JCT2 Task 3

A: Supply Chain Strategy
The best strategy for this company in regards to supply chains is known by the Japanese term “Keiretsu”1. “It is part collaboration, part purchasing from few suppliers and part vertical integration.” Your manufacturing company would most “likely be a financial supporter of some or all of your suppliers through either ownership or loans. Members of the Keiretsu are assured long term relationships but are expected to collaborate as a partner, provide technical expertise, and stable quality production”1 to you.

What this means to you is the ability to work with suppliers with a relative level of trust. This will allow you to work together on making your power tools a better product to the competition. In addition your company’s goals will be directly tied to the goals of your suppliers. You can share data, collaborate on business decisions, as well as standardize your products and processes. This makes the overall success of your company just as important to your suppliers as to yourselves.

You will have to be mindful of a few things. The first is to keep an eye on your entire supply chain and make sure that all of the entities involved are aware of the overall goals. This will help keep the idea of “Local Optimization”1 in check. “Local Optimization”1 is the concept where a supplier or other entity is unaware of the overall goal and its importance and focuses on their own goals which could potentially sabotage the overall efficiency of the supply chain by over producing or under producing their step or section of the supply chain. Another issue is “large lots”1 or “incentives”1. These two ideas basically will cause additional product to be produced and placed into the supply chain when the supply chain is not ready for it. The last issue to try and avoid is the “Bullwhip effect”1. This is basically fluctuations that