QUESTION ONE $[40]$

Read the following article and answer the questions that follow:

Strategic supply$-$base reduction

Strategic supply$-$base reduction $($SBR$)$ has become a major tool used by leading firms to

reduce costs and improve quality, responsiveness, flexibility, and other key dimensions of

performance. Here are some examples of SBR in action. AlliedSignal: AlliedSignal$$s first

step in its sourcing strategy was to prune the supply base from $10,000$ in $1992$ to fewer than

$2000$ in $1997.$ Plans called for its supply base to shrink further to $1500$ over the next few

years. AlliedSignal$$s automotive sector saved $$28$ million in $1993,$ which came primarily from

winnowing the supply base and negotiating new contracts $($Minahan$,1997).$ Boeing: $$Boeing

will cut $13,000$ of its $31,000$ suppliers over the next four years, mostly smaller companies

that duplicate equipment$($Rae$-$Dupree, $1999).$ Chrysler: From $1989$ to $1993,$ Chrysler

reduced its production supplier base from $2500$ companies to $1114$ and fundamentally

changed the way it works with those that remain. The time to develop a new vehicle is

approaching $160$ weeks, down from an average of $234$ weeks during the $1980$s$.$ The

cost of developing a new vehicle has decreased by an estimated $20$ to $40$ per cent. Since

$1988,$ Chrysler has reduced its number of buyers by $30$ per cent and has increased the

dollar value of goods procured by each buyer. Profit per vehicle has increased from

approximately $$250$ in the $1980$s $($taking the average from $1985$ through $1989)$ to $$2110$ in

$1994($Dyer$,1996).$Now about $90$ per cent of Chrysler$$s purchasing volume is with $150$

suppliers$($Lewis$,1995).$

GEC Marconi Electronics: GEC Marconi replaced the multiple systems it used to manage

and order parts with a single system. As a result, it was able to reduce its supply base from

$97,000$ to $28,000$ and generate a yearly savings in its component costs of $15$ per cent

$($Bylinsky$,1999).$ Intel: $$Since the mid $80$s$,$ Intel has made a serious effort to consolidate its

supply base, adopting an n $+1$ rule$-$of$-$thumb in determining the maximum number of

suppliers $($n$)$ needed in each commodity

area to satisfy production requirements.$$ That is$,$ Intel will not have more than one extra

supplier above the minimum number needed to satisfy its production requirements. For

example, the number of suppliers of lead frames has been trimmed from $12$ to $3,$ ceramic

packages from $6$ to $3,$ and wire and moulding compound from $3$ to $1($Morgan$,1995).$ Kraft

Foods: $$Recent initiatives to consolidate activity $[$copier equipment and records retention$]$

with a Single vendor for each function are generating annual cost savings of $30$ to $40$ per

cent$($Westfall$,1999).$

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Questions:

$1\mathrm{.}1$ Examine the concept strategic supply$-$ base reduction as a strategy in light of the

covid pandemic. $(20)$

$1\mathrm{.}2$ Discuss how reducing the supplier base can improve organisational

performance. $(20)$

QUESTION TWO $[30]$

Traditionally, the traditional view of companies has been that they exist independently of

others and must compete with them in order to succeed. As a participant in the supply chain

management process, it is imperative that you integrate and coordinate the flow of materials

from multiple suppliers, often located offshore, and similarly manage the distribution of the

finished product through multiple intermediaries $($Christopher$,2005).$

With regards to the above information, critically assess the importance of supply and

demand alignment.

QUESTION THREE $[30]$

$3\mathrm{.}1$ Porter's Value Chain does not examine departments or accounting cost types, but

instead focuses on systems that change inputs into consumer outputs.

With regards to the above statement investigate the applicability of Porters value

chain to the supply chain environment. $(15)$

$3\mathrm{.}2$ Determine the steps to align supply chain management with corporate strategy. $(15)$