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Supply Chain Management

Using the "TSC Stores: Supply Chain Management for Profitable Growth" case by Professor P. Fraser Johnson please assist with the following questions:

1: Capacity problems aside, what are the major supply chain issues that threaten the growth and profitability plans of TSC? Please explain.

2: Analyze the anticipated capacity issues in the TSC supply chain (compare anticipated volumes in Exhibits 5-7 to DC Capacity).
i. In which areas of the DC will problems be most prevalent?
ii. When will these capacity issues have a major impact on TSC operations and abilities to serve their stores?

3: On page 4 of the case, Brad provides the skeleton of a long term supply chain strategy and discussed the need to evaluate internal and external options for addressing TSC's capacity problems.
i. Provide a strategic plan for TSC to address their capacity problems. How should TSC expand their distribution capabilities - via DC expansion, the use of cross docking, outsourcing distribution to third party logistics service providers, increasing direct store deliveries from manufacturers, or some combination of these methods?
ii. Explain your rationale and discuss how you would apply your strategy to the information provided in Exhibit 3.
iii. What other supply chain issues and considerations must Brad include in his long term supply chain strategy?

4: What can Brad learn / leverage from the best in class SCM capabilities) global sourcing, distribution, information systems, etc.) of Wal-Mart? Also, feel free to discuss other supply chain strategies and tools that you believe would assist TSC.

Solution Preview

1: Capacity problems aside, what are the major supply chain issues that threaten the growth and profitability plans of TSC? Please explain.

There are several supply chain issues that threaten the growth and profitability plans of TSC. These include major stock outs in both the stores and distribution centers. Further, the service level at the distribution centers is only 65%, there is excessive inventory. The inventory turnover is only two time per year. There are ineffective tools and processes for effective inventory management. There was poor replenishment of inventory and lack of inventory integrity. Working capital is tied up so that supplier payment discounts cannot be availed of. There is lack of efficiency in managing data and information, replenishment processes and capacity planning.

The explanation is that stock-outs lead to inability to fulfill orders. This leads to lost opportunities for growth and profitability. Not only that stock outs cause customer dissatisfaction. Low service levels means wastage of capacity. This reduces the profitability of TCS. Slow inventory turnover means that there is need for higher working capital, this increases costs and reduces profitability. If information is not properly managed, there is a high degree of mismatch between the demand and inventory leading to higher inventory carrying costs and lower profitability.

2: Analyze the anticipated capacity issues in the TSC supply chain (compare anticipated volumes in Exhibits 5-7 to DC Capacity).

i. In which areas of the DC will problems be most prevalent?

Currently, there will be problems in the yard. The problems will be most prevalent there. Next year, problems ...

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