Integrated Business Management Mid-Term Exam

Thursday, 29 September 2011 BBA II B

The Tug-of-War Case Study Analysis

Written by: Virginie Fauran, Mike Lesman, Bart Favre

Integrated Business Management Mid-Term Exam

Thursday, 29 September 2011 BBA II B

1. Jack Emmons is the CEO of Voici Brands; he wants to centralize the supply chains of operations. Jack visits the Chinese supply chain city and upon his tour encounters the representative of their main competitors (Marquise). He is told that Marquise already consolidates their supply chains and is now using this supply chain city. As such, they managed to improve their bottom line. Recently one of Voicis subsidiaries showed bad results that were due to their inaccurate forecasts of sales. As a result there was a lack of products in the retail stores and the high seasonal demand was not met. Due to the inefficiency of the current supply chain the goods that were ordered to cover the shortage arrived after the demand for this item had fallen, a large amount of inventory piled up and had to be sold with a major discount. This shortage was partially caused by a strike that their Australian supplier encountered. Due to this situation Voici was criticized and even their stock took a partial hit. Emmons also had to keep in mind each of the lines managers most of them do not opt for change, they are pleased with their operations and the small inefficiencies that they acquired during their work experience serve as pathologies that damage the overall performance of the company. His main dilemma upon some thought and some conversations with professionals is: he can either implement the change rapidly, save time for the company and make sure that the competitors wont get ahead to far. This approach will not be met kindly with the line managers. On the other hand he can move slowly, implement it slow, through small successful operations that will reduce their costs and demonstrate to others that is it a good idea. Change needs to happen reducing the time from design to market will increase accuracy of sales forecasts and will reduce the risks the company will have to take during its operations. 2. Margie Rosen, is the senior vice president in charge of Jacquie. Margie was typical of the lines managers. She has over 20 years of experience in her field and she is unwilling to change rapidly. She has forged stable and reliable contracts with suppliers from textile mills to production houses, from customs brokers to warehouses, from technologies consultants to Written by: Virginie Fauran, Mike Lesman, Bart Favre 2

Integrated Business Management Mid-Term Exam

Thursday, 29 September 2011 BBA II B

transportation firms1. She is against the consolidation of the company. Her arguments against the change are the high quality of products by using best of-breed suppliers () and each supplier uses its own bests-of-breed suppliers2. Furthermore, Margie might be intimidated by the Rottweiler technique of change (rapid, aggressive) and can leave the company if she feels uncomfortable. Loosing skilled professionals such as Margie will not benefit the company as a whole and this could be a bad example for other employees who are in doubt. 3. Ravi Chandry (the Rottweiler) is a wealthy retired consultant who was recommended to Jack by his mentor on the board Mike Coverdale. Emmons meets Chandry for lunch in his favourite restaurant. Ravi has successfully centralized the supply chain operation for the second largest food and beverage company in the world. Ravis advice is to measure everything before streamlining the operation. He says that the most important part is to act quickly and decisively. 4. Tony Rini, head of the childrens wear division, Harry and Sally. A ten-year veteran in the company who worked in all of its divisions. He does not appear to play in politics and is a trustworthy employee. He has trust of other employees and business heads and he knows not only how to get along with them but also how things are done inside the company. He can win the hearts and minds of the people who need to make the decision for change. He believes that the situation is too complex to face at one time; there is too much complex logistics involved too many contractors and subcontractors. He thinks that change should be implemented slowly first through the IT department, and if the applied changes will work well there, it could be moved up into bigger, riskier divisions. 5. Robert Dodds, Voicis CFO, accompanies Jack on his china trip.

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Written by: Virginie Fauran, Mike Lesman, Bart Favre

Integrated Business Management Mid-Term Exam

Thursday, 29 September 2011 BBA II B

It is understood by the top management that the centralization of the supply chain will help Voici save money, however it will also take away power from the unit directors, which means that they are resenting this change. It is clear that some inefficiencies of certain supply chains arose, the first bell was when Magies Jacquie line encountered a supply shortage, the second was with Tonys Harry and Sally line of cloathing having the same problem. If this continuous the complicated and often overcomplex network of contractors, subcontractors and sub-subcontractors will become a liability that the company will need to avoid. Voicis competitors are able to go from design to production in 2 months, it takes Voici 1 year to do the same. Their efficiency and their flexibility and adaptability to change is in danger if this continuous. This sluggish system cannot be efficient in our ever changing, more rapid world. The company is facing both an economic and a managerial issue. Indeed, competition has already consolidated their operations by outsourcing all its product line. By doing that, they have reached economies of scale and shrunk the time from fashion design product s arrival in its retail stores. They can respond more quickly to the whims of its fashion-conscious customers. In other terms, they have reduced their time to market and eased their production process. Moreover, they are now a step ahead Voici. Voici is confronted to the question of a major change. This restructuring issue involves the comitment of the executives to support the change. However, the latter may lose control on operation. This reluctance to change is instictive. The CEO of the company, as presented in the case, has basically two cards in his hands and will have to make a final decision. Either a fast moving centralization procedure; against which the board is obviously against. Either a smoother implementation of centralization as presented by Toni Rini; a restructuration done step by step beginning with changes in the IT department for example. The alternative to competing with Voicis main competitors Marquise is to follow what their competitors did. In order to solve the main issue of loosing face to their main competitor Marquise, that consolidated its supply chain by outsourcing all its product line in China, is to follow the same direction. However Voicis brand CEO

Written by: Virginie Fauran, Mike Lesman, Bart Favre

Integrated Business Management Mid-Term Exam

Thursday, 29 September 2011 BBA II B

realised that negotiating with the Chineses suppliers was not an option as Voici is just too decentralized. It would just be a waste of time and it would not work. Since they are just too decentralized even so securing a deal with the Chinese wont allow them to shrink the time from fashion design to product arrival and increasing a small part of profit due to lower labour cost as Marquise successfully achieved. Instead Jack realises that he is faced with two possible solutions to implement. Both of them seem to contradict each other however both showing a positive outcome. The first alternative to solving the problem is following the Rottweiler tactic. According to Ravi who has experience in this domain and who has successfully achieved previous centralization, there is only one possible solution. Everything needs to be measured, in order to be reorganized and given the competition, this should be taken into action now. He feels that the longer he drags this around the higher he puts at risks the company. The factor of time is a highly important one however the draw back here is the executives loss of power that might see this has a threat. The second advice he gets is from Tony the head of the childrens division and who has been around the company for many years. Tonys vision is also change. However after writing everything down for the organizational chart, he quickly realizes that the chart is too complex with too many division supply chain each having their own contractors who in turn have subcontractor and sub-subcontractors. The chart is too complex highly linked with sub-branches and millions of factors needed to be taken into considerations. Even recentralizing in one unit is a process, which takes time and cannot be done over one night. The change should be implemented steps-by-steps. Focusing in a first part on small units, which would be good tests and eventually moving up once the tactic has proven effect to more highly risky units. Also Tony has credibility among others and so such implementation coming from him will have more chance of being accepted from the divisions. The only draw back to this solution is the time factor.

Written by: Virginie Fauran, Mike Lesman, Bart Favre

Integrated Business Management Mid-Term Exam

Thursday, 29 September 2011 BBA II B

The recommended solution would be collaboration between Ravi and Tony mixing the two opinions for a balanced solution. Tony has the expertise and insider information that is required for a detailed understanding of the problems that the company is facing and the potential threats that might arise from implementing changes. His experience lacks the knowledge of consolidating the supply chains and on the alternative solutions that a professional in that field holds. Ravi has this knowledge. With Ravis knowledge the change will be implemented properly and alternatives that best fit the company will be identified and chosen. The optimal solution is combining the expertise of Tony with the knowledge of centralization that is held by Ravi. This mix will provide the company with a team of specialists that will be able to face not only the global problem of changing the company and centralizing its supply chain, but also with the daily problems that might arise in the companys operations. Demanding the

Written by: Virginie Fauran, Mike Lesman, Bart Favre