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Somerset Furniture’s

Company
Supply Chain Case Study
POINT OF VIEW

Somerset Furniture Company


SYNOPSIS

 The main focus of this study lies on the business


performance of Somerset Furniture. Consequently, this
paper aims to assess the supply chain and logistic
practices of Somerset Furniture. With regards to purposes,
this paper also aims in exploring the Somerset Furniture's
supply chain strategy, specifically its manufacturing plant
establishment in the foreign country-China, has influenced
its success.
INTRODUCTION

 Organizations use the supply chain approaches to have


control over the operations and reduce the costs, as much
as possible. Supply chain strategy is often intertwined
with the supply chain management but supply chain
strategy is broader than the other which should be
managed well in order to compete in the market. The
implemented strategy is a kind of process that evaluates
the cost and benefit that an organization can gain through
its operation.
 Somerset Furniture are considering now the advantage of
transferring the manufacturing process to China in order to
lessen their overhead costs. Actually, setting up
manufacturing plants in other countries like China may reduce
costs, principally due to the use of economical foreign labor
in developing nations. Somerset Furniture can handle costs by
transferring their production lines in global setting or in a
foreign land that they wish to operate.
IDENTIFYING THE ISSUES
 Actually, there are no specific steps regarding the
development of a comprehensive supply chain strategy that
can be effective in an organization. Every enterprise is
uniquely founded and their environments are differs among
the others. This is a challenge that the organization should
identify. Before the development, the organization should first
assess the existing supply chain management or the factors
that might affect the creation of the effective supply chain
strategy.
 Basically, businesses like Somerset Furniture are considering
now the advantage of transferring the manufacturing process
to China in order to lessen their overhead costs. Actually,
setting up manufacturing plants in other countries like China
may reduce costs, principally due to the use of economical
foreign labor in developing nations. Somerset Furniture can
handle costs by transferring their production lines in global
setting or in a foreign land that they wish to operate.
1. LOGISTIC DURATION DAYS
 The logistics duration days is delay by as much as
40% because of the supply chain variability,
shipments can be off scheduled.

2. OBSOLETE PRODUCTS
 Keeping excess inventories on hand in its warehouses is
very costly and since Somerset redesigns its product lines
so frequently a real problem of produce obsolescence
arises if products remain in inventory very long.
3. COST
 Somerset has also been experiencing quality problems. The
Chinese suppliers employ quality auditors who rotate among
plants every few weeks to perform quality control tests and
monitor the manufacturing process for several days before
visiting another plant. Store and individual customer
complaints have forced Somerset to inspect virtually every
piece of furniture it receives from overseas before
forwarding it to stores.
4. QUALITY
 In some instances, customers have complained that tables
and chairs creak noisily during use. Somerset subsequently
discovered that creaking was caused by humidity
differences between the locations of the Chinese plants
and the geographic areas in the United States where their
furniture is sold.
 Replacement parts (like cabinet doors or table legs) are
difficult to secure because the Chinese suppliers will only
agree to provide replacement parts for the product lines
currently in production.
5. VENDOR MANAGEMENT
 Somerset provides a one year warranty on its furniture,
which means that they often need parts for a product no
longer being produced. Even when replacement parts
were available, it took long to get them from the supplier
in order to provide timely customer service.
ALTERNATIVE SOLUTIONS
STRATEGIC SOLUTION

 There is no such thing as constant. Everything in this world


evolves, even strategic performance measures. From the
issues in the logistic and supply chain process of Somerset
Furniture and in accordance to strategic solution, the
business must be open to the idea that some measures
changes over time. Somerset Furniture must research on
different approaches to be at par with the changes on the
systems.
 In Somerset Furniture, the business may want to
incorporate e-commerce strategy in their supply chain
management. Actually, this has been the primary role of
most businesses, how to incorporate e-commerce strategy
in the supply chain management that will help in reduce
expenses in the supply chain and at the same time makes
the supply chain more responsive and the flow of products
or services faster for the benefits of each member of the
chain.
 In Somerset Furniture, the business may want to incorporate e-
commerce strategy in their supply chain management. Actually, this
has been the primary role of most businesses, how to incorporate e-
commerce strategy in the supply chain management that will help in
reduce expenses in the supply chain and at the same time makes the
supply chain more responsive and the flow of products or services
faster for the benefits of each member of the chain.

 On the other hand, electronic selling refers to the paid endorsement


of commodities and services with the use of online trading known as
the Internet. While marketing has the main goal to select
marketplaces that have the capability to acquire a product,
electronic selling, in contrast, is the paid communication through
which pertinent data concerning the product is transmitted to latent
consumers via the Internet.
 In Somerset Furniture, amplified market rivalry
classifies incessant modification and development
in the assembly lines, outsourcing and supply
chain managing of companies. Interdependence
and contribution of suppliers and manufacturers
in product plan, innovation, including research
and development distinguish the present
international business setting consequential to
market instability.
TACTICAL SOLUTION
 In accordance to the tactical solution and with respect to
the issues of logistic and supply chain in Somerset
Furniture. The business may consider the implementation
and integration of Information technology (IT) to their
supply chain and logistic process. Basically, the
information technology (IT), also commonly referred to as
information and communication technology (ICT) can be
applied to Somerset Furniture. In Somerset Furniture, IT
may play a significant role in enhancing supply chain
management (SCM) systems.
 For instance, a number of information technologies had been made
available to owners of business organizations for this purpose, from less-
sophisticated to more advanced systems. The supply chain operations of
most businesses have been enhanced through information technology mainly
when the concepts of business and consumers and business partners were
introduced.

 In addition to tactical solution, internet technology may also lead to the


development of SCM systems among business organizations. Through this
innovation, product customization, information searches and online
deliveries are some common services that are now available to the
customers. Manufacturers, suppliers and distributors on the other hand,
benefit from internet utilization through well-coordinated information
sharing. Online auctions are even made possible with this technological
development.
 In addition to internet technology, specific programs and
systems such as Enterprise Resource Planning (ERP) also became
one of the most well-known strategies for applying IT within
manufacturing enterprises, which helps in facilitating
information exchange.

 The business industry like the business of Somerset Furniture is


also one of the business sectors that utilize various information
technology strategies so as to enhance its operations. One of
these strategies that they may consider was the application of
Electronic Point of Sale (EPOS), which was first introduced
during the late 1980s.
 In this tactical solution, Somerset Furniture may able to acquire a
large customer database that can more or less give a good
representation of their total demand. Customer data basically
include information such as consumer sales in terms of brand,
product, outlet and region. Information about the customers such
as names, frequency of their visit to a particular outlet and
payment method can also be obtained and stored in the database.
With these data, businesses are able to develop and make
successful television campaigns based on the product sales obtained
from a specific region.
SUPPLY CHAIN MANAGEMENT SYSTEM

 The organization should firstly look on the obvious and existing process that
lies within their supply chain. All of the processes involved in the organization
can effectively contribute in the successful creation of the supply chain
strategy.

 1. Performance Management
 2. Cost-Benefit Evaluation Process
 3. Keeping Communication with the Partners
CONCLUSION
 Developing an effective supply chain strategy does not end
there, there should also include the appropriate efforts and
approach to deliver its value. A supply chain strategy is the focus
of the organization towards the suppliers and customers and
maintaining the good relationship towards the operational
excellence of the organization. It might involve risks, but the
organization should bring the emphasis on the supply chain
strategy to guide the organization, at least, to gain competitive
advantage.

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