A Case Study Analysis on the Strategic Alliances of Audio Duplication Services, Inc. (Ads)

Abstract Logistic strategy is vital part of company’s goal to reduce cost, gain more profit and improve supplier-customer relationship. This paper studied the logistic process of Vanity Products to have a grasp of how logistic works and affects the flow of supply chain. Guide questions are answered to have a better understanding on the logistic and warehousing; and how these decisions must be well thought.

Evaluation, conclusions and recommendation are done to know the best alternative for Vanity Products.

Introduction Background and Significance of the Study

The strategic decision with regards to alliances is an option for firms to improve and strengthen their respective firms. Strategic alliances is said to be a multi-faceted, goal oriented partnerships of companies in which each shares resources and rewards but the risks involved is also shared.

In deciding whether such alliances will help your firm, several factors should be considered. These factors are, if this would add value to the products, if this would improve the firm market access, if this would strengthen the operation, if this would enhance strategic growth and organizational skills, and if this would build the firm’s financial strength. The decision if one firm should make an alliance to another company is something that is thought thoroughly.

This strategic alliance is a very big step for any firm and the firm should be very critical in making such decisions because the benefits are high and so the risks in this kind of arrangement. Objective of the Study This study aims to:

1. Study and analyze the strategic alliances of Audio Duplication Services, Inc. (ADS)

2. Evaluate the alternative of ADS on its logistics management

3. Study and analyze the benefits of Vendor-managed inventory(VMI) Key

Terms to Remember

  • Shipping Cost – Third Party Logistics- the use of outside company to provide for a particular services to perform all or part of the firm’s material management and product distribution functions
  • Strategic Alliances – agreement among firms in which each commits resources to achieve a common set of objectives
  • Vendor-Managed Inventory (VMI)- a family of business models in which the buyer of a product provides certain information to a vendor Results and Discussions

Case Questions

1. Why are ADS’s customers’ customers moving towards VMI arrangements? ADS’s customers’ customers (i. e. etailers) are moving towards the VMI arrangement so that the likelihood of being out of stock is reduced and the inventory level in the supply chain is also reduced. This will be achieved because through VMI the retailers could provide a continuously updated point-of-sale (POS) to the record companies. By then, the decisions that will be made by the record companies like how much of each album, CD, and cassette title is delivered and when each delivery is made will be more accurate because the records company’s data is updated.

2. How will this impact ADS’s business? How can ADS management take advantage of this situation? This decision on VMI arrangement will have a big impact on ADS. The ADS management should take advantage in the new arrangement because through this they could maintain a more accurate inventory level. Because in this kind of arrangement, the ADS takes full responsibility on the inventory level and through VMI they could have a more accurate inventory level and also ADS could deliver the product on time.

3. How should ADS manage logistics? The ADS should manage logistics by hiring a third party logistics to manage the logistics in their supply chain. This decision is based on several reasons.

One of these is that managing logistics is not one of the expertises of ADS Company and by hiring a third party logistics the ADS Company could now focus on their competency of cassette duplication. Also, the new arrangement of direct shipping to the stores would incur higher shipping cost for ADS because of a more complicated route that unlike before there is a distribution center where the products are shipped; in this situation it is very logical for them to hire a third party logistics so that the path networks of these stores would be manage efficiently by third party logistics who are experts in this things.

Another reason why ADS Company should not opt to buy a fleet of trucks is that this alternative would require a very high capital investment. Thus, ADS should hire a third party logistics to manage their logistics.

4. Why are the large national retailers moving toward a direct shipment model? So that the product would get into the specific stores where it is needed on time and with the right quantity. Also, direct shipment model is important in a business to reduce the lead time especially for a company whose nature is already changing due to the changing technology.

Conclusions, Recommendations, References, and Other Details Conclusions Ultimately, a business organization’s goal is to make profit. But one cannot forsake the quality of the product as well as the satisfaction of customers. In this case, the customers of Vanity Products made changes in terms of ordering the products they need. It was very challenging for VP to adapt to the changes made by the customers since significant changes have to be implemented to address the demands of customers.

VP encountered problems regarding cost as well as logistic service. With this, Tom White recommended a solution where different warehouses will be established near the customers. In the long-term, it is beneficial to the company because it decreases the cost in terms of transportation. Recommendations From the main discussion, Tom’s proposal is the best course for Vanity Products. The requirement of the customers that the products be delivered within five days will be met.

At the same time, the cost of VP will be lower compared to that of delivering less than truckload quantities to a specific store or using a peddle run method to deliver a full truckload quantities to a set of stores or customers. Thus, the best alternative or solution to the problem is to implement Tom’s proposal.

References

  1. (1)J. Heizer and B. Render. (2010). Operations Management. Tenth Edition. New Jersey: Prentice-Hall, Inc.
  2. (2) Munley. com. Truck Accidents Glossary. Retrieved February 4, 2013 at http://www. unley. com/truck_glossary/legal_glossary_p. html
  3. (3) Businessdictionary. com. Freight Costs. (2012) Retrieved February 4, 2013 at http://www. businessdictionary. com/definition/freight-cost. html Other Details “A Case Study Analysis on the Strategic Alliances of Audio Duplication Services, Inc. (ADS)”

IE 191 Section: V Date of Submission: March 21, 2013 Contributors Signature Members: Josol, Patricia Beatriz| ___________| Palomar, Romelyn Mae| ___________| Tena, Mara Alyssa| ___________|