The Futurist Corporation
The Futurist Corporation is a market leader with a flagship product, the attractive ‘ClickZipPlus’ that is sold in mainly retail supermarkets in packs of four and eight. The manufacturing plant is running at full capacity and the old and outdated equipment is exhibiting signs of distress. Despite this, Thomas Randall, the CEO, is trying to maximize production and turnover in order to report a 9% sales growth by final quarter of year.
This growth target is exerting extreme pressure on Peter Smith’s sales department. The 9% projection set by Randall was based on a more favourable economic outlook. Randall now predicts a 3% sales growth, but in order to achieve this, the ‘ClickZipPlus’ is being offered to retailer customers at reduced prices.
It seems that Futurist has overlooked the problems that could occur from offering goods so cheaply. It is likely that this will adverse effects, not only on profits, but also the supply chain and the business as a whole. However, the objective in Peter Smith’s team, with only weeks to go, is to achieve heavily discounted selling in bulk quantity, to any taker. This is demonstrated when, at a sales meeting, a key account manager announces a new order for 40,000 cases of the product.
The customer has been offered 8% discount and is, supposedly, an overseas trading company. Sales staffs at the meeting are very sceptical of the stories that this firm has markets in Eastern Europe or Jiangsu province, China, but they are aware of the immediate threat to their jobs if the sales objective is not met. The decision to offer the 8% discount to the overseas trading company has been made purely from a sales perspective. Randall is now realizing that in order to achieve all his expectations he also has to turn his attention to the raw materials input costs of his product.
Despite the size of this business, surprisingly it does not have a professionally run supplies organization. This is fast becoming its major weakness. At this time, most of its purchases are undertaken locally. Investigation shows Randall that the company’s competitors are all sourcing increasingly on an international basis, leaving Futurist behind its market rivals and indeed, what is now considered best practice in its industry sector. This issue requires immediate attention and to that end Randall calls in specialists supply chain consultants, Grahams Inc, to discuss possible strategies to move Futurists forward in its international supply chain management.
It is now some four months on, and Grahams Inc is ready to present a strategic plan to Thomas Randall and the other directors of Futurist.
In preparation of the strategic plan, your initial tasks are to:
a) Analyse the strategic business considerations of sourcing supplies in overseas markets.
b) Discuss the impact of ethics and culture on international supply chain management and the subsequent buying process.