In 2002, the management of Hunt Corp faced additional challenges caused by the growing competitive pressure within the business environment. In response to the new circumstances, the company resorted to offshoring, moving the production of office and graphic supplies to China (Kodama, 2004). This way, the management was able to optimize production costs and improve the financial performance of the organization. However, the offshoring model has its downsides, as well, and additional links appeared within Hunt Corp’s supply chain. As a result, the shipping time increased dramatically, rendering the company unable to complete urgent orders.
The change in the supply chain procedures has affected Hunt Corp, and it became difficult for the company to provide its product in a short time. The process became more fragile, as the organization now had to rely on its partners overseas in terms of production and transportation. In this regard, it would have been favorable to accumulate a certain number of the best-selling items in stock prior to halting the local production. By researching and analyzing its prior sales reports, the company would have been able to distinguish the most popular products and prepare for the supply chain transformation in advance.
The increase in lead time refers to a growing period required by the company to serve a customer. Following the model change, the lead time rose to ninety-five days, meaning that Hunt Corp could only meet the long-term, non-urgent demand (Kodama, 2004). Clients who needed their supplies quickly had to seek other options in the market, which pushed toward Hunt Corp’s rivals. This situation may be related to customer loyalty issues, as the relationship between the organization and its clients was subjected to additional pressure.
Initially, Hunt Corp’s operations comprised both major aspects of their business, which are manufacturing and distributing. If a similar combination is impossible in the new reality, it appears instrumental to remain a good distributor. Hunt Corp should lay an emphasis on its communication with clients, actively engaging new customers while retaining the existing ones amid serious transformations. The production stage happens behind the scenes, and Hunt Corp can always outsource to another provider if the manufacturing quality is unsatisfactory. However, distribution is its unique area of expertise, in which direct contact with clients is enabled.
By his quote, Bill Bracey wanted to underline the multifaceted nature of effective supply chain management. While reducing costs is an important goal of any enterprise, optimizing the expenses is not equal to lowering all of them to a minimum. Supply chain models are more complex than that, and the priority should be to strike the right balance between all aspects. Companies, which focus on minimal costs, will eventually have to compromise on the quality, shipping time, or distribution network efficiency, ultimately losing customers and suffering from the stronger financial impact.
First, Hunt Corp redesigned its image and market position, transitioning from a strong manufacturer to a solid distributor of office supplies. This way, the company clearly announced its position and ability to potential customers. Second, having identified the weaknesses of the new model, the management focused on improving the coordination and communication with partners, optimizing the supply chain procedures. Finally, the effective analysis allowed Hunt Corp to implement its Supply Visualization application to forecast the demand and adjust its operations accordingly, which became one of the most profitable additions to its supply chain management.
One of the potential avenues for further development may be related to extending the use of Supply Visualization and similar mechanisms. Hunt Corp’s products are not perishable, which allows the company to purchase large quantities in advance. The continuous marketing research will provide the management with an understanding of the demand potential and allow the company to retain at least a small portion of the urgent order segment.
Reference
Kodama, D. (2004). Syncing the Supply Chain. Managing Automation.