Operations and Supply Chain Strategies

December 2023 Examination

1. How can the full set of logistical and cross-functional drivers be used to create
strategic fit for a PC manufacturer targeting both time-sensitive and price-conscious
customers? (10 Marks)

Ans 1.

Introduction

In the dynamic world of PC manufacturing, targeting both time-sensitive and price-conscious

customers presents a unique challenge. While time-sensitive customers prioritize rapid
delivery and the latest features, price-conscious customers are more focused on getting the
best value for their money. To cater to both these segments effectively, a PC manufacturer
must achieve a strategic fit between its competitive strategy and its supply chain strategy.
This alignment is crucial for ensuring that the company can meet the diverse demands of its
target market while maintaining profitability. The full set of logistical and cross-functional
drivers play a pivotal role in achieving this strategic fit. These drivers, which encompass
facilities, inventory, transportation, information, sourcing, and pricing, can be fine-tuned to
create a harmonized strategy that addresses the needs of both customer segments. By
understanding and leveraging these drivers, a PC manufacturer can build a resilient and
responsive supply chain that delivers value to both time-sensitive and price-conscious
customers.

Concept and application

The concept of strategic fit emphasizes the alignment between a company's competitive
strategy and its supply chain strategy. For a PC manufacturer targeting both time-sensitive
and price-conscious customers, achieving this fit requires a deep understanding and effective
management of the logistical and cross-functional drivers. Let's delve into how each of these
drivers can be optimized to cater to both customer segments:
1. Facilities: Facilities refer to the places where inventory is stored, assembled, or
fabricated. For time-sensitive customers, having strategically located distribution
centers can ensure faster delivery times. This might mean setting up facilities closer to
major urban centers or regions with a high concentration of time-sensitive customers.
On the other hand, to cater to price-conscious customers, the manufacturer might
consider setting up production facilities in regions with lower labor and operational
costs. This dual approach ensures that products are not only delivered quickly but are
also produced cost-effectively.

2. Inventory: Inventory management is a balancing act. While holding more inventory

can lead to quicker response times, appealing to time-sensitive customers, it also ties
up capital and increases holding costs. For price-conscious customers, efficient
inventory management can lead to cost savings, which can be passed on as lower
prices. Techniques like Just-In-Time (JIT) inventory, which reduces holding costs, or
safety stock strategies, which ensure product availability, can be employed based on
the demand patterns of the two customer segments.

3. Transportation: Transportation decisions, such as mode and route, directly impact

delivery speed and cost. For time-sensitive customers, employing faster transportation
modes like air freight might be necessary, even if it's more expensive. In contrast, for
price-conscious customers, cost-effective modes like sea freight or rail might be more
appropriate. Additionally, consolidating shipments and optimizing routes can lead to
significant cost savings.

4. Information: In today's digital age, information is a powerful driver. Real-time

tracking, accurate demand forecasting, and efficient communication systems can
significantly enhance supply chain responsiveness. For time-sensitive customers, real-
time updates on product availability and delivery can enhance trust and satisfaction.
For the price-conscious segment, accurate demand forecasting can reduce
overproduction and wastage, leading to cost savings.

5. Sourcing: Sourcing decisions, such as selecting suppliers and determining

procurement policies, play a crucial role in cost and quality control. For time-sensitive
customers, it might be beneficial to source components from reliable and quick
suppliers, even if they are slightly more expensive. For the price-conscious segment,
 bulk purchasing or long-term contracts with suppliers might be strategies to achieve
cost reductions.

6. Pricing: Dynamic pricing strategies can be employed to cater to both customer

segments. For instance, premium pricing can be set for faster delivery or newer
models, catering to time-sensitive customers. On the other hand, discounts or bundle
offers can be provided for older models or bulk purchases, appealing to price-
conscious customers.

To effectively cater to both time-sensitive and price-conscious customers, a PC manufacturer

must adopt a differentiated supply chain strategy. This means running multiple supply chains
optimized for each customer segment. For instance:

Segmented Distribution Centers: The manufacturer could have dedicated distribution

centers for each segment. The one catering to time-sensitive customers would prioritize rapid
shipping, while the one for price-conscious customers would focus on bulk shipments and
cost efficiency.

Tailored Production Lines: Different production lines could be set up for products targeting
each segment. The line for time-sensitive customers might prioritize quick assembly and
frequent model updates, while the one for price-conscious customers might focus on longer
production runs and economies of scale.

Customized Marketing and Sales Strategies: Marketing campaigns for time-sensitive

customers could highlight features like the latest technology, rapid delivery, and premium
support. In contrast, campaigns for price-conscious customers could emphasize value for
money, durability, and cost-saving deals.

In essence, achieving strategic fit for both customer segments requires the PC manufacturer
to be agile and flexible in its supply chain operations. It's not about finding a one-size-fits-all
solution but rather about customizing the supply chain drivers to meet the unique needs and
preferences of each segment. By doing so, the manufacturer can ensure that it delivers value
to both sets of customers, enhancing loyalty and driving business growth.

Conclusion
Achieving strategic fit in the PC manufacturing industry, especially when targeting diverse
customer segments, is a complex yet rewarding endeavor. By effectively utilizing the full set
of logistical and cross-functional drivers, a PC manufacturer can align its supply chain
operations with its competitive strategy, ensuring that it meets the distinct needs of both time-
sensitive and price-conscious customers. This alignment not only enhances customer
satisfaction but also drives operational efficiency, leading to improved profitability. In an
industry characterized by rapid technological advancements and shifting consumer
preferences, the ability to adapt and align one's supply chain strategy is paramount. In
conclusion, for a PC manufacturer to thrive in a market with varied customer expectations, it
must continuously evaluate and adjust its logistical and cross-functional drivers. By doing so,
it can ensure that its supply chain remains agile, efficient, and in perfect harmony with its
overarching business goals, leading to sustained success in a competitive landscape.

2. “SCOR model links business processes, performance metrics, skills and practices into
a unified structure” Comment. (10 Marks)

Ans 2.

Introduction (200 words):

The Supply Chain Operations Reference (SCOR) model is a globally recognized framework
that offers a comprehensive approach to evaluating and enhancing supply chain management.
Developed by the Supply Chain Council, the SCOR model has been adopted by numerous
organizations worldwide to standardize their supply chain processes, measure their
performance, and benchmark against industry best practices. At its core, the SCOR model
seeks to integrate various elements of supply chain management, including business
processes, performance metrics, skills, and best practices, into a cohesive and unified
structure. This integration is pivotal in ensuring that supply chains operate efficiently and
effectively, meeting both customer demands and business objectives. By providing a
common language and set of standards, the SCOR model facilitates better communication,
understanding, and collaboration among supply chain stakeholders, leading to improved
operational performance and strategic decision-making.

Concept (800 words):

The Supply Chain Operations Reference (SCOR) model is a comprehensive framework that
provides a detailed understanding of supply chain management. To fully grasp the
significance and intricacies of the SCOR model, it's essential to delve into its primary
components: business processes, performance metrics, skills, and best practices.

1. Business Processes:

The SCOR model categorizes supply chain processes into five primary domains: Plan,
Source, Make, Deliver, and Return. These domains represent the end-to-end supply chain
activities.

 Plan: This process involves the strategic planning and management of all resources
required to meet customer demand. It encompasses demand forecasting, inventory
planning, and capacity planning, ensuring that supply chain operations are aligned
with business objectives.

 Source: This domain focuses on procuring the necessary goods and services to meet
the planned production. It includes supplier selection, order management, and
inventory receiving.

 Make: This process pertains to the production activities, transforming raw materials
into finished products. It involves scheduling, production operations, and quality
assurance.

 Deliver: Often referred to as logistics, this domain manages the movement of

products to customers. It includes order fulfillment, warehousing, transportation, and
invoicing.

 Return: This process manages the return of products, whether for defects, repairs, or
excess inventory. It ensures efficient handling and disposition of returned goods.

2. Performance Metrics:

A distinguishing feature of the SCOR model is its emphasis on performance measurement.

The model provides a set of standardized metrics that allow organizations to evaluate their
supply chain performance objectively. These metrics are categorized into three levels:
  Level 1: Strategic metrics that focus on the overall performance of the supply chain,
such as total cost and customer satisfaction.

 Level 2: Tactical metrics that evaluate the performance of specific processes, like the
efficiency of order fulfillment or inventory turnover rate.

 Level 3: Operational metrics that delve into the details of individual tasks, such as the
accuracy of demand forecasts or the lead time for supplier deliveries.

By using these metrics, organizations can identify bottlenecks, inefficiencies, and areas of
improvement in their supply chain operations.

3. Skills:

The SCOR model recognizes that a successful supply chain is not just about processes and
metrics but also about the people who manage and execute these processes. The model
emphasizes the importance of equipping supply chain professionals with the necessary skills
and knowledge. This includes technical skills, such as data analysis and logistics
management, and soft skills, like communication and collaboration. By fostering a culture of
continuous learning and development, organizations can ensure that their supply chain teams
are well-prepared to navigate the complexities of modern supply chains.

4. Best Practices:

One of the most valuable aspects of the SCOR model is its repository of best practices. These
are proven methods and techniques that leading organizations have adopted to achieve supply
chain excellence. The SCOR model provides a wealth of best practices across all its process
domains, offering organizations a roadmap to enhance their operations. Whether it's
implementing just-in-time inventory systems, adopting lean manufacturing principles, or
leveraging advanced analytics for demand forecasting, the SCOR model's best practices
provide actionable insights for supply chain optimization.

The integration of these four components into a unified structure is what sets the SCOR
model apart. By offering a holistic view of supply chain operations, the model allows
organizations to see the bigger picture, understanding how individual processes, metrics,
skills, and practices interrelate and impact overall performance.
Furthermore, the SCOR model's adaptability is one of its key strengths. While it provides a
standardized framework, it is designed to be tailored to the unique needs of individual
organizations. This means that whether an organization is a small startup or a global
conglomerate, operating in the tech industry or the food sector, the SCOR model can be
customized to fit its specific requirements and challenges.

In essence, the SCOR model is more than just a theoretical framework; it's a practical tool
that empowers organizations to transform their supply chain operations. By providing a clear
roadmap, standardized metrics, and a repository of best practices, the model equips
organizations with the resources they need to achieve supply chain excellence. Whether it's
enhancing efficiency, reducing costs, improving customer satisfaction, or driving innovation,
the SCOR model provides the insights and guidance necessary to navigate the complexities
of modern supply chains and achieve sustainable competitive advantage.

Conclusion

In conclusion, the SCOR model serves as a holistic blueprint for organizations aiming to
achieve supply chain excellence. By linking business processes, performance metrics, skills,
and best practices, the model provides a systematic approach to analyzing, designing, and
implementing supply chain strategies. Its unified structure ensures consistency and clarity,
enabling organizations to pinpoint areas of improvement, implement best practices, and
measure their performance against global standards. Furthermore, the SCOR model's
adaptability means it can be tailored to fit the unique needs and challenges of any
organization, regardless of size or industry. As supply chains continue to evolve in
complexity and importance, frameworks like the SCOR model will remain instrumental in
guiding organizations towards optimal supply chain performance, ensuring they remain
competitive, resilient, and customer-centric in an ever-changing business landscape.

3. Yomato is an Indian multinational restaurant aggregator and food delivery

company. Company reported first-ever profitable quarter brought a whole lot of
cheer among management. Company is also planning to expand its business to other
countries as well.
a. Explain various competitive dimensions in detail that company needs to
rework to get sustainable profitability. (5 Marks)

Ans 3a.

Introduction

Yomato, an Indian multinational restaurant aggregator and food delivery company, has
recently achieved a significant milestone by reporting its first-ever profitable quarter. This
accomplishment has invigorated the management and has set the stage for the company's
ambitious plans to expand internationally. As Yomato embarks on this new chapter, it is
imperative to re-evaluate and refine its competitive dimensions to ensure sustainable
profitability. These dimensions will play a crucial role in determining the company's long-
term success in both domestic and international markets.

Concept and application

1. Cost Leadership: To achieve sustainable profitability, Yomato must focus on optimizing

its operational costs. This includes streamlining delivery processes, leveraging economies of
scale, and negotiating favorable terms with restaurant partners. By becoming a cost leader,
Yomato can offer competitive prices to customers while maintaining healthy margins.

2. Differentiation: In the crowded food delivery market, differentiation is key. Yomato

should invest in unique features, user-friendly app interfaces, and exclusive partnerships with
premium restaurants. Offering value-added services, such as loyalty programs or gourmet
food experiences, can also set the company apart from competitors.

3. Speed and Reliability: Timely and reliable delivery is a critical competitive dimension in
the food delivery industry. Yomato should focus on reducing delivery times, ensuring
accurate order fulfillment, and maintaining a high standard of food quality upon arrival.
Investing in advanced logistics and real-time tracking can enhance the customer experience.

4. Geographic Expansion: As Yomato plans to expand internationally, understanding and

adapting to local tastes, preferences, and cultural nuances is essential. Establishing local
partnerships and tailoring the platform to cater to regional demands can give Yomato a
competitive edge in new markets.
5. Technological Innovation: Embracing technological advancements can significantly
enhance operational efficiency and customer experience. Yomato should consider integrating
AI-driven recommendations, chatbots for customer support, and data analytics to predict
demand and optimize supply.

6. Sustainability: With growing global concerns about sustainability, Yomato can

differentiate itself by adopting eco-friendly packaging, promoting sustainable food practices,
and reducing food wastage. A green initiative can not only appeal to environmentally-
conscious consumers but also reduce long-term operational costs.

Conclusion

For Yomato to maintain its newfound profitability and thrive in the competitive food delivery
landscape, a multi-faceted approach addressing various competitive dimensions is essential.
By focusing on cost leadership, differentiation, speed, reliability, technological innovation,
and sustainability, Yomato can position itself as a market leader both domestically and
internationally. As the company expands its footprint, it must remain agile, receptive to
feedback, and adaptive to changing market dynamics. With a strategic focus on these
competitive dimensions, Yomato can pave the way for sustainable growth and profitability in
the years to come.

b. You are appointed as consultant for the Yomato. Suggest some corporate level
strategies that ultimately helps them. (5 Marks)

Ans 3b.

Introduction

Yomato, having established itself as a prominent player in the Indian food delivery and
restaurant aggregation sector, stands at a pivotal juncture in its growth trajectory. As the
company contemplates its next steps, especially in light of its recent profitability and
international expansion plans, corporate-level strategies become paramount. These strategies
will not only guide Yomato's overarching vision but also ensure that its business units and
operations align seamlessly with the company's broader objectives.
Concept and application

1. Diversification: Yomato can explore diversifying its offerings by venturing into related
businesses such as cloud kitchens, grocery delivery, or even subscription-based meal plans.
This would not only provide multiple revenue streams but also hedge against potential
downturns in any single segment.

2. Strategic Alliances and Partnerships: Forming alliances with international food delivery
platforms or local players in new markets can expedite Yomato's global expansion. Such
partnerships can provide valuable local market insights, share operational best practices, and
co-create unique value propositions.

3. Mergers and Acquisitions: Acquiring or merging with existing players in target

international markets can offer Yomato a ready customer base, operational infrastructure, and
a deeper understanding of local dynamics. This can significantly reduce the time and
resources required to establish a foothold in new territories.

4. Vertical Integration: Yomato can consider backward integration by investing in or

partnering with food suppliers, packaging providers, or even logistics companies. This can
help in cost control, quality assurance, and ensuring a seamless supply chain.

5. Focus on Technology and Innovation: At the corporate level, Yomato should prioritize
investments in technology, be it in the form of app enhancements, data analytics, AI-driven
customer insights, or supply chain optimizations. A dedicated innovation lab can be
established to continuously ideate and test new tech-driven solutions.

6. Brand Building and Reputation Management: As Yomato expands, its brand image will
play a crucial role in customer trust and loyalty. Corporate strategies should emphasize
consistent branding, proactive public relations, and robust customer feedback mechanisms to
maintain and enhance the brand's reputation.

Conclusion

Yomato's journey from a restaurant aggregator to a profitable food delivery giant showcases
its potential and ambition. As a consultant, the recommended corporate-level strategies aim to
harness this potential, ensuring sustainable growth, competitive advantage, and resilience
against market uncertainties. By diversifying its offerings, forging strategic alliances,
prioritizing technology, and emphasizing brand value, Yomato can solidify its position not
just in India but on the global stage. The key lies in executing these strategies with precision,
adaptability, and a keen understanding of evolving market dynamics and consumer
preferences.