Supply Mgmt Case Studies
Case Study #1 - Sunspot, Inc
1. What are the most likely benefits of forming strategic supply alliances with Sunspot’s key suppliers?
A strategic alliance between Sunspot and its key suppliers will result in a relationship based on trust. It’s key for both parties to develop and manage this “institutional” trust or the alliance will fail. Trust will facilitate communication which will lead to less errors and higher quality, faster development times, and lower costs. Synergies created by alliances result in reductions of direct and indirect costs associated with labor, machinery, materials, and overhead. Other benefits are reduced time to market, improved technology flow from suppliers, and improved continuity of supply. With strategic alliances, all parties have a stake in the success of Sunspot’s business.
Instructor Comments:
2. What are the disadvantages or risks of such alliances?
Alliances are a resource-intense approach to supply management with several disadvantages or risks. There’s a danger the supplier will act in an opportunistic manner over time; perhaps Sunspot’s electronic systems don’t allow for optimum information sharing and communication with its suppliers. Mr. Bart Lyons will have to ensure he has a supply manager who is trained in managing alliance partnerships--if not, the alliance will fail. Sunspot will have to accept added risk associated with reducing the supply base. Both the supplier and buyer need be aligned in what their ultimate customer considers valuable and in their respective visions thus able to make long term commitments to each other. Sunspot must determine if the benefits of an alliance outweigh the effort, risk, and resources required.
Instructor Comments:
3. How can these disadvantages be offset?
The three most important factors in a successful buyer-supplier relationship are two-way communication; the supplier’s responsiveness to supply management’s needs; and clear product
1. What are the most likely benefits of forming strategic supply alliances with Sunspot’s key suppliers?
A strategic alliance between Sunspot and its key suppliers will result in a relationship based on trust. It’s key for both parties to develop and manage this “institutional” trust or the alliance will fail. Trust will facilitate communication which will lead to less errors and higher quality, faster development times, and lower costs. Synergies created by alliances result in reductions of direct and indirect costs associated with labor, machinery, materials, and overhead. Other benefits are reduced time to market, improved technology flow from suppliers, and improved continuity of supply. With strategic alliances, all parties have a stake in the success of Sunspot’s business.
Instructor Comments:
2. What are the disadvantages or risks of such alliances?
Alliances are a resource-intense approach to supply management with several disadvantages or risks. There’s a danger the supplier will act in an opportunistic manner over time; perhaps Sunspot’s electronic systems don’t allow for optimum information sharing and communication with its suppliers. Mr. Bart Lyons will have to ensure he has a supply manager who is trained in managing alliance partnerships--if not, the alliance will fail. Sunspot will have to accept added risk associated with reducing the supply base. Both the supplier and buyer need be aligned in what their ultimate customer considers valuable and in their respective visions thus able to make long term commitments to each other. Sunspot must determine if the benefits of an alliance outweigh the effort, risk, and resources required.
Instructor Comments:
3. How can these disadvantages be offset?
The three most important factors in a successful buyer-supplier relationship are two-way communication; the supplier’s responsiveness to supply management’s needs; and clear product