Study Document

Supply Chain Management in Canada Case Study

Related Topics: Management Operations Canada China

Pages:11 (3384 words)



Topic:Supply Chain Management

Document Type:Case Study


Strategic Supply Chain Management: Case Study

I. Executive Summary

Strategic supply chain management consists of strategic, tactical and operational levels, wherein general planning, short-term process decision-making, and day-to-day operations are planned and executed. This case study examines the supply chain issues of Krebbler-McCray Home Products and provides recommendations together with an integration implementation and monitoring plan to address both the long and short term issues presented in the case. The report is organized in the following sections: Issues Identification, Environmental Analysis, Root Cause Analysis, Alternatives and Options, Recommendations, Implementation, and Monitor and Control. It covers the strategy and market position of the company, the supply chain decisions that have to be made, evaluation criteria, possible alternatives, quantitative and non-quantitative analysis, how the best strategy can be implemented, and how the company be know whether the strategy has been successful.

The main points of this summary are the following:

1. The issues identified consist of

a. the company’s revenue coming almost exclusively from Canadian consumers, where competition is fierce;

b. operating expenses increasing as a result of no integration of operations following the merger of Krebbler and McCray;

c. There is considerable unnecessary overlap in the distribution system, which should be streamlined;

d. Krebbler’s quality does not lead to positive net revenues; McCray’s faster delivery and sales record does—but at a cost of a lower quality ranking

e. The big 5-year contract worth $30 to $36 million needs to be signed. It requires low-cost ready to assemble furniture like that which McCray can produce using its new CAD software. It will mean, however, reducing the footprint of Krebbler’s.

2. Environmental analysis reveals that margins are being squeezed by the low costs of competition from China, the customer base has shifted to bulk buyers from custom design buyers, and competition in premium product comes from Germany and Italy.

3. The strategic issues to be addressed are: 1) integration of the two businesses so as to reduce costs; 2) whose approach to retain and whose to drop—Krebbler’s or McCray’s, and 3) how to restructure operations so as to penetrate new markets and improve revenues, while cutting costs. Both financial and quality considerations have to be made.

4. The recommendations for the company are as follows: 1) the company must integrate distribution centers; it is currently operating two centers that have overlapping service channels—one of them can be closed to save costs; 2) the company must reserve the Krebbler approach for custom design clients and use the McCray approach for bulk buyers; 3) the company should expand into U.S. markets now that trade war with China has developed and in the U.S. there will be an opening to penetrate the market and fill a gap left by China’s absence.[footnoteRef:2] [2: Robert Channick, “Fallout from China Trade War,” Chicago Tribune, 2019.]

5. The decision to reduce Krebbler operations should be made so as to compete with low-cost competitors; however, the company’s reputation for quality should be reserved for custom design consumers. Expansion into the U.S. should be made by meeting retailer demand now that high tariffs are being placed against Chinese imports in the U.S. The large $30 million contract must be signed and tactical operations must be made to work to accommodate this new demand.

II. Issue(s) Identification

The strategy and market position of the company is to offer premium household wooden furniture to consumers in Canada, U.S., Japan and China. The vast majority of sales revenue comes from the domestic market (95.5%). 2.5% of sales in the U.S. and 1% of sales in Japan make up the rest of the company’s revenue sources.[footnoteRef:3] Essentially, outside of Canada, the company has made no inroads of any substantial impact in foreign markets. [3: Krebbler Furniture Case Study, Supply Chain Management Association, 12.]

The market for household furniture in Canada is extremely competitive. The founder Michael Krebbler took the company public five years ago so as to obtain capital for expansion as well as to give himself an exit strategy for his retirement. Because of the competitive nature of the market, however, the company has been struggling just to survive.[footnoteRef:4] By selling the company to McCray, Krebbler entered into retirement. However, the two businesses never fully integrated and at present are still operating as two separate businesses though they are owned by one owner.[footnoteRef:5] [4: Krebbler Furniture Case Study, Supply Chain Management Association, 3.] [5: Krebbler Furniture Case Study, Supply Chain Management Association, 8.]

Operating expenses have increased drastically since the sale of Krebbler’s to McCray. Two years prior they 7.23 million CAD compared to current expenses of 10.94 million. The main recent for this increase is the lack of integration between the two businesses, which means that Krebbler-McCray is essentially running two supply chains simultaneously. By integrating the two it could substantially reduce operating expenses and return to a positive net earnings—currently -3.25 million CAD as compared to a positive 1.187 million prior to the companies’ merger.[footnoteRef:6] The difference in income between before and after the merger can be seen in the income statement in the Appendix. [6: Krebbler Furniture Case Study, Supply Chain Management Association, 12.]

There is also considerable overlap in the distribution systems of the two businesses. The McCray Plant and Distribution Center crisscrosses with the Krebbler Plant and Distribution Center, as can be seen in Appendix B. Both businesses use national retail chains to move their products, and there is overlap here as well.[footnoteRef:7] In terms of delivery rate, McCray bests Krebbler by 25% and delivers in half the time (3 weeks vs. 6 weeks). In terms of quality and customer satisfaction, Krebbler bests McCray by 1.5 stars in the Furniture Quality Index (4.5 vs. 3.0). Krebbler’s extra time to delivery correlates with a higher quality ranking. However, its extra care also increases its overhead (for example, to construct a dining room hutch, labor at Krebbler costs $408 vs $135 at McCray;…

Some parts of this document are missing

Click here to view full document

…the company a reputation of being a provider of quality goods at a low-cost rate.

a. Pros: This fully eliminates any company bloat and cuts upwards of $6 million annually from operational costs, which firmly puts the company in the black and will allow for a positive cash flow for a consistent number of years. It will put demand on the supply chain management team to develop increased tactical designs for shipping and to establish strong logistical relationships so that products are moving consistently and at a rate proportional to the production of goods so that DCs are not oversupplied.

b. Cons: It will essentially eliminate the Krebbler staff unless they are willing to transfer to any new facility opened in the U.S. for logistical purposes. The problem here is that the staff will likely need re-training in order to update them on the best practices for achieving tactical goals.

VI. Implementation

The implementation of the top recommendations could be achieved by designating the 20% east plant space of McCray’s plant for all custom designed orders and using the Krebbler plant to increase output for the purposes of fulfilling the $30 million contract. The plant would need to be retrofitted with CAD to maintain best practices and this would require an elimination of or retraining of staff to meet the market demands. This could be implemented over the course of a year so that the company is ready to meet the needs of the new customer client. Further closures and expansions would depend upon how well the company is able to make inroads into the U.S. market, which from a strategic standpoint should not be difficult because of the tariff situation between the U.S. and China.

The implementation of these decisions should be made in a transparent manner so that no staff or stakeholders are shocked or surprised. The process should be explained to all in a manner that uses both transformative leadership and transformational leadership skills so as to ensure that the vision of the company is reasonably and logically explained and that all stakeholders are treated fairly and appropriately. Without this kind of leadership, the company may face serious resistance from stakeholders that could undermine the momentum and competitive advantage the company currently holds thanks to the quality factor that the Krebbler brand brings to the company’s reputation in the market.

VII. Monitor and Control

Monitoring and controlling the situation should be commenced using Six Sigma, which allows for the company to focus on ensuring quality, improving employee morale, and eliminating unnecessary costs from the production of goods for the market. Six Sigma shows where cuts can be made to improve the bottom line, and controlling for any issues will depend upon making internal reviews and audits quarterly. Reducing operational costs will depend not just upon eliminating any operational bloat but also upon enhancing employee morale and maintaining efficient productions and performance. With CAD, productivity can be programmed, but with custom design…

Sample Source(s) Used


Channick, Robert. “Fallout from China Trade War,” Chicago Tribune, 2019.

Krebbler Furniture Case Study, Supply Chain Management Association. Digital File.

Cite this Document

Join thousands of other students and "spark your studies."

Sign Up for FREE
Related Documents

Study Document

Supply Chain Management Hypothesis Defined Concepts of

Pages: 80 (24788 words) Sources: 1+ Subject: Business - Management Document: #27040353

Supply Chain Management Hypothesis defined Concepts of SCM and the evolution to its present day form Critical factors that affect SCM Trust Information sharing and Knowledge management Culture and Belief -- impact on SCM Global environment and Supply Chain management "Social" and "soft" parameter required for SCM Uncertainties This chapter aims to give an outline and scope of the study that will be undertaken in this work. The study lays out the issues faced by manufacturing organizations when it comes

Study Document

Supply Chain Management Proposal: Automation

Pages: 2 (617 words) Sources: 2 Subject: Business Document: #13149167

Though it is not entirely necessary for the approach taken to be a novel one, the research here will consider that there are yet undetermined impacts on the merchant of such a system. Thus, a second part of this methodology will be focused upon once the literature review has provided us with sufficient data to surmise a framework for the automated system. As this automation would impact the ordering systems

Study Document

Supply Chain Management Home Depot

Pages: 10 (2659 words) Sources: 5 Subject: Business Document: #10744141

Home Depot and Management Tool • Company background -- must include sales and employment data. Products or services provided. Size vs. major competition. The Home Depot (NYSE: HD) is the world's largest home improvement chain and the fourth-largest retailer of home improvement and construction products and services. Founded in 1978, Home Depot has about 2,500 locations in each of the 50 states as well as in the 10 provinces of ten provinces

Study Document

Sony and Supply Chain Management Sony Corporation

Pages: 6 (1886 words) Sources: 1+ Subject: Business Document: #96969337

Sony and Supply Chain Management Sony Corporation is one of the world's leaders in supply chain management initiatives. The electronics giant has taken considerable steps to modernize its supply chain management, with generally excellent results. However, recent problems with business forecasting, and a continually challenging marketplace suggest that Sony must continue and even step up efforts to improve its supply chain management process. At the same time, the company is faced

Study Document

Glide Right Inc Strategic Supply Chain Management

Pages: 8 (2577 words) Sources: 4 Subject: Business - Case Studies Document: #20913759

Glide Rite

The Problem

There are a couple of problems with the current situation, as Raj is discovering. The first is that the engineer, Angela, is ordering without the consent of the supply chain division. This alone is cause for concern because this is not the process, and she is not following the supply chain department's processes. So in that sense, regardless of what else is happening, there

Study Document

Supply Chain Automation at Imperial

Pages: 9 (4095 words) Sources: 1+ Subject: Business - Management Document: #2888562

This issue of resistance to change is a critical one that will require significant effort to overcome. As a first step, the development of needs analysis is critical for understanding how the systems can be designed to be of more value to those using them. This is essential to increase the likelihood of acceptance of the supply chain system, both within Imperial Tobacco Canada and with its suppliers. The

Join thousands of other students and

"spark your studies".