Supply Chain management is the notion that has emerged with the growing need for efficiency enhancement and differentiation from the increasing number of competitors. It allows considering all the activities in a company combined and devising a common strategy to promote efficiency and competitive advantage.
The situation in the Trap-Ease America is complicated at the moment. Despite offering an excellent product, it cannot realize the expected returns and loses potential customers to other mousetrap producers. Moreover, it may lose the important clients, due to delivery delays, which Trap-Ease America cannot afford at the product introduction phase. Therefore, the company should reconsider their business strategy as well as adjust their supply chain strategy to the current market demand.
In order to create a Supply Chain strategy for Trap-Ease America, it is first of all necessary to understand the objectives it should pursue. According to Fisher, products can be categorized into functional and innovative. While the former require extensive effort in efficiency improving and cost reduction, the latter have to be always available for the customers and delivered according to predetermined conditions. Since mousetraps by Trap-Ease America are a novelty in the respective market segment, they are more likely to be considered an innovative product. Therefore, the aim of the Supply Chain should be delivery reliability and constant product availability, rather than cost efficiency.
Having defined the Supply Chain objectives, it is necessary to establish the separate units of the chain. In the Trap-Ease America it can be represented in the following way:
Procurement – Inbound – Manufacturing – Warehousing – Outbound – Distribution
Strategic decisions should be made considering every step of the chain separately and devising a proper approach to fit the Supply Chain objectives and to be aligned with the overall vision and policies of the company.
Procurement process in Trap-Ease America is not transparent at the moment, as it is outsourced together with production. One of the first steps in creating a Supply Chain strategy is achieving full transparency in the processes. Taking over the control of the supplier relationship management will allow Trap-Ease America achieving two goals. Firstly, it will give an opportunity to assess the cost of raw materials and seek for cost reduction potential by selecting from a wider range of suppliers, and to facilitate closer relationships with them in order to achieve efficiency for both parties. Moreover, it will help to identify delayed deliveries from suppliers and mitigate the potential risks as soon as possible.
Manufacturing as well as procurement has been outsourced by Trap-Ease America. However, in order to achieve more efficient production, Trap-Ease America should take over the control on production, so that it fits the overall Supply Chain strategy of the company. One of the first areas for improvement in manufacturing should be the change of the production scheduling method. As practice has shown, demand for mousetraps is not easy to predict. Lower than predicted sales not only yield lower revenues, but also lead to overproduction and high inventory. To avoid the cost of keeping extra mousetraps in stock, demand forecasting should follow a pull strategy, therefore production should be based on the orders placed rather than predicted. Such an approach may significantly reduce unnecessary stock and facilitate planning of production capacities, thus lowering production cost.
Faced with a lower than expected demand for mousetraps, Trap-Ease America is facing overproduction and increased inventory. Therefore, warehousing is an important part of the Supply Chain to be considered at the moment. However, warehousing is not only limited to storing, but also provides value-adding activities. Trap-Ease America can utilize this possibility by conducting final packaging within the warehouse in order to meet the needs of individual customers. Moreover, information transparency with the warehouse operator will allow maintaining a buffer stock, in order to smoothen production capacities and be ready to respond to the rush orders.
Current distribution channels for Trap-Ease America are grocery, hardware and drug stores. The company is delivering mousetraps to big retailers, avoiding wholesalers on the way. Although this strategy reduces costs and enhances transparency, for innovative products service quality is a higher priority than low cost. Late deliveries may cost Trap-Ease America reputation and deprive it from the unique opportunity of introducing the product into the market. Therefore, available capabilities of Trap-Ease America should be thoroughly evaluated before completely denying the idea of introducing middlemen into the Supply Chain. This approach will take the delivery pressure off Trap-Ease America, allowing wholesalers to take care of the final delivery to the retailers and to explore various distribution options. This strategy is extremely helpful at the product introduction phase, however in the long-run Trap-Ease America may return to the original scheme of direct deliveries, having learnt from the experience of the wholesalers.
Inbound / Outbound
Finally, strategic decisions have to be made regarding the inbound and outbound transportation of the mousetraps. Depending on the available capacities of Trap-Ease America, they can do it themselves. However, if the recent delivery delays were caused by inappropriate transportation performance, an alternative strategy may be outsourcing it to a freight forwarder. It will help Trap-Ease America to concentrate on their core competence, production, shifting the transportation to those companies, which can provide more efficient and reliable delivery solutions.
Ayers, J. (1999). Supply chain strategies. Information Systems Management.
Fisher, M.L. (1997). What is the right supply chain strategy for your product? A simple
framework can help you figure out the answer. Harvard Business Review, 105-116.