Tam S Complex Supply Chain Problems Case Study

Length: 4 pages Sources: 4 Subject: Transportation Type: Case Study Paper: #31950247 Related Topics: Global Supply Chain, Christmas, Supply Chain, Supply Chain Management
Excerpt from Case Study :

¶ … Tea Leaves at Tea and More: Resolving Complex Supply Chain Issues

Tea and More (TAM) is a company that has achieved tremendous success and profitability in its business as a purveyor of fine teas and varied food specialties. Since it provides its products and/or services to upscale gourmet shops and restaurants, the firm has experienced steady growth, which is characterized by increased market share and profitability. As a result of the steady growth and profitability, TAM embarked on a rapid expansion initiative in order to enhance its market share and become a leading company in this industry. However, the company is facing significant challenges from this rapid expansion initiative despite potential gains from the process. Some of the major areas where these challenges occur include marketing plans, supply chain management, establishing long-term strategy for increased growth, and value creation. In order to enhance its productivity, the company needs to develop appropriate strategies to deal with these problems.

I. Major Facts

Tea and More is a company with a history that dates back to 1985 when it was founded in Los Angeles as Global Tea by three sisters (Doyle & Bell, 2009, p.165). Since its inception, the company experienced tremendous growth and profitability to an extent that its revenues had increased to nearly $25 million by early 2009. However, the firm has experienced several issues that have threatened its success and growth over the past few years largely because of its rapid expansion initiative over the past decade. During this period, Jack Reynolds bought out his partners' share in the company, which made it easy for him to make decisions and have the final say in most operational and sales decisions. As he increased his working hours, he soon became temperamental while the firm experienced several challenges that threatened its effective operations and productivity.

First, the firm had a complex supply chain after Jack shifted from direct import of selected teas to an advantageous deal with Earl Morgan Limited (EML). Order definition and compilation became a major challenge in the new supply chain mechanism given that EML requires three-month lead time for any production run. Secondly, TAM is experiencing a difficult time with its sales representatives regarding the most suitable approach for sales. Sales representatives have expressed concerns on seeming inability to afford making irregular calls on smaller, distant customers because of increase in gas costs. On the other hand, the company's management has declined establishing a new sales arrangement because of likelihood of salespeople to fail making in-person calls to customers. In addition, attempts by the management to stop these people from subtracting their commission before turning in cash have been futile. Third, the company has lost competitive advantage to its rivals who market their products through eye-catching displays and magazine advertisements. Finally, TAM is experiencing numerous challenges brought by the low-price market as competitors reduce prices in order to attract more customers.

II. Major Problem

The major problem at Tea and More (TAM) is poor inventory management given the complex supply chain issues that characterize its operations. Poor inventory management is evidenced by the long lead time, which implies that ordering has to be carried out in bulk through Earl Morgan Limited (EML). In addition, the company is experiencing low product turnover rate and high storage costs because of extra inventory in poor inventory management slide (Harrison, 2013). The poor inventory management at TAM has been brought by an ineffective corporate culture that is based on autocratic decision making. This has contributed to widespread distrust and criticism, lack of employee responsibility and ownership, stifled innovation, and decreased worker efficiency. The ineffective corporate culture has in turn generated poor customer service and relations given the lack of a Customer Relationship Management (CRM).

III. Possible Solutions

Given the far-reaching impacts of Tea and More's poor inventory management, there are several possible solutions that can be utilized to resolve the problem. The first possible solution is to change the company's corporate culture from autocratic decision making to a suitable leadership style that improves stakeholder relations. The autocratic decision making has been the major cause of this problem since it does not involve other major stakeholders in making operational decisions. This process would require...

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The advantage of this probable solution is that it will improve stakeholder relations in order to solve the problem. However, the solution is disadvantageous in the sense that there are numerous requirements to change the corporate culture and may not necessarily solve the issue.

The second possible solution is establishing Supplier Relationship Management (SRM), which is a comprehensive approach to managing an organization's interactions with it suppliers. This approach will streamline and enhance the effectiveness of supply chain processes through increasing the supplier base, resolving existing communication issues, and focusing supply chain processes on the actual demand. The advantages of this probable solution include its focus on relationship and it's mutually beneficial to the company and suppliers (Rizza, 2015). However, its disadvantage is its need for relatively expensive technology in order to function effectively. The third possible solution is lean management, which will involve changing the existing corporate culture and management approach. The advantages of this solution include reduction of product mix-ups, decreased inventory, and ensuring short production lead time while its disadvantage include the fact that it does not focus on customers but focuses on suppliers only.

IV. Choice and Rationale

The most suitable solution for addressing the major problem at Tea and More is establishing a Supplier Relationship Management (SRM). This is primarily because the major problem at TAM is the complex supply chain issues in its current operations. These complex supply chain issues have in turn affected the company's profitability and affected its relationship with customers. The establishment of SRM is suitable to deal with poor inventory management through improving relations with other stakeholders. The rationale for choosing this solution is that it will help engage suppliers in a manner that reflects the priorities of the organization and its customers (Procurement Leaders, 2013). While changing the corporate culture and establishing lean management could help deal with TAM's problems, they will not effectively address the firm's relationships and interactions with suppliers.

V. Implementation Plan

The implementation plan for this proposed solution begins with conducting an evaluation of the company's business priorities, existing supply chain processes, and problems with current processes. This should be followed by identifying desired objectives from short-term and long-term perspectives. The next process involves partnering with EML and other suppliers to integrate supply relationship methodology into their strategic supply chain sourcing efforts. This step should be followed by identification and purchase of suitable technology to automate supply chain processes. Tea and More should collaborate with its suppliers in identifying and implementing the technology to support the SRM framework. Once the system is launched, the company and its suppliers should monitor it and make necessary improvement based on desired short-term and long-term objectives through effective metrics.

In conclusion, Tea and More is a company that has remained profitable across all its operations since inception. However, the company's recent success and profitability has been affected by ineffective business practices such as an ineffective corporate culture and poor inventory management. The major problem in the firm is poor inventory management brought by ineffective corporate culture that is based on autocratic decision making. While there are several possible solutions to address the problem such as lean management and establishing an effective corporate culture, the most suitable solution is establishing a Supplier Relationship Management.

References

Doyle, B. & Bell, A.H. (2009). Reading the Tea Leaves at Tea and More: Resolving Complex Supply Chain Issues. In Operations and supply chain management: an international journal (pp.165-171).

Harrison, O. (2013, November 22). TAM: Resolving Complex Supply Chain Issues. Retrieved April 30, 2016, from https://prezi.com/sta6ayjlhxep/tam-resolving-complex-supply-chain-issues/

Procurement Leaders. (2013, June). Strategy Guide: Supplier Relationship Management. Retrieved April 30, 2016, from https://www.procurementleaders.com/AcuCustom/Sitename/DAM/052/sample-strategy-guide-SRM-0613_1.pdf

Rizza, M.N. (2015, February 17). The Five Secrets of Supplier Relationship Management. Retrieved April 30, 2016, from http://www.cips.org/supply-management/opinion/2015/february/the-five-secrets-of-supplier-relationship-management/

Appendix

1. What can we do about lost sales due to poor customer service by outside "contract" sales staff?

Tea and More should consider hiring at least one full-time staff rather than the current external "contract" sales staff. The full-time staffs should be adequately trained to utilize technology in order to improve information flow between the company and its customers. The firm should also focus on creating intimate customer service relationship and focus on online orders.

2. How can we restore the attractiveness and power of the TAM brand for major customers so they aren't lured away by low-cost, low-quality competitors?

TAM can restore the attractiveness and strength of its brand for major customers through focusing on lessening cost in supply chain, improving customer service, conducting marketing analysis to determine customers' preferences, and designing and marketing products based on the preferences. This process should also entail encouraging customers to buy quality tea.

Case 22 Reading the…

Sources Used in Documents:

references. This process should also entail encouraging customers to buy quality tea.

Case 22 Reading the Tea Leaves at Tea and More: Resolving Complex Supply Chain Issues 169

3. How can we minimize "stock outages" and other inventory problems caused by unpredictable customer ordering patterns and the continuing difficulty of getting faster production and delivery from EML in London?

Inventory problems at the company can be addressed through complementing the existing partnership with EML with small suppliers. The process should be accompanied by improving internal and external communication processes in the company.

4. How can we reduce collection time from 54 days to less than 40 days without alienating the very customer base TAM is trying to attract and retain?


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