SUPPLY CHAIN MANAGEMENT AT REGAL MARINE

Like most other manufacturers, Regal Marine finds that it must spend a
huge portion of its revenue on purchases. Regal has also found that the
better its suppliers understand its end users, the better are both the
supplier's product and Regal's final product. As one of the 10 largest U.S.
power boat manufacturers, Regal is trying to differentiate its products
from the vast number of boats supplied by 300 other companies. Thus,
the Orlando firm works closely with suppliers to ensure innovation,
quality, and timely delivery.
Regal has done a number of things to drive down costs while driving up
quality, responsiveness, and innovation. First, working on partnering
relationships with suppliers ranging from providers of wind-shields to
providers of instrument panel controls, Regal has brought timely
innovation at reasonable cost to its product. Key vendors are so tightly
linked with the company that they meet with designers to discuss
material changes to be incorporated into new product designs.
Second, the company has joined about 15 other boat manufacturers in a
purchasing group, known as American Boat Builders Association, to work
with suppliers on reducing the costs of large purchases. Third, Regal is
working with a number of local vendors to supply hardware and fasteners
directly to the assembly line on a just-in-time basis. In some of these
cases, Regal has worked out an arrangement with the vendor so that title
does not transfer until parts are used by Regal. In other cases, title
transfers when items are delivered to the property. This practice drives
down total inventory and the costs associated with large-lot delivery.
Finally, Regal works with an Orlando personnel agency to outsource part
of the recruiting and screening process for employees. In all of these
cases, Regal is demonstrating innovative approaches to supply chain
management that help the firm and, ultimately, the end user.
Discussion Questions:
1. What other techniques might Regal use to improve supply chain
management?
2. What kind of response might members of the supply chain expect
from Regal in response to their "partnering" in the supply chain?
3. Why is supply chain management important to Regal?
4. How Regal Marine is achieving strategic fit between its competitive
and supply chain strategies?

SOURCE: Render and Heizer, Operations Management, 8th edition, Pearson Education.

SOLUTION - SCM AT REGAL MARINE

Answer#1:
Regal could make some use of virtual companies that use suppliers on an as needed basis;
therefore it would make it easier to respond quickly to changing requirements, & to meet
changing market demands. Using the latest IT, computer & transmission technologies to
schedule & manage the shipment of parts in & finished products out, would help to increase the
efficiency of the company. Ensuring alternative sources would be another important point in the
Supply Chain.
For the wide range of raw materials that they need to make a boat, they use different strategies
for different areas. For example, they use a few suppliers strategy for some part in order to
improve the final quality of the product according to the feedback from engineering enterprises.
In other pieces of the boat, not as critical as it is an engine, they might use many suppliers
techniques in order to reduce the cost of the product. Vertical integration: they could even
improve this aspect in order to reduce inventories and save some money.

Answer#2:
The typical response by members of the supply chain through partnering is to further the
understanding of end users needs (feedback from customers) as the suppliers become
increasingly integrated. Regal can be expected to develop long-term contracts & integrate
suppliers into their strategy, aggregate scheduling, & detail scheduling so they understand
Regal Marines requirements.
There are a lot of opportunities for unethical behaviour in a Supply Chain so in every Supply
Chain there is a code for acceptable behaviour Members of Regal's Supply Chain expect:
o Loyalty to their organization: loyalty to Regal by following the lawful instructions, using
reasonable care & granted authority. All the members should encourage support for
small, disadvantaged & minority-owned businesses that are not able to manage &
progress on their own. Some types of conduct should be avoided as accepting or
soliciting money, loans, & credits from potential suppliers that might influence the supply
management decisions.
o Justice to those with whom they deal: avoiding any personal businesses that would
create a conflict between personal interests & the interests of the employer. All the
activities conducted by any member in the chain should be in accordance with national &
international laws, customs, the organization's policies, & these ethical principles &
standards of conduct.
o Faith in their profession. Every component of the supply chain should work their best in
order to fulfil the needs & products that are expected from him.

Answer#3:
Because a huge amount of Regal Marines dollars are spent on purchases. Additionally, the
quality of those purchases has significant impact on the quality of Regals end product.
Consequently, enhancements in terms of quality, delivery, & price have substantial impact on
Regal Marines market & bottom line. Reduced Inventory (JIT), SRM, CRM, Inter-Company InterFunctional Scope Management, Forecasting are the advantages of SCM that are crucial of Regal
Marine
Using the Supply Chain, Regal can reduce costs & improve the products they offer to their
clients whilst maintaining core competence. There would be a lower product cost assuring to the
diverse clients their desired quality. It would help small companies to specialize in the products
they make &, therefore in the global chain obtaining a better success than on their own. The
acquisition cost of the diverse products is lower, & it makes more reasonable the price for the
customer.

Answer#4:

Steps to achieve Strategic Fit by Regal Marine:

Step 1: SC Uncertainty:

Competitive Strategy: Innovation, Quality and Responsiveness (Timely-delivery)

Predictable Supply but Uncertain Demand

Step 2: SC Capability:

Somewhat Responsive
Step 3: Achieving Strategic Fit:
Make one stage more responsive to enable others to be more efficient i.e.
different functional strategies should be inline of SC strategy to achieve
Competitive Strategy.

MUMBAI DABBAWALAS: SUPPLY CHAIN STRATEGY

If asked about the best-managed organization in India, the stunning answer is the
organization of the dabbawalas of Mumbai. In 1998, Forbes Global magazine
conducted an analysis and gave them a Six Sigma rating of efficiency, implying just
one error in 6 million transactions. Their punctuality and indigenously developed
management system have now attracted the interest of global management gurus
and awed the Prince of Wales too, who came down especially to meet them in
November 2003 and learn more about their business art. Mumbai dabbawalas are an
excellent example of how firms can manage their value chains to gain a competitive
advantage.
The History
The service of dabbawalas came into existence way back in 1890, and the sheer
necessity prompted its development. At that time, the distance between residential
areas and the business district made it very difficult for the workers/employees to go
back home for lunch. A Parsi banker finally found a solution. He employed a carrier to
fetch his lunch every afternoon. By early twentieth century, people were migrating to
Mumbai in search of employment. Home-cook food had a comfort level among these
workers not only because it was relatively inexpensive but also because it was tried
and tested. Therefore, the idea caught on and this inspired many people to become
dabba carriers. Soon each dabbawala had a handful of customers, and they
differentiated between dabbas by tying colored strings. The system that was
developed in the 1890s continues till date with some modification to facilitate the
identification and delivery of dabbas. Presently over 5,000 dabbawalas, drawn from
rural Maharashtra and operating in Mumbai, deliver over 200,000 dabbas at a
reasonable price.
Working Style
To reiterate, it all began with colored strings to distinguish between one dabba from
another. The system was driven by only one objective and that was to deliver dabbas
on time for lunch. The system has remained the same since inception except for fine
tuning in 1966. When the population to be catered increased, it became difficult to
separate one lunchbox from another with colored string alone. A set of rules were
subsequently evolved as mentioned below:
1. Each dabba is picked up by a dabbawala and taken to the railway station, where
these are sorted and loaded by the other dabbawala. These are unloaded and
resorted at the destination station by a third dabbawala and delivered at home
from where these are picked up by a fourth dabbawala. This requires a wellmentioned supply chain.
2. Each dabba lid is now marked with a particular code, denoting the dabbawalas
number, the building, the floor number of that building where the Tiffin box has
to be delivered, and the railway station where the Tiffin box has to be offloaded, followed by an alphabet indicating the station of pickup. With this
interesting color-coding scheme, the dabbawalas reach out to the length and
breadth of the city seldom faltering.

3. The maximum load that a dabbawala handles a day is 25 to 35 dabbass, which

snuggle in 100-kg crates. Monthly income of a dabbawala varies from INR 5,000
to 6,000. A client pays anywhere from INR 150 to 250 a month to his dabbawala
of this ,he pays INR 15 to the association, INR 60 for a crate and INR 120 to the
railways.
4. The association, which has a corpus of INR 50,000, doles out cash to the needy
whenever the need arises. The association acts as a watchdog and helps out
with substitutes when dabbawalas have to go on leave.
By carefully managing their flow of goods and information, the Mumbai dabbawalas
are able to operate more efficiently than any other company.
SOURCE: Krajewski, Ritzman and Malhotra, Operations Management, 8th edition, Prentice Hall.

Discussion Questions:
1. What other techniques might Regal use to improve supply chain
management?
2. What kind of response might members of the supply chain expect
from Regal in response to their "partnering" in the supply chain?
3. Why is supply chain management important to Regal?
4. How Regal Marine is achieving strategic fit between its competitive
and supply chain strategies?

SOURCE: Render and Heizer, Operations Management, 8th edition, Pearson Education.

SOLUTION MUMBAI DABBAWALAS

Answer#1:

Answer#2:
o

Answer#3:

Answer#4:

JOHN DEERE & COMPLEX PARTS, INC.

Dollars. Looking ahead to 2007, international crude oil market is still
there are many variables, the global economic situation, the geopolitical
situation and the Organization of Petroleum Exporting Countries on how
to act will oil prices have an important impact.
Add the implicit interest rate
(1) increase in the possibility of a U.S. recession, U.S. economic recession,
the biggest impact may come from the real estate bubble burst leading to
consumer landslide. The real estate market has accounted for 15% of U.S.
GDP in ~ 20%. The first quarter of the U.S. economy, a substantial
increase of 5.6%, but substantial cooling of the housing market factors, in
the second quarter and third quarter to 2.6% and 2.2% respectively.
Falling house prices in 2007 will make U.S. economic growth to 1.5%
reduction is heavily dependent on the expected increase in U.S. market
economies of East Asia will inevitably fall.
(2) of the international financial markets face greater risks. From 2000 to
2005, the world's total bank loans jumped from $ 2.3 trillion to $ 3.5
trillion, formed on the basis of the global credit derivatives market size,
by 2006 had reached $ 26 trillion in 2003 seven times the size of the
market and is still the rapid expansion of hedge funds (Hedge Fund) and
investment banks play an important role. In 1990, the disposable funds of
hedge funds (Hedge Fund) less than $ 50 billion, and now grasp the
amount of investment increased to $ 1.2 trillion. The lack of transparency
in the operation of hedge funds (Hedge Fund), as well as the derivatives
market to the lack of effective supervision, so once a serious breach of
contract and financial panic, the whole financial system will face a great
risk.
(3) the major Western central banks to prevent inflation have been
tightening, as of the end of June 2006, two years, the U.S. Federal
Reserve Board for 17 consecutive rate of 0.25% each in the regular
meeting to raise interest rates, the federal funds interest rate increased
from 1% to 5.25%. As the economy has become increasingly evident
signs of cooling down, the U.S. Federal Reserve Board decided to suspend
the regular meeting in August 2006 to raise interest rates, and decided to
maintain the rate unchanged at the next regular meeting.
Question 1:
Discuss the strengths and weaknesses of John Deeres Achieving Excellence Program. Consider and discuss other criteria to include
in the analysis.
Strengths of Achieving Excellence Program
1) Win/Win Situation
One of the strength offered by this program is a promised Quality product, which is equally important and beneficial for both
parties, Deere & Complex Parts Inc.
2) Performance based volumes

This compliance system yields a bench mark for the suppliers and they are supposed to follow it. This ensures that the supplier
performing best will get more volumes thus creating an environment of competence to achieve the excellence.
3) Improved Relationship between Buyer and Vendor
In order to implement this program a good deal of communication and coordination is required. Which in turns become a strength
of this program to boost up the good relationship between Buyer and Vendor.
4)Further benefit
Suppliers can use the benefits of successful implementation of this program with their other clients as well.
5) Comprehensiveness
AEP is designed keeping in view all the aspects of Supply Chain Management. Its comprehensiveness to cover all the areas is one of
its Strength.
6) Dynamic System
Its property of being dynamic and absorbent to new changes, ideas and improvements is also one of its major strength.
Weaknesses of Achieving Excellence Program
1) Absolute Qualitative & Quantitative
Few of the areas such as Cost Management, Wavelength and Technical Support are totally qualitative while areas like Delivery and
Quality are absolutely quantitative. This makes it as one of the weakness of this program. Specially absolute qualitative measure
can be at times influence by perception and inaccuracy, thus effecting the judgment.
We think a mix of both attributes can be assigned to each area.
2) Suppliers short or under-deliveries are not considered in Delivery measurement...

CJ Industries and Heavey Pumps1

In October 2007, CJ Industries (CJI) had just been awarded a 5-year
contract,
amounting to $10 million per year, commencing on July 2007 to supply
Great Lakes
Pleasure Boats a number of key engine components for their luxury line
of pleasure
boats. The award marked an important milestone for CJI, in that it was the
culmination of
several years of hard work and dedicated service, supplying Great Lakes
parts for their
boats on an as-needed basis. The contract had significant long-term
follow-on potential as
well, if they could continue to show Great Lakes they had the capabilities
to be one of
their valued, alliance partners. In addition, with this contract, Great Lakes
would
represent approximately 30 percent of CJIs annual sales, so performing
adequately on
this contract had a significant long-term financial impact on CJI.
One of the parts, a bilge pump, was an item that CJI had been purchasing
from
one of their suppliers, Heavey Pumps, a small local specialty pump
manufacturer, on an
informal, noncontract basis. The remaining items were all built in-house
by CJI and
supplied to Great Lakes from one of their two finished goods warehouses
located near the
Great Lakes production facilities. Heavey Pumps was producing and
delivering 50 bilge
pumps at a time at a cost of $1,500 per unit and built to Great Lakes
specifications to
one of the CJI warehouses, whenever an order was telephoned in by CJI.
The delivery
costs (about $500 per 50 pump shipment, depending on the carrier used)
were included in
the $1,500 per unit price. This scenario typically occurred about every
four to six months.
Normally, CJI would order another batch of 50 about eight to ten weeks
ahead of time,
and Heavey had always been able to supply the pumps before CJIs stock
was depleted.

Though CJI had sufficient excess capacity to ramp up production on the

parts to
be supplied in the Great Lakes contract, they were not sure about the
ability or
willingness of Heavey to increase their production of the bilge pumps. The
new demand
for bilge pumps starting in July would be 50 pumps per month, and
potentially more,
depending on Great Lakes demand, and the ability of CJI to perform on
the contract.
There were a number of issues that Nik Grams, the purchasing manager
who put
the contract together with Great Lakes, needed to work out with both
Heavey and the
production manager at CJI, for this contract needed to be met with as few
problems as
possible. The issue with Heavey Pumps was whether or not they could
guarantee delivery
of 50 pumps per month to one of the CJI warehouses. This had been the
one item that had
slipped through the cracks on the contract with Great Lakes, and it now
loomed as
something that could conceivably put the contract in jeopardy. There
were potentially
additional equipment, labor, and other production costs for Heavey
associated with the
extra demand for bilge pumps, not to mention extra delivery costs as
well. Heavey had
been a reliable supplier for CJI for a number of years, but nothing else had
ever been
purchased from them. In addition, because the demand for these pumps
was rather low
and the deliveries were sporadic, no performance records had ever been
kept for them.
Mr. Grams had also not known specifically about the quality history of the
Heavey bilge
Joel Wisner, PhD, C.P.M., University of Nevada, Las Vegas
(joel.wisner@unlv.edu). This case was
prepared solely to provide material for class discussion. The author does
not intend to illustrate either
effective or ineffective handling of a managerial situation. The author has
disguised names and other
identifying information to protect confidentiality.

pump; although he could not remember ever getting one returned by

Great Lakes for any
reason. Up until now, the pump issue did not seem like anything to worry
about.
Another possibility for CJI would be to make these pumps in-house. Nik
Grams
knew that CJI had the capability to make this pump, but it would require
an initial capital
investment of approximately $500,000 according to the CJI production
manager, along
with the clearing out of some space, and the hiring of three additional
employees. With
only about nine months remaining until the contract start date, it would
be tight, but the
production manager had assured Nik that they could do this, if needed.
Though Mr.
Grams didnt doubt the production managers assurances that the
production line could
be ready, he wasnt sure that going to this added expense was a good
investment for CJI,
given their lack of pump manufacturing experience. There were also at
least two other
bilge pump manufacturers that Mr. Grams knew of, but both of them were
about 500
miles further away from the CJI warehouses, and he had never used
either of these firms
in the past.
This whole thing seemed to Nik like an ideal job for his special project
buyer,
Bob Ashby. He figured he had maybe a week or two to hammer out a plan
to assure
contract compliance with Great Lakes, and Bob was known for his ability
to put things
together quickly. So, he called Bob.
1. What are all the issues here, from both CJIs and Heaveys
perspectives, that
need to be researched by Mr. Ashby?
2. Should CJI continue to use Heavey to supply pumps, should they make
them
in-house, should they consider one of the other suppliers, or should they
do

some combination of these alternatives? Discuss the advantages,

disadvantages, and risks of each of these alternatives.
3. How can CJI assure continued contract compliance and additional
contract
business from Great Lakes in the future?

Solution: CJ Industries and Heavey Pumps1

Q1 : What are all the issues here, from both CJIs and Caollins
perspectives, that need tobe researched by Ms. Stanley? Tell me the
factsConcerned about the current supplier will able to increase output.
Negotiated contractwith Great Lakes to supply pumps. One issue, they
have to get together with Caollinpumps to figure out if can up their
output. What is capacity? What is desire? Shouldhave figured out before
signing contracts.Jumped the gun signing the contracts. Should they have
jumped the gun? Or letsomeone else take?Worth it for CJI to make or buy?
Do a make/buy analysis.Other two suppliers. Have they evaluated other
suppliers? Get other performance data from Caolinn.Is 9 months long
enough to setup shop? Q2 : Should CJI continue to use Caolinn to supply
pumps, should it make them in-house,should it contact one of the other
suppliers, or should it do some combination of thesealternatives? Discuss
the advantages, disadvantages, and risks of each of thosealternatives.
Long term agreement with CJI?If the price is right.What should CJI do?
Should they continue to use caolinn?YesMaybe, add another supplier.
Other suppliers dont need to know about other suppliers. Some cases, it
would be good to let them know , be straightforward. Maybe, take all
three, take internal, take CJI, take other suppliers, do a mpv, after 5
years,make determination of whos the best and come up with one
solution. Not much choice for Caolinn. Caolinn can say that they can
supply up to a certainamount and then thats it.
Page 23
Transportation costs can decrease if there is a better transportation
system. If scheduledproperly.Think that they would want local business.
Depends on capacity of the supplier.Could buy out Caolinn. Cost 500,000
to make pumps in house. Advantage, take fullcontrol. Disadvantage, less
focus on real business. Possible quality problem.Most risky thing to do?
Nothing. Go with a unknown supplier. Make in house, no idea on cost, no
idea on quality. Least experience on making in house. Q3 : How can CJI
assure continued contract compliance and additional contract

businessfrom Great Lakes in the future? Meet Great Lakes demand.Short

term - Need to meet great lakes demand.Long term, worry about quality.
Develop excess capacity.Need to evaluate suppliers. Need to develop a
better relationship. Develop performancemeasurement system. Monitor
ongoing performance. Document their processes.Need to integrate
supply chain with supplier. Get embedded. Work on customerrelationship
management. Guarantee future business. Let them know that they are
aloyal customer. Hook up with customers in the long term.