LGMT 683 ASSIGNMENT

LGMT 683:

Post your answer to only one of the topics below. Begin your post with the question you are answering and then make your response.

1. Briefly describe one example of a firm that appears to have done a good job in balancing their e-business distribution network with their “brick and mortar” distribution store network. Use at least four criteria from the e-business scorecard in the text to justify your response.
2. Why is it important to ensure that incentives are aligned in a supply chain? (Hint: see summary at end of the presentation for Chapter 4)

Reply to at least two of your classmates on different topics than your original post.

CLASSMATES POSTS:

SUSETTE,

Why is it important to ensure that incentives are aligned in a supply chain?

A supply chain works well if its companies’ incentives are aligned, if the risks, costs, and rewards of doing business are distributed fairly across the network. When the companies’ incentives are not in line, the companies’ actions won’t optimize the chain’s performance. Misaligned incentives are often the cause of excess inventory, stock-outs, inaccurate forecasts, poor sales efforts, and even poor customer service (Narayanan & Raman, 2004).

There are three reasons why incentive-related issues arise in supply chains. First, when companies cannot observe other firms’ actions, they find it hard to persuade those firms to do their best to the supply network. Second, it’s difficult to align interests when one company has information or knowledge that others in the supply chain don’t. Third, incentive schemes are often poorly designed. Once companies have identified the root causes of incentive problems, they can use one of three types of solutions to bring incentives back into line:

• Contract based: Rewriting their contracts
• Information based: Disseminating information throughout the supply chain
• Trust based: Developing trust

Managers need to take into consideration that the term incentives (how you pay) cannot be exchanged with negotiations (how much you pay); they should recognize that it is hard for some people to recognize that their behavior is driven by incentives. These are possible barriers that managers can encounter when they are trying to solve their incentive issues.

Most organizations don’t have the influence to redesign an entire chain’s incentives, but they can change only the incentives of their existing partners. It's also important to periodically reassess incentives because even top-performing networks find that changes in technology or business conditions alter the alignment of incentives.

References:

Chopra, & Meindl. (2012). Supply Chain Management, 5th Edition. VitalSource Bookshelf version. Retrieved from http://online.vitalsource.com

Narayanan, V.G. & Raman, A. (2004). Aligning Incentives in Supply Chains. Harvard Business Review. Retrieved from https://hbr.org/2004/11/aligning-incentives-in-supply-chains

Retrieved from http://www.scdigest.com/assets/FirstThoughts/08-10-03.php 

TERESA,

Briefly describe one example of a firm that appears to have done a good job in balancing their e-business distribution network with their “brick and mortar” distribution store network. Use at least four criteria from the e-business scorecard in the text to justify your response.

Walmart has done a good job of balancing its online and retail store network by innovating in the areas of (but not limited to):

Information - Walmart used information technology to track and understand consumer behavior from an early age. According to Sam Hornblower of Frontline: “In 1985, Walton and his chief lieutenant, David Glass, began developing a program called Retail Link. The software, and the hardware that went along with it, took years to perfect, eventually costing $4 billion. This revolutionary system delivered sophisticated information on consumer behavior, drawn from the data imbedded in the barcodes that passed through checkout counters.” This software and approach to deciphering consumer behavior has expanded Walmart’s ability to partner with, and exert control over, its suppliers. Hornblower adds that “At the heart Wal-Mart’s offer to share its software program was a Faustian bargain for suppliers: Use our Retail Link program, play by our new rules and we will be your gateway to sales beyond your wildest dreams. Or refuse, and be shut out of America’s dominant retail chain. In fact, by sharing Retail Link, Wal-Mart gained command over its suppliers and effectively penetrated their executive decision-making” (Matthews, 2012).

Product availability - As online and offline retail operations become more tightly knit, as customers purchase online and pick up in stores, or place web orders while roaming store aisles, Wal-Mart thinks it has a competitive advantage. “With over 4,500 stores, we are within 10 miles of nearly 90% of all Americans,” Greg Foran, Wal-Mart’s new CEO of its U.S. business, told investors last week in a strategic update on Wal-Mart’s U.S. operations. “As we continue to expand, that equation becomes even more fascinating. That is a competitive advantage.” The reason is because the many Americans who live near a Wal-Mart could save on shipping costs and pick up web purchases at their local store before an online-only competitor like Amazon.com could have that same purchase shipped to their home (Zaroban, 2015).

Flexible pricing, portfolio, promotions - Wal-Mart is offering a discount of $10 on shoppers’ first order of $50 or more at some stores to entice customers to purchase their groceries online as part of a test phase of some locations. The grocery delivery system is not online; customers order online and pick up their order in the store. In Bentonville, Ark., the pickup location is a standalone grocery pickup store, separate from a regular Wal-Mart building (Geier, 2015).

Facilities - Walmart helped shape the physical landscape of the US retail industry. Thanks in part to the Walmart format, Americans have demanded bigger stores that had to be built on the outskirts of small towns or in the suburbs of large cities. The same drive for greater selection and low prices that made Walmart so successful must be balanced as online sales take a larger share of retail sales (Matthews, 2012). I think the more recent articles of this post demonstrate how Walmart is now taking advantage of its large stores to also serve the online customer community by facilitating same-day pick-up of online orders.

Reference:

Geier, B. (2015). How Walmart will get you to order your groceries online. Retrieved from http://fortune.com/2015/03/26/walmart-order-online/ on November 2, 2015

Matthews, C. (2012). 10 Ways Walmart Changed the World. Retrieved from: http://business.time.com/2012/07/02/ten-ways-walmart-changed-the-world/ on November 2, 2015

Zaroban, S. (2015). The new head of Wal-Mart U.S. says stores are key to winning customers online. Retrieved from: https://www.internetretailer.com/2015/04/15/wal-mart-stores-are-key-winning-customers-online on November 2, 2015

PS: PLEASE RESPOND TO ONE OF THE QUESTIONS AND RESPOND TO MY CLASSMATES POSTS AS YOU WERE SPEAKING TO THEM DIRECTLY.

3.3 QUESTIONS

CHAPTER 4:

4) WHAT TYPES OF DISTRIBUTION NETWORKS ARE TYPICALLY BEST SUITED FOR COMMODITY ITEMS?

5) WHAT TYPE OF NETWORK IS BEST SUITED TO HIGHLY DIFFERENTIATED PRODUCTS?

6) INTHE FUTURE, DO YOU SEE THE VALUE ADDED BY DISTRIBUTORS DECREASING, INCREASING, OR STAYING ABOUT THE SAME?

CHAPTER 5:

6) CONSIDER A FIRM SUCH AS DELL, WITH FEW PRODUCTION FACILITIES WORLDWIDE . LIST THE PROS AND CONS OF THIS APPROACH AND WHY IT MAY OR MAY NOT BE SUITABLE FOR THE COMPUTER INDUSTRY.

7) CONSIDER A FIRM SUCH AS FORD, WITH MORE THAN 150 FACILITIES WORLDWIDE. LIST THE PROS AND CONS OF HAVING MANY FACILITIES AND WHY IT MAY OR MAY NOT BE SUITABLE FOR THE AUTOMOBILE INDUSTRY.

3.4 ASSIGNMENT

Chapter 5: Network Design in the Supply Chain

Right click and save the Sun Oil Exceldemo to your hard drive.

If the demand in Asia doubles, what happens to the total cost and what is the best configuration of plants for Sun Oil under these conditions? Note: Use the “Solver” capability under the ”Tools” menu (but you need to change the demand for Asia in cell E9 from 16 to 32 prior to running “Solver”).

*Note on using the “Solver" Add-In:The Solver Add-in is an Excel add-in program that is available when you install Microsoft Office or Excel. To use it in Excel, however, you need to load it first. Instructions for doing so were included within the module.

For Excel 2003:
1. On the Tools menu, click Add-Ins.
2. In the Add-Ins available box, select the check box next to Solver Add-in, and then click OK.
Tip: If Solver Add-in is not listed, click Browse to locate it.
3. If you see a message that tells you the Solver Add-in is not currently installed on your computer, click Yes to install it.
4. Click Tools on the menu bar. When you load the Solver Add-in, the Solver command is added to the Tools menu.

For Excel 2007:
1. Click the Microsoft Office Button
2. Click Excel Options
3. Click Go
4. In the Add-ins available ;box, select the Solver Add-in check box, and then click OK.
Tip: If Solver Add-in is not listed in the ;Add-Ins available box, click Browse to locate the add-in.