Optimizing Supply Chain Strategies for a Tyre Distribution Company

Running head: SUPPLY CHAIN
Organization in Global Context
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SUPPLY CHAIN
Introduction
SSAS is a distristibution company that deals with car wheels. It ships tyres from
Japan, Korea, Germany, France, and the USA to the port of King Abdul-Aziz in Dammam,
Saudi Arabia. After shipping the containers, the distribution starts at the port of Dry port.
Many shops, retail centers and garages are actually set up for distribution purposes.
Distribution has to cover other major cities like tabuk, medina, mecca, Jeddah and Hial.
However, during the distribution, supply chain strategies are used in the process.
Before you start developing a business plan for a distribution company, you need to
understand a number of common, but very essential principles for organizing this activity.. Its
content characterizes the type of business in which a business entity on the basis of a contract
purchases products from a direct producer and then sells it through retail or wholesale sales,
using its own trade and logistics resources and equipment (Christopher, 2016). . There are no
uniform requirements for a distribution company’s business plan, since this activity depends
on a variety of variables - regional business characteristics, seasonal conditions, the nature of
the products sold and so on. The companys distribution strategy has to be strategically
planned and has to satisfy customers needs and wants (Fredendall, & Hill, 2016). .
Distribution company business plan
The distribution of tyres, like Goodyear, Michelin, Bridgestone, Yokohama and
continental depends on how demand and supply is set up in the markets supply chain. It
should be borne in mind that the implementation of distribution activities in some cases
cannot be limited to trade as such. Distribution is a whole range of measures to promote

SUPPLY CHAIN
goods along the line from the manufacturer to the final consumer. In drawing up a business
plan, investments should be made necessary to create and develop other divisions of the
company that will develop effective logistics, organize distribution networks, work with
brands and familiarize consumers with new tyres of their products, increase the company's
reputation rating in regards with the tyres (Fahimnia, Sarkis, & Davarzani, 2015).
When drawing up the distribution plan of the tyre, it is necessary to decide on whose
behalf the company will act in the future (it depends on how the profitability will be
distributed). The fact is that today there are two views on this type of activity:From the point
of view of the product manufacturer, the distributor’s functions include the organization of
product sales channels, as well as the effective management of their promotion (Fahimnia,
Sarkis, & Davarzani, 2015).
On the part of the distributor, this business is the work of delivering and locating
marketable products in its territory and then bringing it to the consumer.Thus, the essence and
the ultimate goal of the activities of both entities is total - profit. Moreover, both the
manufacturer and the distributor are practically “tied” with sales volumes. But a lot depends
on the specifics of different business sectors and the resources used. The most common
practice is to act on behalf of both subjects, which is realized through the conclusion of a
special agreement between them.
Types of warehouses used
In the distribution chain processes, SSAS will use either public warehouses, private
warehouses or climate warehouses. It is important to note that distribution of tyres in major
cities is done through retail warehouses hired or leased to store the goods for the company’s
garages to act as feeders. The warehouse systems is done through batch processes. The JIT
and the inventory management systems are used in releasing the inventory to the public.

SUPPLY CHAIN
FIFO, LIFO and many more are used in inventory management. However, for the sake of
costing and accounting purposes, FIFO is the systems that SSAS is using to manage its
inventory.
The goal of the inventory management by SSAS is to gain profit from the wholesale
trade in tyre materials by creating a wholesale base. The main difficulties lie in the
organization of search and establishment of reliable relations with manufacturers of high-
quality materials, as well as in the development of routes and efficient logistics channels. The
considered project of activity is not connected with the use at the initial stage of highly
qualified employees and the use of special technologies. The total investment costs amount to
11.855 million riyadh.
The main integral parameters of efficiency
Parameter values
1 Annual / monthly discount rate 24% / 1.8%
2 Payback (total / discounted) 21-24 / 30 months
3 Net value of 13,329,398 riyadh
4 ARR (Investment Return Ratio) 6.56%
5 IPP value (rate of return, internal) 4.71%
6 PI value (index of return) 1.15
Supply Chain Management
The project involves the opening of a base of tyres for wholesale. In the future, it is possible
to open additional activities: own production, as well as trade other products like Rims and