Solution on Individual Assignment ADV Supply Chain Management
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- Words: 1500
Case study:
SAB Distribution: The next chapter
SAB was established as a classic, middle-of-the-supply chain organization since it purchased consumer products from major manufacturers such as Kraft, Kimberly-Clark, Procter & Gamble (P&G), Unilever, and others and sold them to smaller distributors, wholesalers, and retailers. When Susan Weber assumed the role of CEO of SAB in 2010, she knew that despite several major changes, its continued survival depended upon the company re-examining its role in various supply chains and making appropriate strategic and tactical changes.
Company background
SAB Distribution was established in 1949 in Harrisburg, Pennsylvania, by three World War II veterans (Skip, AL, and Bob) who had served as navy supply officers. Harrisburg was selected because of its central location in the mid- Atlantic region and because of its access to rail and highways for suppliers and potential customers. The founders of SAB recognized the need for a consumer products wholesaling company to serve medium- and small-size retailers within a 200-mile radius of Harrisburg. The company grew and prospered in subsequent years. The company was incorporated in 1978, and a CEO, Pete Swan, was appointed in 1980 when the founders retired. SAB’s market area expanded into nearby states, such as New York, New Jersey, and Delaware, and its product line expanded from non-perishable food products to include perishables and non-food consumer products. Sue Purdum took over from Pete Swan in 1995 when the company was facing major competitive challenges that could have led to the sale of the company, but she “navigated” the company successfully. Susan Weber assumed the CEO role with the full knowledge that significant changes was necessary if SAB were to continue to survive as a profitable organization. Essentially, SAB needed a transformation in the scope of its activities.
Current situation
SAB is faced with several challenges to its future existence. First and foremost, many of its customers compete against large retailers like Walmart that can buy directly from the same consumer product manufacturers as SAB, with no “middleman.” Walmart’s buying advantage had to be offset in some way to keep SAB’s customers competitive. In addition, globalization was affecting SAB’s business because of an increase in imported products for the more diverse population of the United States and the ongoing search for lower-priced alternatives. The net effect was a much more complex and competitive business environment with more potential volatility.
When Sue Purdum assumed the role of CEO in 1995, she analyzed the competitive environment and understood the need to change SAB’s business practices. She focused upon efficiency in warehouse operations, improved fulfillment, and developed partnerships with a core group of motor carriers. Finally, she invested in information technology. The net effect of these changes lowered the cost of doing business for SAB’s customers and enabled them to be more competitive. It was a win-win since SAB also became more efficient and effective as well as more profitable.
Initially, Susan Weber followed the lead of Sue Purdum, but she knew that she had to transform the company to attract large retailers as customers. Their current customers were losing market share to the larger retailers, which negatively impacted SAB’s profitability.
Susan Weber realized that the large retailers outsourced part of their logistics operations to third-party logistics companies to lower their cost of doing business. Given SAB’s proficiency in logistics, she believed that there were opportunities for SAB to eliminate duplicative echelons in those supply chains. For example, between a producer’s plant and a retail store, there were often three or more distribution locations where products were stored and handled.
The SAB managers recognized the challenge of Susan Weber’s assessment of their competitive market but also the opportunity associated with the changes that she outlined. After five years of Susan Weber’s leadership, SAB attracted five large regional retail chains in the Northeast and developed a distribution park for warehousing, a transportation hub, and a call center near Scranton, Pennsylvania.
The new distribution park allowed SAB to expand their value-added services to customers by providing third-party logistics services (warehousing and inventory management, order fulfillment, delivery, and special packaging).
SAB hopes to attract additional regional chains such as Wegman’s. A focus for their new distribution park is fresh fruits, vegetables, and other perishable food items, commonly referred to as the cold supply chain. SAB’s success with their distribution park has caught the attention of several other companies who are planning similar operations along the eastern seaboard.
Recently, Susan was informed by a daughter of one of the founders of SAB that the family had been contacted by a representative of a major investment group that wanted to buy the family’s share of the stock (65%) and make the company private. The potential buyout had major implications for Ms. Weber and her valued employees. She felt that SAB could survive in the current environment, but she would have to present a plan to the family owners that would convince them to maintain their current ownership position. Susan is analyzing and considering designing a plan to enable their retail customers to implement direct delivery from their stores to the residence of their customers.
Instruction:
Please answer and complete all the question to follow:
Question 1:
Regarding the above case scenario, the consolidation that has developed at the retail end of many supply chains has had an important impact specifically in the case of SAB. What changes have occurred in supply chain management because of retail consolidation and the related/consequent power shift? Please do motivate your answer with reference to the case scenario.
(10)
Question 2:
Why should senior executives be concerned about supply chain management in their organizations and how can effective supply chain management improve the financial viability?
(5)
Question 3:
Discuss the three phases of evolution of the supply chain concept relevant to the current case scenario of SAB? Please motivate your answer.
(9)
Question 4:
Supply chains encompass four flows. Describe and analyze the four flows and why are they of such importance? How are they related to the case scenario at hand? Please provide appropriate examples based on the case study.
(12)
Question 5:
Contrast the reasons why and how has the marketplace changed for SAB in the last five to seven years?
(7)
Question 6:
Collaboration is a very critical ingredient for successful supply chains. In the case of SAB what type of collaboration is needed to address some of the major challenges and issues that SAB are confronted with? Please motivate your answer.
(7)