Case Study: Supply Chain TrendsThe Do$-$Green Solar Systems case addresses challenges faced by a Canadian manufactureras a result of the CUSMA trade agreement. As you read through the case, think about thechallenges, risks and complexities in changing their supply chain from North American toInternational markets.Do$-$Green Solar SystemsTaylor Douglas, V$.$P of Do$-$Green Solar Systems, was evaluating the strategic position of thecompany. With the new Canada$-$United States$-$Mexico $($CUSMA$)$ agreement in place and theuncertainty around future trade with the United States Taylor was pondering the future direction ofDo$-$Green.Do$-$Greens HistoryTaylor grew up in the family business. Established in $2000$ Do$-$Green began as a family run electricalcontracting company. Their core business focused on providing residential electrical contracting fornew home construction as well as renovations and electrical upgrades to existing homes. As thebusiness grew Taylor began to deal more and more with requests from customers for solar poweroptions for their homes. Taylor realized that the market for residential solar power was growing.Supply agreement$/$partnership attempts with solar component suppliers proved to be unreliable. Itwas at that point Taylor decided to purchase a facility to begin manufacturing solar powercomponents for residential use. In $2004$ Do$-$Green Solar Systems was formed.Do$-$Green was now involved in both the manufacture and installation of solar power systems forresidential use. The business saw steady growth through $2006.$ Do$-$Green had established alucrative business niche for itself.New OpportunitiesAt the same time that Do$-$Green was establishing itself, Canadians saw the expansion of big boxhome improvement retailers and the proliferation of the do$-$it$-$yourself craze. In $2008$ TaylorDouglas approached several home improvement retailers and in $2009$ Do$-$Green signed a supplyagreement with a big box home improvement retailer to stock their products in $25$ stores acrossOntario. People could now purchase and install their own residential solar power systems and Do$-$Greens business profile evolved into that of a manufacturer$/$distributor$.$ To meet the increasedproduction demands Do$-$Green acquired a local mid$-$size manufacturing facility. For the next twoyears Do$-$Green settled into its new business model as installer, manufacturer and retail distributor ofsolar power systems for residential use.Do$-$Green Becomes Leaner and Looks to New MarketsNot one to rest on past successes, Taylor began to look at ways to grow the business. It was now$2011.$ The Canadian dollar was at par with the U$.$S$.$ dollar and Taylor wanted to break into the U$.$S$.$market. To do that additional capacity needed to be purchased or Do$-$Green needed to find ways torun their operation more effectively and efficiently. Taylor decided to look within the company forcapacity improvement opportunities. Do$-$Green increased their capacity through several initiatives.They invested in an ERP system which allowed then to increase productivity and fully integrate theordering and procurement process. Supply chain visibility increased. Do$-$Green could now receivereplenishment orders from retailers directly into their system. This enabled them to reduce rawmaterial, work in process and finished goods inventories by a combined $20\%.$ Do$-$Green alsoimplemented lean process integration throughout their operation. This accounted for an additional$15\%$ increase in production capacity. Once fully implemented these initiatives accounted additionalcapacity of $30\%.$ Delivery times were reduced from three days to one.With the newly found capacity Taylor approached the U$.$S$.$ affiliate of the Canadian homeimprovement retailer. In $2012$ Do$-$Green signed a contract to supply $30$ U$.$S$.$ based stores throughoutthe North East states. For the next several years Do$-$Green established themselves as a majorstakeholder in the residential solar power industry.The Canadian Dollar Loses ValueIn $2014$ the Canadian dollar began to lose value against the U$.$S$.$ dollar. Taylor and the Do$-$Greenmanagement team looked to further streamline their manufacturing and distribution network. Profitsbegan to shrink as the devalued Canadian dollar began to become a real issue for Do$-$Greenshareholders. However, even with the exchange rate being what it was, the company remainedstrong and profits were steady.Do$-$Green Goes GreenWith consistent demand and a reliable and robust supply$/$distribution system in place in both Canadaand the U$.$S$.$ Taylor began to focus on sustainability issues within the supply chain. Much of thedunnage and packaging Do$-$Green used to ship their product to retail distributors could be reused.Taylor began to develop a reverse supply chain where packaging and dunnage was returned to theDo$-$Green manufacturing facility to be used again. This initiative helped to further Do$-$Greensreputation of being a sustainable and environmentally conscious organization. Cost savings werealso realized through the reverse supply chain program which helped offset the ongoing disparitybetween the Canadian and U$.$S$.$ dollar.The New FrontierAs Taylor Douglas pondered the new strategic direction of Do$-$Green, Taylor knew the exact datethat Do$-$Greens future was in jeopardy. On November $30,2018$ the $($CUSMA$)$ Canada United StatesMexico agreement was signed. This new trade agreement took the place of the long standingNAFTA trade agreement. Under the CUSMA agreement Do$-$Green now faced higher tariffs to exportinto the U$.$S$.$ This combined with an even weaker Canadian dollar meant that Do$-$Green had tochange direction. The U$.$S$.$ market was no longer viable.Taylor and the Do$-$Green management team knew there were market entry opportunities offshore.With $1\mathrm{.}4$ billion people and $18\%$ of the worlds population, China was the obvious choice. Do$-$Greenhad to develop a new international supply strategy if they wanted to do business in China.Issues and ConcernsConcerns regarding exporting to China were many. Taylor knew there would be logistical issues.Currently trucks left their facility and delivered directly to retail stores in both Canada and the U$.$S$.$International supply chains required multi$-$tiered distribution systems. There would be currencyissues to consider as well as the potential for theft of products, product design and companyintelligence. ERP and technology compatibility with Chinese distribution partners was of concern.Do$-$Greens operational concept of being a lean organization would be taxed. The longer the supplychain the more inventory investment was required. With a longer more diverse supply chain Taylorknew that risk would increase, supply chain visibility would decrease and overall control reduced. Asa green company Do$-$Green would incur added cost to retain its circular supply chain. Taylor knewthat reclaiming packaging from China posed significant logistical and cost considerations. Amongother things to consider there was the risk of natural disasters, terrorism and labour disputespotentially disrupting the supply chain.Where to go From HereTaylor and the Do$-$Green management team had some significant strategic planning issues toconsider. They understood supply chain trends were heading toward more diverse and complexsystems in the delivery of products and services worldwide. They realized that they needed toresolve a significant number of issues if Do$-$Green wanted to compete in the global supply chain$\mathrm{.}3.$ Name and explain at least three risks the company faces and what dimensions of supply chainrisk these fall under. $(25\%)$ See warning in Question $1\mathrm{.}4.$ From a purely logistics perspective, what unique challenges does Do$-$Green face while building inCanada and distributing worldwide? Please explain these challenges in detail and how to overcomethem. $(35\%)$ See warning in Question $1.$