in the example below, engage in making connections between various supply chain design, logistics, and integration strategies and previous course concepts.

One of the most important functions a company manages is their supply chain design and integration. If this is properly done, the company can create savings that will drive profit margins.

In this weeks videos, we watched how Crayola, Continental tires, and Starwood hotels handle the unique challenges presented to them in their supply management. At Crayola, they focus looking at lead times, servicing risks, expediting risks, inventory carrying and physical costs when making supply chain decisions. Crayola is dedicated to the satisfaction of their customers and keep in mind key times of the year when their products are in higher demand. Crayola ensures they have enough inventory on hand to cover these spikes. When it comes to manufacturing, Crayola understands that sometimes it is better to produce a product domestically, and some situations require production abroad. For example, when expanding into the Asian market, Chinese tariffs would have made the importing of Crayola products too expensive, so Crayola created manufacturing facilities in China to produce their product to a market that boast over half the worlds population of children.

Continental tires really took the 3-Ps approach to selecting their new plant in South Carolina. They focused on a 100-year plan for the new plant and took into consideration the surrounding area for expansion. They focused on an area that had a skilled and available labor force. They looked for a community that their employees would enjoy living and growing families in. They looked for a location that had renewable and available energy sources, and they invested in the community that they became part of. And finally, they considered the logistics. 1 in 3 tires sold globally are sold in the United States, so proximity to their customers was essential. Continental ran the numbers and understood that the cost of shipping the tires from abroad would erase the savings the company would have from manufacturing outside of the United States, so in the end a plant in South Carolina made the most sense.

Starwood Hotels has a balanced approach to their supply chain where they source some products local, like fresh produce and other perishables; and for the non-perishables they engage in national contracts. For the national contracts they have a few ways they go about obtaining them. After sourcing viable supply candidates, for products that are a commodity that is not normally customer facing and the quality is essentially the same, Starwood would select a few of them and have a reverse auction. In this process, the vendors submit a bid on what their cost is and usually the lowest bidder wins the contract. In my previous career, we awarded contracts in this manner all of the time, and it is a fairly easy process to save company dollars, especially if you are not concerned with the quality of one vendor over the others. When quality is a factor, a request for a proposal is done. Through this request a Statement of items (or work/services) is provided with the costs involved. Many times, this process leads to the last option of Negotiation. In my current role, we negotiate contracts for services all of the time. Much like the Starwood example, we often find areas where we can cut unnecessary pieces, reducing required resources on the vendor saving both them and our company money.