CSCMP ACADEMIC CASE STUDY SERIES

Case studies can supplement a course and be used to teach application of supply chain
management concepts to real-‐world situations. Others can use the case studies to learn
about supply chain challenges and to analyze the situation to develop solutions.

Provincial Industries:
Opening International Regional Offices
An Academic Learning Case Study written for the
Council of Supply Chain Management Professionals

Council of Supply Chain Management Professionals

333 East Butterfield Road, Suite 140
Lombard, Illinois 60148 USA
+1 630.574.0985 | education@cscmp.org | cscmp.org
Provincial Industries – Opening International Regional Offices
“Wow. I have had quite an interesting, ever-‐changing career with Provincial Industries,”
thought logistics manager Randall Wesley as he walked up the stairs to the office of CEO
Douglas Matthews. “This company is growing by leaps and bounds. Every time I turn around
there is another opportunity to enhance our supply chain, increasing revenues and profit. As
the company grows, I’ve moved up nicely in the organization. I wonder what Doug has in mind.
He seemed delighted last week when I developed that ‘Future is Now!’ proposal to help grow
the company. If I keep it up, I will be Vice President in no time.”

Wesley enters the office of Matthews. “Doug, you wanted to see me?”

“Yes, Randall, please come in,” replied Matthews, “Great news. I met with the Board of
Directors yesterday and presented my ‘Future is Now’ proposal to expand Provincial Industries
internationally. They agree that the time is right. To remain competitive, our current
international customers are insisting we have a local presence near them, and if we position
correctly we can not only increase sales with our current international customers, but also
harvest additional sales of our products with new international customers.”

“Key points which all came from the proposal I developed for you. I am delighted they
liked it. Now comes the hard part. LOCATION, Location, location. That pretty much sums it
up!” exclaimed Wesley. “We need to set up international regional offices that can also support
distribution to customers in the region. Promise me you won’t go cheap and take the best
‘deal’ touted by a commission-‐driven agent in the region. There have been many mistakes
made in determining the ‘right’ location for a regional office or plant location. Whoever does
this has to consider so many things. Miss one and you end up in a Great Mistakes textbook.”

Matthews bristled, “When we determine the locations of our regional offices the goal is
to maximize profits, period, either through optimally positioning our offices relative to our
current customers or through cost minimization. Either way, our location analysis must
quantify ’why’ we select the locations that we select. This will certainly NOT be taken lightly.”

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Provincial Industries – Opening International Regional Offices
Wesley pointed out, “There are several key categories that we must factor into the
decision including the business climate in the region, communications (including quality of
internet connections), quality of local financial services for banking and regulatory
management, health services and ‘quality of life’ for our employees, infrastructure, the
location of the office to support our current customers, and, finally, quality of transportation
services.”

“Right. And that is a lot to consider. I fear we will find there are other considerations as
well,” responded Douglas, “And aren’t some of the categories more important than others?”

“Yes, each category should be weighted by importance. Ask five managers in our
functional silos to weight the categories and you will get five weightings different than my
own. Everyone has their own agenda, so the weighting should come out of your office,”
pointed out Randall.

“Agreed,” said Matthews grimacing. He grabs a pad of paper and begins writing. “OK,
here is how I would weight each of the categories on your list by importance so we can get
started. Wow, there are so many possible locations. Where do we begin?

TABLE ONE: CEO Matthews Category Ratings

5% Business climate
20% Communications
10% Financial services
10% Health services and “Quality of Life”
20% Infrastructure
35% Transportation
100% TOTAL

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Provincial Industries – Opening International Regional Offices
“One way to simplify this is to only consider cities where we presently have customers,”
stated Wesley, “That will narrow down the number of choices. We need to initially get a
foothold in the region, and then later as the markets develop in the region, we can always move
to a different location. ‘Optimal’ will be a constantly moving target anyway. We just have to
start somewhere.”

Matthews delegated, “Here is our customer list [Appendix One]. Assign a task force to go
over your categories and my customer list and recommend a location for each region. Keep the
task force limited to five functional managers, including yourself. We should be able to show the
Board of Directors which functions had input to the decision and why their function was selected.”

Matthews looked intently at Randall and said, “Make sure to consider every category
and most importantly quantify the importance of each factor or attribute for each category.
Your team likely will have to hone their internet search skills to support any conjecture. I want
complete visibility into how you quantify each area to rank the cities.”

Matthews caught his breath before resuming, “After that, the task force will need to
create a spreadsheet which combines the category ranks into an overall recommendation to
justify the best location. I might want to tweak my weightings later so their spreadsheet will
be important. Remember that I have limited spreadsheet skills so have pity on this
technological dinosaur and create an easy-‐to-‐understand, easy-‐to-‐use spreadsheet for me.”

Matthews finished, “If the task force does a great job quantifying and supporting their
rankings of each category, then I should be able to use the spreadsheet to incorporate my
weightings to get to the final recommendation. Most importantly, if the task force completely
cites sources used when they developed their scores we can use the model to replicate the
process to select locations in other regions as well. Plan on giving me a 15-‐minute presentation
of the task force recommendation for both regions and provide a written executive-‐style
report that I can share with the Board of Directors. Make sure you quantify each variable. Do a
great job on this, Randall, and your career will continue to flourish.”

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Provincial Industries – Opening International Regional Offices
As he walked down the stairs to his office, Wesley started to develop an action plan
based on his deliverables:

TABLE TWO: Wesley’s Action Item Checklist

Importance

Identify members of the location task force by function within Provincial Industries and explain co

Project management plan (including deliverable dates) to engage entire task force, tap into each

Create easy-­to-­use .XLS for CEO

20%

Develop PPT presentation (assume PPT presented to

Matthews will be used by Matthews to present to BOD)
15%

Presentation to Matthews 25%

Executive style written report for Board of Directors 20%

Ask task force to evaluate member performance 20%

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Provincial Industries – Opening International Regional Offices
APPENDIX ONE: International Customer Locations
Annual Freight Annual Annual
City Volume (kgs) Revenue (₫) Profit (₫)
Busan, South Korea 500,000 1,000,000 ₫ 60,000 ₫
Guangzhou, China 750,000 1,500,000 ₫ 90,000 ₫
Ningbo-‐Zhoushan, China 2,000,000 4,000,000 ₫ 240,000 ₫
Shenzhen, China 250,000 500,000 ₫ 30,000 ₫
Singapore 1,000,000 2,000,000 ₫ 120,000 ₫
Annual Freight Annual Annual
City Volume (kgs) Revenue (€) Profit (€)
Prague, Czech Republic 750,000 €1,875,000 €82,500
Vienna, Austria 500,000 €1,250,000 €55,000
Rotterdam, Netherlands 2,000,000 €5,000,000 €220,000
Copenhagen, Denmark 1,000,000 €2,500,000 €110,000
Hamburg, Germany 250,000 €625,000 €27,500
Annual Freight Annual Annual
City Volume (kgs) Revenue ($) Profit ($)
Lagos, Nigeria 500,000 $1,000,000 $60,000
Beira, Mozambique 1,000,000 $2,000,000 $120,000
Dar Es Salaam, Tanzania 750,000 $1,500,000 $90,000
Mombasa, Kenya 2,000,000 $4,000,000 $240,000
Durban, South Africa 250,000 $500,000 $30,000
Annual Freight Annual Annual
City Volume (kgs) Revenue (₹) Profit (₹)
Tanjung Priok, Indonesia 1,000,000 2,500,000 ₹ 110,000 ₹
Karachi, Pakistan 250,000 625,000 ₹ 27,500 ₹
Port Klang, Malaysia 2,000,000 5,000,000 ₹ 220,000 ₹
Colombo, Sri Lanka 750,000 1,875,000 ₹ 82,500 ₹
Laem Chabang, Thailand 500,000 1,250,000 ₹ 55,000 ₹
Annual Freight Annual Annual
City Volume (kgs) Revenue (₱) Profit (₱)
Santos, Brazil 250,000 500,000 ₱ 30,000 ₱
Balboa, Panama 500,000 1,000,000 ₱ 60,000 ₱
Cartagena, Colombia 750,000 1,500,000 ₱ 90,000 ₱
Callao, Peru 2,000,000 4,000,000 ₱ 240,000 ₱
Kingston, Jamaica 1,000,000 2,000,000 ₱ 120,000 ₱
Annual Freight Annual Annual
City Volume (kgs) Revenue ($) Profit ($)
Jeddah, Saudi Arabia 250,000 $625,000 $27,500
Tanger-‐Med, Morocco 1,000,000 $2,500,000 $110,000
Jebel Ali (Dubai), UAE 500,000 $1,250,000 $55,000
Port Said, Egypt 2,000,000 $5,000,000 $220,000
Jebel Ali, Dubai 750,000 $1,875,000 $82,500

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Provincial Industries – Opening International Regional Offices
APPENDIX TWO: Definitions of Categories
City Address Longitude Latitude
Busan, South Korea 67 Dongbaek-‐Ro, Haeundae Busan, 48100 35.1559645 129.1517932
Guangzhou, China 228 Tianhe Road, Tianhe District Guangzhou, Guangdong 510620 23.1318839 113.32383
Ningbo-‐Zhoushan, China 188 He Yi Road, Hai Shu District Ningbo, Zhejiang 315000 29.8776606 121.5505103
Shenzhen, China 116 Fuhua San Road, Futian District Shenzhen, Guangdong 518048 22.5336491 114.0593331
Singapore 7 Raffles Avenue Singapore, Singapore 039799 1.2908195 103.8578684
Prague, Czech Republic V Celnici 8 Prague, Czech Republic 110 00 50.0882075 14.4290556
Vienna, Austria Ungargasse 60 Vienna, Austria 1030 48.1966432 16.3841935
Rotterdam, Netherlands Weena 686 Rotterdam, Netherlands 3012 CN 51.922488 4.4694493
Copenhagen, Denmark Kalvebod Brygge 5 Copenhagen, Denmark 1560 55.6685049 12.5714686
Hamburg, Germany ABC Strasse 52 Hamburg, Germany 20354 53.5546542 9.9850453
Lagos, Nigeria 38/40 Isaac John Street, Ikeja GRA Lagos, Nigeria 100271 6.5821653 3.3561173
Beira, Mozambique Avenida de Bagamoio 363, Beira CP 363, Mozambique -‐19.8304149 34.8357153
Dar Es Salaam, Tanzania Seaview Ocean Road Dar es Salaam, Tanzania 1000 -‐6.7989477 39.2829563
Mombasa, Kenya Haile Selassie Avenue, Mombasa 00200 -‐4.0597205 39.6666981
Durban, South Africa 149 OR Tambo Parade Durban, 4001 -‐29.8544423 31.0362203
Tanjung Priok, Indonesia Jalan Boulevard Barat Raya, Kelapa Gading, Tanjung Priok, 14240 -‐6.1554329 106.8944857
Karachi, Pakistan 9 Abdullah Haroon Road, 10444 24.8463037 67.0289927
Port Klang, Malaysia 5 Jalan Sultan Hishamuddin Kuala Lumpur, Malaysia 50000 3.1392266 101.6899256
Colombo, Sri Lanka 265, Galle Road, Kollupitiya Colombo, 00300 6.9130784 79.8470192
Laem Chabang, Thailand 35 Jerm Jompon Road, Si Racha 20110 13.1694242 100.9253453
Santos, Brazil Avenida Ana Costa 555, Praia do Gonzaga, Santos, 11060-‐003 -‐23.9690935 -‐46.3348762
Balboa, Panama Avenida Balboa con Calle 53, Paitilla, Panama City 8.9785609 -‐79.520035
Cartagena, Colombia Carrera 1 No. 5, Cartagena 130010 10.3908394 -‐75.4781095
Callao, Peru Avenida La Paz 1226, Callao, Peru -‐12.0852728 -‐77.0961768
Kingston, Jamaica 1 Park Close Kingston, Jamaica 5 18.0041041 -‐76.7925237
Jeddah, Saudi Arabia 13344 Jeddah, Saudi Arabia 21493 21.5523033 39.1579369
Tanger-‐Med, Morocco K'sar Almajaz Tanger Med Free zone, 90000 Tanger Morocco 35.881944 -‐5.5136707
Jebel Ali (Dubai), UAE Mankhool Road, 4C Street, Bur Dubai 25.2518196 55.290592
Port Said, Egypt El-‐Shaheed Atef El-‐Sadat, Port Fouad, Port Said Governorate, Egypt 31.2710407 32.3001334
Djibouti, Djibouti Blvd du General de Gaulle, Djibouti 11.5884459 43.1499276

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Provincial Industries – Opening International Regional Offices
The site location decision depends on individual attributes or factors for each category.
These factors determine capabilities and efficiency of operations. Because of its direct impact
on operational capability and efficiency, site or facility location is a common decision and a
popular area for research by both academics and industry, and they have developed many
approaches for making this decision. The attributes generally fall into the major categories
described below. You need to find data that fits into each category to support an evidence-‐
based analysis. A comprehensive analysis will include several factors for each category—do not
rely on just one data point.

Before assessing a site, you first must understand the location purpose and the
business’s strategy. In this case, you need to select a site in each region with the purpose of
expanding international market reach. Be sure that each of the data points used as evidence
relates to the strategy. A good analysis will start by enumerating each desired strategy goal—
customer service numbers, transport lead times, market access, inventory costs, storage
availability, numbers of customers—and then communicating how each data point directly
impacts a business outcome. Lastly, each category interacts with the others. Use the
definitions below to help decide where to include data.

CATEGORY DEFINITIONS:

Business Climate
Business climate is the general environment within an economic area that consists of
the attitude of the government, politicians, society, labor organizations, and legal climate
toward the target business’s interests and industry, including the current taxation regimen,
inflation, and regulatory requirements. Keep in mind that businesses don’t necessarily mind
paying taxes if they receive valuable services, efficient infrastructure, or market access in
return—it’s all about the value.

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Provincial Industries – Opening International Regional Offices
Communications
Communications refers to the ability to connect people and places to other people and
places. In the context of supply chain site location decisions, communications are a powerful
enabler of efficient and effective supply chain operations that include both technology and
policy implications.

Financial Services
Financial services include banking and currency concerns such as professional services
involving the investment, lending, and management of money and assets, as well as exchange
rates and the ability to freely move money both within and between countries.

Health Services and “Quality of Life”

Health services have a direct impact on the availability and productivity of labor, and
are important to prevent epidemics, recover from disasters, and other events that can
potentially disrupt markets, labor availability, and the ability to conduct trade with other
countries.

Infrastructure
Infrastructure focuses on the physical structures in the country, especially civil
engineering structures.

Transportation
Transportation refers to the capability and efficiency of transportation modes that
aren’t direct measures of the physical architecture.

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