Kingfisher School of Business and Finance

1st Semester A.Y. 2020-2021

Written Case Analysis No.2

MasterTag

Submitted by:

Aquino, Carl Vincent

Bucaloy, Romel B.
Bautista, Mariel D.
Caolboy, Joy Annalice
Carolino, April Mae H.
Conzaga, Linlyn C.
Daoa, Irish Christian Marie D.
Dela Cruz, Ravene Jhoi D.
Dizon, Sofia R.
Garbo, Lara Alyssa
Group 1

Submitted to:
Ms. Maybelle Ann S. Lopez, MBA
Instructor

Date of Submission: November 25, 2020

I. Statement of the Problem
 MasterTag needs to change its supply chain to match supply with demand and address
unhappy customers and unused labels.

II. Objectives
A. To determine appropriate revision on the supply chain to match supply with demand
B. To evaluate each revision and determine which is cost-effective
C. To identify the key ethical considerations needed to incorporate with each revision

III. SWOT Analysis

STRENGTHS WEAKNESSES

I. Identity of MasterTag III. Inefficient Supply Chain

1. Trusted greenhouse partner 1. Overproduction of labels

2. Ownership succession coming from 2. Lack of interaction with the growers

the same family line

3. Commitment to social, ethical, and

environmental responsibility

II. Manufactured product (labels)

4. High quality of products

 Strengths
MasterTag has been serving horticultural industry for a long time now and still owned by
the same family who founded it which give an impression to their trusted greenhouse partners
that they have maintained the good reputation. Also, MasterTag adheres to the highest ethical
standards, protects, and preserves environment through recycling plastics to produce high
quality of label products, and the founders seek to improve the quality of life by being socially
and environmentally responsible.
Furthermore, MasterTag’s strength lies in its manufactured high-quality label products
which features full-color pictures of the plants along with its name that helps customer to easily
identify the plants and provides them with several planting and care instructions.

Opportunities
With these strengths, the company may achieve its going concern opportunities.
Particularly, MasterTag’s popularity among the seed companies as its largest customers could
induce profitable operations and expansion of market share as many customers would be
encouraged to patronize the MasterTag. Furthermore, it could benefit from its continuous
development in horticulture industry where MasterTag could venture in creating new label
designs to serve the changing marketplace like for instance, its recently announced new
functional business unit like MasterMedia which is committed in introducing new ways for
sharing horticultural information to mobile gardening consumers (Nursery Management, 2012).
From this, the company can also benefit from the potential partnership with other industries like
pot producers that also highlights its primary focus of providing horticultural information to
consumers.
As stated in the case, its plan for implementing the revision in the supply chain
management can smoothen the flow of the necessary elements in the chain which would result
to the prevention of overproduction of labels. Also, this plan fosters an improved interaction and
communication between the producer (of MasterTag) and consumers (the plant growers) which
helps in addressing the concerns and needs of the two parties. From this point, the plan could
also be more cost-effective than the previous supply chain management as it will reduce the
overproduction or underproduction of labels and will ensure the customer satisfaction.

Weaknesses
On the other hand, MasterTag has a main weakness for its inefficient supply chain
management brought by the lack of interaction with the growers which entails a lack of
awareness about the concerns that need an immediate attention, and about how the products
were utilized once distributed by the seed companies to the growers. From this unmonitored
status, this inefficient supply chain leads to the overproduction of tags wherein millions of tags
were left unused then results to unhappy customers.

Threats
With its weakness for having an inefficient supply chain management, the company
should be wary to the threats brought by the incidental events like crop failures and introduction
of new items which could pose a discrepancy in decision making for the production of tags.
Consequentially, these threats could lead to the unanticipated possibilities of unused labels and
dissatisfied customers which could adversely lead to wastes, increased miscellaneous costs or
reduced earnings.

IV. Ethical Considerations

In choosing inventory models, the following must be considered

V. Alternative Courses of Action

Alternative 1: Stick to original plan and apply MRP (demand push approach)
Materials Requirements Planning or MRP is a demand push approach which involves
forecasting inventory needs and producing enough products to meet the forecast demand and
sell, or push, the goods to the customer. MRP is used to make sure raw goods and materials
needed for production are available when they are needed. It is designed to answer questions
like: What is needed? How much is needed? and When is it needed?

Advantages:

● It involves forecasting which will help MasterTag to have enough products on hand to
avoid shortages and prevent the inability to meet the customer demand for the product.
● MRP system works with data from the production schedule which helps MasterTag to
determine the level of inventory needed to satisfy customer demand
● On-time availability of the right materials required for production
● Better response on Mastertag's product demand because of timely delivery of Tags
produced to seed companies
● Due to optimal use of production resources, materials requirement planning will also
reduce MasterTag’s costs

Disadvantages:

● The use of forecasting may result to inaccurate forecasts as inputs like forecast values
and estimated lead-time can sometimes be misleading.
● Overly optimistic forecasts can lead to high holding costs while forecasts that are too low
will result in shortages of tags
● The time needed to plan and implement MRP system is generally very long and it
requires substantial amount of investment
● Since the system is based on long term sales forecast, it has slow supply chain
responsiveness that limits its ability to meet rapid changing demand patterns.
● Demand push system often result to too much inventory leftovers which are prone to
inventory obsolescence and may in turn result to losses.

Alternative 2: Proceed with the revised plan (Cutting the supply chain)
Cutting the supply chain deals with the restructuring of distribution channels. This is
done by eliminating some of the stages in order to address inefficiencies. In this case,
MasterTag proposes to eliminate its supply to seed companies and make a direct transaction to
its customers - the growers.

Advantages:

● Reduced stages in the supply chain

● Reduction in delivery process from MasterTag to the end consumers
● Direct coordination between MasterTag and the commercial growers which will in turn
improve customer relationship
 ● Efficient production of tags per classification according to the plants survived from the
seeds
● Information regarding the demand for tags is directly provided by the commercial
growers
● Ease of work in seed companies
● Leftovers in seed companies will be eliminated

Disadvantages:

● Does not consider forecasting as MasterTag will have to wait for the grower result before
producing another batch
● Additional work load for commercial growers
● Commercial growers will carry the burden of leftovers if there is any
● MasterTag will be changing its production levels from a one fairly large batch into two
batches leading to an increased cost

Alternative 3: Proceed with another plan (use ERP - demand pull approach)
Enterprise Resource Planning (ERP) is a demand pull approach that supports the
coordination of resources, information and processes within a company. The implementation of
ERP involves establishing operating systems and operating performance measurements to
enable them to manage business operations and meet business and financial objectives. ERP
encompasses supply chain management activities such as planning for demand and managing
supply, inventory replenishment, production, warehousing, and transportation.

Advantages:
● It improves the accuracy of demand forecasting and ensures that the cost of inventory is
minimized in case of large-batch production process.
● It significantly reduces the bottlenecks between internal processes and external
suppliers.
● Improved efficiency across multiple departments and organizations working within the
supply chain.

● It can greatly reduce repetitive manual process

● ERP can reduce the time and effort required by Master Tag's workforce to carry out it's
daily activities.

● Good customer service

● Improved supply chain management

Disadvantages:
● The cost of the software can be exceedingly high.
● ERP systems are complex, therefore it becomes harder to implement on other systems.
● MasterTag needs to account for the time and cost of manpower such as additional IT
staff, ERP consultants, and software training specialists necessary for successful
deployment.
 ● Implementation pricess can cost nearly four times as much.

VI. Recommendation
Some successful businesses give most importance to the quality of the products and
services they offer. Bruegger’s Bagel Bakery is one of the companies that devotes careful
attention and emphasis to the quality of their products. In addition, in order to maintain the
degree of freshness of every bagel that is offered to customers, the company continually
supply fresh bagels at the store but operates only with minimal raw and partially completed
inventories at the plant and keep very little inventory of finished products at the stores. So in
order to lessen stock outs and boost customer satisfaction, Bruegger needs effective
inventory models for ordering and production that will fit with its processes and achieve
quality. Thus, the most appropriate inventory model is the Economic Order Quantity Model
(EOQ Model) which helps company to determine appropriate safety stock and reorder point.

VII. References