Task 3
Jct task 3
Based on the information provided by Power Tool Company it is recommended that the company consider using a Keirtetsu Network as there supply chain strategy. While there are other supply chain strategies available the Keiretsu Network provides many of the desired components which will allow Power Tool Company A to achieve there desired goals while utilizing there current resources. Joint Ventures are not recommended for Power Tool Company because although companies can benefit from shared resources there is a risk that this type of partnership can dilute a company brand or unintentionally cause a company to lose its market share or competitive advantage to its partner. Virtual companies are another strategy but is not recommended for Power Tool Company. The reason this option is not recommended is because with Virtual Companies a large amount of suppliers is used. Although this method may be cost effective having fewer suppliers like within a Keiretsu strategy makes suppliers more reliable and allows for longer more stable business relationships.
Because Tool Company A will own its production plant purchasing or investing in the suppliers which provide the required goods will give Tool Company a competitive edge while allowing the company to purchase required materials at the lowest price possible. By taking part in the Keiretsu network the suppliers will also benefit by securing a long-term relationship with Company A which will ensure stable revenue for the supplier instead of having to continuously negotiate and renegotiate contracts with a company with whom they share a temporary or short term relationship. The relationship between the suppliers and Tool Company A can also benefit from this relationship because increased and more efficient communication between the two companies and higher quality products because of a shared goal and potential for profit. A Keiretsu network between suppliers is also beneficial in keeping inventory levels low.
Based on the information provided by Power Tool Company it is recommended that the company consider using a Keirtetsu Network as there supply chain strategy. While there are other supply chain strategies available the Keiretsu Network provides many of the desired components which will allow Power Tool Company A to achieve there desired goals while utilizing there current resources. Joint Ventures are not recommended for Power Tool Company because although companies can benefit from shared resources there is a risk that this type of partnership can dilute a company brand or unintentionally cause a company to lose its market share or competitive advantage to its partner. Virtual companies are another strategy but is not recommended for Power Tool Company. The reason this option is not recommended is because with Virtual Companies a large amount of suppliers is used. Although this method may be cost effective having fewer suppliers like within a Keiretsu strategy makes suppliers more reliable and allows for longer more stable business relationships.
Because Tool Company A will own its production plant purchasing or investing in the suppliers which provide the required goods will give Tool Company a competitive edge while allowing the company to purchase required materials at the lowest price possible. By taking part in the Keiretsu network the suppliers will also benefit by securing a long-term relationship with Company A which will ensure stable revenue for the supplier instead of having to continuously negotiate and renegotiate contracts with a company with whom they share a temporary or short term relationship. The relationship between the suppliers and Tool Company A can also benefit from this relationship because increased and more efficient communication between the two companies and higher quality products because of a shared goal and potential for profit. A Keiretsu network between suppliers is also beneficial in keeping inventory levels low.