Case Summary

Case 1: Intel

After going through the first case of Intel Corporation, it has been found that the company is
facing hitches of increasing supply chain costs. Intel had also found that their new introduced
product named “Atom” chipset has the opportunity to grab the market because of its low cost
but the supply chain increasing cost is not providing the actual benefit of lowering the cost of
that new product. That’s why Intel has decided to reduce the cost and after investigating
different areas of supply chain department, they found the only way to reduce the cost is to
manage the inventory is of products.

Intel decided to find out different ways to reduce supply chain cost by reducing the packaging
costs but it didn’t work. They also tried to reduce the duty payment to eat government
regarding export in their product but it was also not the way to reduce the costs. But after
long investigation they found that the only way to reduce the cost of inventory is to reduce
the order cycle time period of demanded products to reduce the inventory costs.

Intel started manufacturing in Malaysia and has decided to who said the Assembly unit of the
company to increase today testing period which was previously 5 days and after the change it
was 7 days. The company has also introduced sales and operational planning process for
introducing new ways of delivering the products to their targeted audience. They also
introduced vendor-oriented inventory systems which ultimately reduces the inventory cost of
the company by $4 per unit.

Case 2: Starbucks

Being one of the most famous brands in coffee industry across the world, during the year of
2007 and 2008 Starbucks faced increasing cost of supply chain which was very challenging
situation for the company to deal with. Internal audit and analysis have provided some
information to the manager of Starbucks that the company is not fulfilling the customer
expectation according to the demand. Laziness in delivering appropriate order within time
period was one of them. Outsourcing decision of third-party logistics expenses has also
increased the overall costing of supply chain for Starbucks. Investigation also shows that the
supply chain system of Starbucks has unnecessarily become very complex for everyone to
manage it effectively.

1
The best alternative of Starbucks got after investigation was to improve the performance of
supply chain department to reduce the cost and increase the efficiency. The company focused
on recognising the supply chain, reduction of cost of serving and the groundwork for future
capability of supply chain.

Starbucks took initiative to divide three different functions plan, make and deliver to improve
the performance of internal stages of business. The manufacturing unit has also become 4 in
total us which was another plan of Starbucks to deliver their customers frequently whenever
they demand. The company has also significantly done well to manage the third-party
logistics by developing scorecard system on weekly basis to communicate with the suppliers
and business partners. Using these strategies, Star Bugs become successful in in upcoming
years and now has become stable by reducing the supply chain cost and increasing their
profits.

Case 3: AGCO

AGCO has good reputation of manufacturing agricultural machineries and accessories for last
two decades across the world. In recent years, due to decentralization and fragmented nature
of global network, the company faced different types of challenges regarding the increasing
cost of supply chain system. The company immediately thought about the opportunity is an
alternative in order to reduce the supply chain costs.

After conducting analysis among the brands of AGCO, the company has found that in terms
of different inbound logistics of the company, the supply chain costing is increasing. The
company is collecting the finished goods from the sources of the suppliers and giving a lot of
money as transportation cost because of the decentralized environment in the world. The
company is also found that they are not getting the Economics of scale advantage because of
not having appropriate Transportation system to deliver their machineries into different parts
of world including North and South America and Europe.

To fix the problem, after a lot of Investigation, AGCO found the ultimate way of decreasing
the supply chain cost by introducing TMS transport management system. They basically
focused the European market in order to enter using transport management system and also
find out some of the capable sources of third-party logistics providers. This strategy has
significantly worked in order to reduce the freight cost and carrier cost as well as different
shipment scheduling option was also provided for AGCO to reduce their supply chain cost
and become successful again.