Supply Chain Case Studies: Balancing Responsiveness and Efficiency

This case study delves into supply chain analytics, focusing on the critical balance between responsiveness and efficiency. It begins by defining these two core concepts and their impact on supply chain design and management. The study then presents several real-world scenarios, including the merger of SKEEKFON and STURDYFON, highlighting the challenges in optimizing production and distribution across multiple global regions, considering factors like transportation costs and import duties. It also examines BioPharma, Inc.'s challenges with declining profits and excess capacity, presenting a transportation model to minimize costs. Finally, the study explores the business model of Groupon, analyzing how it achieved early success by focusing on local merchants and offering limited daily deals. The case study provides valuable insights into supply chain optimization, cost reduction, and strategic decision-making in various business contexts, supported by references to relevant resources.

SUPPLY CHAIN ANALYTICS
Difference between responsiveness & Efficiency?
Responsiveness !
The process of action with quickly and positively is called responsiveness.
Efficiency!
Efficiency is the ability to avoid wasting stuff, efforts, money, and time is called
efficiency.
Balancing Responsiveness & Efficiency in supply chain!
The responsiveness of supply chains to changing customer needs and their overall
efficiency are major issues in supply chain design and management & currently
receive wide attention in the scientific community as well as in practice.
Responsiveness is like as the “ability to react purposefully and within an
appropriate time-scale to customer demand or changes in the marketplace, to bring
about or maintain competitive advantage.
A supply chain would be considered to be competent if the focus is on cost
reduction and no resources are wasted. Responsiveness and efficiency are directly
and indirectly linked and even involve evaluation. In supply chains, the
interrelationships between major parts of the system are complex. There are
various players in the supply chain, and each of them addresses condition of
demand, production, and supply management, distribution, planning etc.
Each of these conditions also interacts with the others. These interrelationships
form feedback loops that either intensify or cancel out management initiatives in
unintuitive paths. This is the case both when such initiatives are carried out by
individual supply chain players in an un-coordinated fashion as well as when
supply chain members coordinate their initiatives and try to align policies in the
supply chain.

SKEEKFON & STURDYFON!
Is one of the world mega mergers of two biggest cell phone manufacturers and
both market size are in the following countries:
N.AMERICA
S.AMERICA
EUROPE (EU)
EUROPE (NON EU)
JAPAN
ASIA
AUSTRALIA
AFRICA.
Sleekfon has three production facilities in Europe (EU), North America, and South
America. Sturdyfon also has three production facilities in Europe (EU), North
America, and Rest of Asia/Australia. The capacity (in millions of units), annual
fixed cost (in millions of $), and variable production costs ($ per unit) for each
plant.
Transportation costs between regions was very higher.
Duties are applied on each unit based on the fixed cost per unit capacity, variable
cost per unit, and transportation cost. Thus, a unit currently shipped from North
America to Africa has a fixed cost per unit of capacity of $5.00, a variable
production cost of $5.50, and a transportation cost of $2.20. The 25 percent import
duty is thus applied on $12.70 (5.00 + 5.50 + 2.20) to give a total cost on import of
$15.88.
The merged company has estimated that scaling back a 20-million-unit plant to 10
million units saves 30 percent in fixed costs. Variable costs at a scaled-back plant
are unaffected. Shutting a plant down (either 10 million or 20 million units) saves
80 percent in fixed costs. Fixed costs are only partially recovered because of
severance and other costs associated with a shutdown.

BIO PHARMA !
INTRODUCTION!
BioPharma, Inc. is a global company which is dedicated in manufacturing of bulk
chemicals .The BioPharma Inc. holds patents on two chemicals which, are called
Highcal and Relax internally. Her plants produced from six various regions.
Problem ?
BioPharma Inc. has experienced more than one problem and the serious ones are
three:
1. A sharp decline in profits
2. Very high costs at its plants in Germany and Japan
3. It has a surplus capacity in its global production network which overwhelm the
company
The researcher has outlined a transportation model and the mathematical model
thereof that can be applied to minimize transportation total cost for the BioPharma
Company.
The mathematical model is just a linear programming formulated to solve a
transport problem. We have calculated the minimized total transportation cost for
the company and about 12% of the cost can be avoided.
This is a big saving for the company and about UD$ 3.97 million per month will
accumulate in the company’s bank account. The optimal shipment plan provides a
reduction of the company’s burden by 12% by rearranging the network flow.
Likewise, the optimal network flow agrees with the original plan by closing down
the two Relax plants at Germany and Japan. This is mainly to avoid high running
costs of the plants due to their relatively higher cost raw materials.
Further work is needed to establish the reasons why the Solver failed to give a
sensitivity report. Sensitivity report could save a lot of effort for flexibility tests for
closing plants or increasing demands

SAVOR & GROUPON!
Groupon is an online marketplace through which coupons and discounted gift-
certificates for both local and national companies are offered to consumers.
With the high level of customer satisfaction & many options in the deals.Groupon
deal and depend on subscribers. But from the start with the few members and local
team it was very difficult towards the developments. Moreover with the good
relation with the loyalty and helped with the advance technological team groupon
makes success and increasing competition.
Groupon’s early success is thereby primarily rooted in two factors: The focus on
local, primarily small merchants and the restriction of the number of promotions to
one per day. This combination helped the company to deal with minimal scale and
resources and thus to increase the attractiveness of it’s initially rather small
community.
Starting the business model by city – not by country – and offering only deals from
local merchants, on the one hand, increased the relevance of deals and thus the
attractiveness for Groupon’s early members.
Another local merchants often very afraid in their marketing budgets with more
than 50% of them spending less than US$2,500 per year on marketing appreciated
the idea of promotion without up-front expenses. Thus, while multi global firms
with significant marketing budgets would have not been attracted by Groupon’s
business model at least in the beginning, focusing on small local merchants in
order to leverage their budget constraints significantly enhanced Groupon’s early
success.
The multiple deals on each day reduced the disadvantage of an initially rather low
number of members by steering all members focus on this, one deal and thus
increased the attractiveness for local merchants.That’s all, Groupon’s early
success.

REFERENCES
http://files.shareholder.com/downloads/AMDAE2NTR/2192449792x0x577460/A1ADF349-
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AIMMS Paragon Decision Technology
http://www.aimms.com/aimms/download/manuals/aimms3om_networkflowmodels.pdf
Bertsekas Network Optimization: Continuous and Discrete Models
https://www.chegg.com/tutors/Business-Math-questions/CASE-STuDy-To-Savor-or-to-
Groupon1-Mr-Chang-the-owner-of-Enter-the-Dragon-a-high-end-Asian-restaurant-in-Chicago-
was-puzzled-by-the-choices-put-before-him-by-the-Groupon-sales-representative-He-could-
offer-a-daily-deal-at-Groupon-a-60-coupon-for-30-that-w--OAV4V/
https://www.demandsolutions.com/industries/pharma-bio/case-studies.html
https://www.academia.edu/8751498/Chapter_5_exercise_answers