Supply Chain Analysis: Contract, Inventory, and Internal Analysis

This report analyzes a supply chain case study involving Semicontronics and Singatron. It examines a letter of intent, its legal enforceability, and how parties can limit responsibilities. The report conducts an internal analysis of Semicontronics, identifying strengths such as its reputation and market share, and weaknesses like a lack of advanced equipment. It also explores the Just-In-Time (JIT) inventory model, detailing its advantages and disadvantages, along with its suitability for the company. The report references relevant sources to support its analysis, providing a comprehensive overview of the supply chain management issues presented in the case study.

Running head: SUPPLY CHAIN 1
Logistics and supply chain
Student’s name
Name of the institution
Date

SUPPLY CHAIN 2
A letter of intent can also be referred to as a term-sheet or memorandum of
understanding. It's a written document stating an agreement between parties which they all intend
to solemnize through a legal binding contract. It cannot be enforced by law because the parties
are not engaged in a deal, nevertheless, it indicates a commitment of one party to the other. By
concluding their negotiations with a letter of intent, Semicontronics and Singatron have an
understanding where singatron is committed to supplying semicontronics with the specified
products by in case they don't fulfill their agreement. Law cannot enforce it because they are no
binding contract.
What parties can do to limit the responsibilities to the relations of the Letter-of-Intent?
To limit their responsibilities, involved parties can choose to be careful with the language
used in the LOI or state in their letter that there are no liabilities in case of a breached agreement.
Parties should be cautious while witting an LOI to avoid a contract-like language, words such as
will, must and shall not be, consistent use of shows that the parties have a binding contract and
not just an agreement to discuss in good faith. To ensure that the LOI is not a binding contract, a
word such as possible deal, would, potential transaction, or any other terms that do not show
commitment should be used. The involved parties could also state in their LOI that in case the
agreement is breached there will be no damages to be paid (Ladd, 2017).
Internal analysis of semicontronics.
Strengths:
 Excellent reputation- the company has a good reputation for producing quality products,
meeting the expectations of their customers, and delivering on the right time. This has
enabled customers to build trust and become loyal customers (Búzás, 2017).

SUPPLY CHAIN 3
 Significant market share- semicontronics have both local and international markets, and
to a wide range of customers, they sell their products to retailers who then rebrand their
products and sell them in their own countries, they also sell to companies that produce
electronics.
Weakness:
 Lack of appropriate equipment- the company, lacks the equipment to manufacture the
high technology products and is forced to subcontract to meet the demand. This reduced
their profitability.
Type of inventory model used.
The type of inventory model used is JIT model. JIT requires orders to be made based on
specific demand. Organizations can use this model to become more productive, to reduce waste,
reduce the cost of managing inventory, and reduce the storage and transportation cost. The
organization will only make an order to its suppliers when there is demand and is therefore
required to predict the market accurately. When a supplier predicts that the demand of a certain
product will decrease, he/she starts reducing the stock and at the same time ensure that there is
enough to supply the demand before it decreases. JIT model increases efficiency and minimizes
inventory. The success of JIT model depends on reliable suppliers, no equipment breakdowns,
and steady production (Filippini & Forza, 2016).
The significant advantage of using JIT is that the organization is not left with any
unwanted inventory and they also don't incur storage cost in case a customer cancel an order and
thus the overall cost of production is reduced. Companies using JIT have a short production run
and can quickly shift from the output of one item to another. However, implementing a JIT

SUPPLY CHAIN 4
model could cause supply chain problems in cases where the supplier cannot deliver the required
products in time, the production stops abruptly that leads to delayed delivery of goods ordered by
customers. This could result in an increased number of canceled orders due to the customers
become impatient (Kirchhofer, 2016).

SUPPLY CHAIN 5
References
Búzás, Z. I. (2017). Evading international law: How agents comply with the letter of the law but
violate its purpose. European Journal of International Relations, 23(4), 857-883.
Ladd, J., (2017). Legal and moral obligation. In Political and Legal Obligation (pp. 3-35).
Routledge.
Filippini, R., & Forza, C., (2016). The impact of the just-in-time approach on production system
performance: a survey of Italian industry. A review and outlook. In A Journey through
Manufacturing and Supply Chain Strategy Research (pp. 19-39). Springer, Cham.
Kirchhofer, R., (2016). U.S. Patent No. 9,251,033. Washington, DC: U.S. Patent and Trademark
Office.