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 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 windshields 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 a personnel agency to outsource part of the recruiting and screening process for employees. In all these cases, Regal is demonstrating innovative approaches to supply chain management that help the firm and, ultimately, the end user. The Global Company Profile featuring Regal Marine (which opens Chapter 5 ) provides further background on Regal's operations.
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 because of their "partnering" in the supply chain?
3. Why is supply chain management important to Regal?