Supply Chain

A – Supply Chain Strategy The supply chain strategy chosen for the power tool company is a long term partnering relationship with few suppliers. The long term vision of the company is to make quality products and constantly stay ahead of the competition with innovation. The best way to accomplish this strategic long term goal is to partner with key suppliers that operate using a strategy of long term thinking based on trust and transparency. Ray Kroc was one of the pioneers on forming partnerships with the management teams of his suppliers back in 1955 (Vitasek & Manrodt 2012). Ray Kroc defined the McDonald’s supply chain partnerships with his suppliers as a “system” with everyone working together to drive costs out of the supply chain. This philosophy has proved tried and true for over 50 years and is what makes McDonald’s the successful company it is today. By partnering with few suppliers and building trust between the two organizations the customer and supplier can work together to better understand the drivers of the supply chain costs. There are many advantages of using a long term partnering supply chain strategy over some of the other strategies adopted by other companies. One of the major advantages of partnering with few suppliers is that you are able to build strong relationships with your supply base and both the supplier and customer grow the business together. One of Ray Kroc’s famous quotes was, “none of us is as good as all of us.” (Vitasek & Manrodt 2012). Having few suppliers will create a competitive advantage through innovation, quicker lead times, better inventory management and working together to drive costs out of the supply chain. If your suppliers understand your business model and trust that they will be your primary supplier for the long term they will invest capital into their company with the expectation that innovative ideas will drive revenue for all involved. Another advantage of building partnerships with few

References: Heizer, J. and Render, B. (2010). Operations management. Upper Saddle River, NJ: Prentice Hall Mass customization (n.d.). Retrieved from http://en.wikipedia.org/wiki/Mass_customization Phillips, T. (n.d.). What is a virtual business? Retrieved from http://biotech.about.com/od/businessadminstration/f/virtualcompany.htm RCG University (2006). Mass Customization. Retrieved from http://rockfordconsulting.com/mass-customization.htm Vitasek, K and Manrodt, K. (2012). Vested. New York, NY: Palgrave Macmillan.