
Currently the supply chain and its forecasting measures are not employed in significant manner
that also influences the overall performance (Mangan et al. 2016).
Recommendation for Sapphire Energy
On the basis of case of Sapphire Energy, it can be said that company need improvement in
standards and practices that can assist business to gain better opportunities. It has been witnessed
that Eastern Power will have an increase in demand so the supply forecasting measures are need
to be employed by business. Also, current order system needs to be change so that sales can be
advanced. It is recommended that company should set arrangements that a minimum order from
supplier should be of 15000 meters. Also, the store capacity o the Eastern storeroom is also need
to be increased till 150000. It will also enhance the opportunities for the business firm and allow
accomplishing key goals and objectives in desired manner.
It is also recommended that the company need to improve the shipment cost management
process. In this, cost management techniques need to be advanced such as comparison between
different shipment modes can also be a practice. It will allow making sure that better
opportunities are being attained by business firm through effective control on the shipment cost.
Inventory cost also need to be improved by having proper allocation of resources so that cable
can be stored in accurate manner. It will also help in storing the large quantity of cable in less
cost. It is also suggested to improve the real time inventory management and monitor the vendor
performance. It will allow understanding the ratio of cable is being stored by the supplier and
sales achieved.
Analysis of AusCotton
AusCotton is operating its business from different locations as they are having a contract
manufacturing in China, Vietnam and India. It has been witnessed that typical manufacturing is
also considered by the firm as total time taken for manufacturing as 4 to 12 months. On the basis
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of the global business environment and positioning of AusCotton it can be said that business firm
is facing an issue of inaccuracy in the demand forecasting. Through proper consideration of
standards in regard to supply chain the issue needs to be addressed properly. One of key issue
that business is facing regarding quality levels and defects (Fredendall & Hill, 2016). As
currently the business firm is having a production in China, India, etc so it is not sure that
manufacturing plants are providing effective quality.
Long range logistics is also a critical issue that also influences the key practice in negative
manner. It is necessary to have proper consideration of logistics values in accurate manner.
Currently these aspects are increasing the cost of supply chain for the company and affecting the
overall process effectiveness. There is also an issue that business firm is facing regarding delay
in the service delivery that influences the overall outcome in negative manner. Supply chain of
the AusCotton is also affected due to high cost of transportation (Mangan et al. 2016). Company
is using aircraft and waterways as a transportation medium but they have not designed any
specific SOP for the supply chain. It is also a reason that at few locations the business firm is
using aircraft as well as waterways. Such kind of uneven practice in the supply chain enhances
the overall costing factor (Stadtler, 2015).
Cost control is also a risk that affects the effectiveness of the supply chain process. It is
necessary to have adequate consideration of key values so that long term development can be
well maintained. Planning standards are also not being followed adequately that also enhances
the issue for business firm (Monczka et al. 2015). It is necessary for entity to bring planning
improvement in context to supply chain. Supplier relationship management at global scale is also
not managed in adequate manner that also impacts the work place. Effectiveness of the supply
chain is being influenced due to supplier relationship management.
Recommendation for AusCotton
It is recommended that AusCotton need to focus on the effective consideration of the strategic
sourcing process elements so that issues can be resolved. It will allow improving the supply
chain process effectiveness because it helps in designing of strategies accurately. In this, key
different elements need to be covered by business are classified as profiling the category,
sourcing strategy selection, supplier portfolio, implementation path, select suppliers, integration
of suppliers and benchmarking.
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Through proper consideration of the strategic sourcing process the AusCotton can easily have
improvement in the supply chain process. Currently company is not having an adequate planning
regarding transportation mode selection. It is also suggested that AusCotton must compare the
different modes of transportation cost on each route. On the basis of evaluation the company can
design a layout on transportation mode. The medium which is more accurate and reliable will be
selected on quarterly basis. It will allow having better cost control and leading to better
accomplishment of standards.
It is recommended that AusCotton is also need to focus on the increase in transparency so that
long term development can be well maintained. It has been witnessed that through increase in
transparency the standards in supply chain can be advanced. It is also necessary for businesses to
have accurate data insight gain so that long term development can be promoted. Raise the cost
awareness in the practice will also benefit to improve the supply chain standards and lead to
better opportunities. Also, the standardize working need to be promoted as per key principles of
supply chain. Consideration of standards is necessary to resolve the issue and promote the supply
chain of AusCotton.
Conclusion
As per above study, it can be concluded that supply chain process is essential for AusCotton and
Sapphire Energy. It indicates that business firm is facing issues in terms of high cost of supply
chain. It will allow evaluating the key measures in accurate manner and ensuring that sustainable
values are being prompted. Cost management techniques need to be advanced such as
comparison between different shipment modes can also be a practice. Application of strategic
sourcing process is also beneficial to have accurate learning in regard to the supply chain.
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References
Christopher, M., (2016). Logistics & supply chain management. Pearson UK.
Cooper, R., (2017). Supply chain development for the lean enterprise: interorganizational cost
management. Routledge.
Fredendall, L.D. & Hill, E., (2016). Basics of supply chain management. CRC Press.
Hugos, M.H., (2018). Essentials of supply chain management. John Wiley & Sons.
Mangan, J., Lalwani, C. & Lalwani, C.L., (2016). Global logistics and supply chain
management. John Wiley & Sons.
Monczka, R.M., Handfield, R.B., Giunipero, L.C. & Patterson, J.L., (2015). Purchasing and
supply chain management. Cengage Learning.
Stadtler, H., (2015). Supply chain management: An overview. In Supply chain management and
advanced planning (pp. 3-28). Springer, Berlin, Heidelberg.
Swink, M., Melnyk, S.A., Hartley, J.L. & Cooper, M.B., (2017). Managing operations across the
supply chain. New York, NY: McGraw-Hill Education.
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