2. Do you think Altera’s new strategy will be successful? What are some advantages
and disadvantages of the new strategy?
Advantage of this strategy is less risk and more profit. The disadvantage is that Altera’s customer will have to take on long lead time. In addition, customer will have to fully commit in order to purchase. I think this strategy will be successful. Dell for example, has taken direct model approach along with make to order concept that are the highlight of its success. Perhaps Dell did not have the most sophisticated process in place, however, over time it made changes and created most efficient Dell that we see. From that perspective, Altera’s new approach in handling its manufacturing and inventory process might be an excellent decision.

3. How do you anticipate Altera’s customers will react to this new strategy? What are
advantages and disadvantages for Altera’s customers?
Altera’s customer will have fit at the beginning due to long lead time. However, eventually they will adapt. The advantage of this strategy will bring both customer and Altera together. The new strategy will allow both to collaborate at high level creating efficient process and in return both the customer and Altera will be better off.

4. What information does Flextronics have that its clients do not? Why? How can
Flextronics leverage this information?
Since Flextronics manufactures equipments for many clients that it has opportunity to see the aggregated demand and supply that they are producing. This information in regards to demand and supply can benefit both its suppliers for VMI inventory and clients for its requirements. Flextronics is very good at manufacturing equipments. They got to where they are by using the information that benefits everyone including its clients, supplier and partner.

5. How does IBM manage its suppliers in order to make its pull strategy more effective?
IBM manages its suppliers in order to make its pull strategy more effective by producing forecast that goes out 90 days out. This forecast is updated on weekly basis and made available to all its suppliers which allow them to make appropriate adjustment to meet the demand. One of the goals of IBM is to predict accurate forecast. A lot of time, effort and money are spent trying to predict most accurate forecast as it has huge impact on bottom line. Inaccurate forecast can cause material shortage, lost of sales, inventory cost, and poor profit. It is therefore, important for IBM to do its best to predict most accurate forecast. There is no such thing as 100% correct forecast, however, through quantities methods, one can easily create forecast which may not be 100% accurate but it is fairly close given specific assumptions.

References
David Simchi-Levi, Philip Kaminsky, and Edith Simchi-Levi, (2003) Designing and Managing the Supply Chain (2nd ed.) McGraw-Hill, New York, NY

2. What are the costs and benefits of a universal power supply (feel free to make assumptions)?
Costs:
A. Universal power supply will cost $13.5 million which it is only 3% of product cost that can easily be passed through customer. On the other hand, HP can cover the cost which means 3% off its bottom line. However, if this money is not invested, lost of future customers due to stock out or even lost in profit margin due to transshipment can drain the companies finance through time.
B. Increase in price by 3% can also reduce revenue (sale).
C. Cost or loss of potential sale due to high price.
Benefits:
A. Decrease if not eliminate stock out.
B. With universal power supply, HP no longer needs to develop demand forecast for each market. It only needs to generate estimated worldwide product demand four months ahead.
C. Standardization in universal power supply could also offer customer benefit of using the product in different region.
D. Standardization in universal power supply in printer can also initiate standardizing in other products such as work stations and servers.
E. Add value to customers.
D. Eliminate direct cost associated with labor spent responding to demand by transshipments.

3. How would such costs and benefits be different over the product life cycle?
Over the product life cycle, both cost and benefit are different. At the beginning life cycle of product, the cost of stock out would be high because for every order lost would not only result in lost in revenue but also future revenue. The theory is the customers tend to buy similar product and/or brand to keep consistency. In addition, it takes over four life cycle of product before that customer returns to HP. At the ending life cycle, cost of stockouts is lower than compared to at beginning because there is less fear of loosing future sale.

4. Besides deciding on a universal power supply, what other operational improvements can you suggest to HP Boise?
One of the suggestions HP should consider is improving forecasting ability to ensure appropriate demand is met in all sector while optimizing inventory level. In addition, HP should also look in to creating similar standardization of power supply in other product offering such as workstations and servers. It is also possible that HP can consolidate all power supply (for servers, workstations and printers) to its manufacturing partner in low cost country. The idea is to consolidate and standardize which in theory creates efficiency, and optimize all level of cost including inventory.

5. What would be your recommendations about the adoption of a universal power supply?
In looking at this issue from all perspective, I would recommend HP to adopt universal power supply as the potential benefits out weigh the costs. From one perspective, $30 increases in product that sale for $1000 which is only 3%. This 3% increase will eliminate a lot of marketing, manufacturing, forecasting, and logistical problem that HP is spending millions each year. I believe that by spending 3% more upfront will have better bottom line effect in end. Not to mention, it will also add value to customer in sense HP may be the only company that offers universal power supply.

1.) Other than a need to expand, what other reasons would Wal-Mart have for opening
stores globally?
One of the reasons Wal-Mart have for opening stores globally is to diversify its market. This strategy is important because it reduces risk against poor market conditions. For example, over the past few months America’s corporate world has lost half of its assets due to poor economy which can be a sign of recession. In condition like this, many consumers and business will cut down on spending. The effect of cutting spending can be felt by many organizations, including big retail giant Wal-Mart. The point is that if the Wal-Mart invest everything in to one market, then it would have greater risk should that market were to perform poorly in years to come. On the other hand, if Wal-Mart chooses to operate globally in to different markets, than the investment is more diversified and so the risks are far less.
Another reason Wal-Mart have for operating globally is to decrease if not eliminate competitions. Wal-Mart is the biggest retailer in US. However, it is not the largest in other part of the world. This would mean that there are other companies that are operating in other part of world which Wal-Mart could penetrate that market and gain more market share. This is important because, if Wal-Mart does not penetrate other markets, it will have to face even tougher competition if that competitor were to start investing in market in which Wal-Mart operates.
Some of the other reasons Wal-Mart may have in opening stores globally is to reach out to more customers, increase revenue, increase operating expenditure, increase bottom line, add more values, diversify market base, take advantage of low cost countries, utilize effective labor sources from around the world, develop unique logistics network, and develop optimal and efficient supply chain across global.

2.) Why would it be beneficial for Wal-Mart to have suppliers in different countries?
To have supplier base across different countries can allow Wal-Mart to buy from low cost country and to take advantage of savings/profits that come out of it. For example, Wal-Mart could implement strategic sourcing program where it would buy goods from low cost country such as China then import them to Industrial country such as US or Canada for sale.
Another benefit for having suppliers in different countries is to increase potential source region which can play important role in creating optimal logistics network. For example, if the particular widget can be source from supplier A located in USA and same widget can also be source from supplier B located in Canada. Depending on where customer is located, logistic team can select widget from either supplier. Obvious choice would be the one that is closest to the supplier. This way the freight cost, and transit time are at optimal. In other word, Wal-Mart can simplify its offering to customer my buying from supplier in same region.

3.) Why would Wal-Mart want strong centralized control of its stores? Why would
Wal-Mart want strong local control of stores?
Centralized control of its stores allow Wal-Mart to obtain demand forecast to its warehouse and to its suppliers giving ability adjust production and inventory to meet the demand. For example, the point of sale system Wal-Mart uses collects and provides data to its warehouse, also know as data mining method. Warehouse then has ability to collect and extract data from each store on its entire inventory, forecasts, demographic, markdown, returns and market basket by item and day. The warehouse not only contains data of Wal-Mart but its competitor as well. One of the key elements here is that these data are accessible by Wal-Mart employees and over 3000 approved supplier. End result is that both Wal-Mart and its suppliers are able to save million of dollars on inventory and reduce cost by forecasting accurately. As a result of data mining software, Wal-Mart has achieved increased accuracy in forecasting process and competitive advantage in the retail industry. It is therefore, important that Wal-Mart continue to centralized control of its store.

4.) What pitfalls and opportunities other than those mentioned in TheWall Street Journal
article would Wal-Mart face over the next few years?
Over the next few years, Wal-Mart will face a tremendous challenge in North America due to U.S. economy under recession. Many consumers and organizations are cutting cost to meet the budget. This will have a big impact on Wal-Mart as it makes up roughly 4% of U.S. gross domestic product. In coming years, Wal-Mart may end up closing door to poorly operated stores and it may even decrease number of new store to be open. In addition, Wal-Mart may even face higher operating cost due to increase is oil prices.
On the bright side, Wal-Mart could possibly invest in other countries. In past Wal-Mart took a strategic plan to invest in South America, however, it has yet to find niche to operates at efficiently and effectively. In the next few years, Wal-Mart could turn thing around and become the largest retailer in South America. In addition, Wal-Mart could also invest in other regions of world such as Europe, Africa and even Asia where the population is all time high. As the globalization becomes important, Wal-Mart must pay closer attention to its market base and its international business.

1.) What is customer value?
Customer value is perhaps most important for any organization. In past, customer service was viewed as “satisfaction”. In modern world that view has been extended to “value”. In other word, the role of customer service has been evolved from satisfaction to value.
“Customer value is the measure of company’s contribution to its customer, based on the entire range of products, services, and intangibles that constitute the company’s offerings.” (Simchi, Levi, and Kamisky, 2003) Further more, customer value is the way customer perceives the entire company’s product, service, and intangibles. This perception can be broken down in to following dimension of customer values:
-Conformance to requirements
-Product selection
-Price and brand
-Value-added services
-Relationships and experiences
2.) How is customer value measured?
There are several methods of measuring customer value. They are Service Level, Customer Satisfaction, and Supply Chain Performance.
-Service Level is ability to satisfy customer. This can be requirement, delivery date, product, or service. Most organizations have On-Time delivery metric. It is measurement of delivery of orders.
-Customer Satisfaction is business term that measure how product and service provided by company meets customer’s expectation. Some time this is hart to measure. However, customer satisfaction survey can be used to measure customer satisfaction.
-Supply chain performance measures. Since supply chain impacts customer value, the supply chain performance metric serve as important role. There many metric such as Order fulfillment, lead time, cash-to-cash, and supply chain response time can be sure to monitor business.

3.) How is information technology used to enhance customer value in the supply chain?
Information technology can help organization in many ways. It can reduce cost, it can reduce lead time, it can create efficiency, it can increase quality of work, it can be used to collaborate in real-time. This benefit that Information technology provides adds values to customer. For example, Dell offers its customer web access, know as Dell Premier. This tool allows customer to configure and order there desktop or server with ease. In addition, the information is also in real-time, giving both customer and supplier the ability manage its inventories, orders and forecast with efficiency. This cuts down on inventory and lead time for both Dell and supplier.

4.) How does supply chain management contribute to customer value?
Supply Chain Management contributes a lot to customer values since the supply chain get involve from the beginning to end. Supply chain performance affects the ability to provide customer value. For example, customer relies on supply chain availability of product, customer rely on timely response, they rely on supply chain’s service, they rely on information that supply chain provides, and they rely on saving that supply chain can offers. For all these reason and possibly more, supply chain management contribute greatly to customer value.

5.) How does strategic pricing affect customer value?
The strategic pricing can have a big impact on organization and how customers perceive as value. The organization must select appropriate pricing model. For example, in Dell case study, Dell has learned that it can charge different prices for same product to customer depending on whether purchase is made by consumers, small business, medium business, large business, health care, education institute or government. The pricing model is very sophisticated. Its main goal is to increase profitability where ensuring satisfied customer.
One of the systems that help increase profitability is Revenue Management. It is a method of integrating pricing with inventory and demand. This ensures that the company is selling the right inventory to right customer at right time and place.
Smart Pricing is of strategy used by Dell. It has two approaches. They are customized pricing and dynamic pricing. Customized Pricing is distinguishing different types of customer and its prices according to its sensitivity. For example, Dell is very efficient at customizing customer’s computers and/ or laptops. Dell also offers many other products such as printers, personal computers, laptops, software and many other extra supplies. All these products are built to order, giving customer full opportunity to customize before placing order. Another approach is Dynamic Pricing. It is a change in prices over time without distinguishing different types of customers.

In the freight transportation industry, to have competitive advantage is not as simple as picking up a shipment from a customer and transporting it from point A to point B. In the modern world, one must take strategic approach on developing a relationship with the supplier, establish contracts in becoming a preferred freight carrier, learning the supplier’s freight distribution requirements, and establishing logistic systems that can collaborate information in ways that can anticipate shipments as well as provide real-time information on shipments already made.

Manufacturing of almost any product requires the timely delivery. Delay in a single part can stop the entire manufacturing process. Due to the importance of delivery of goods, companies must place purchase orders in a timely manner. Once the order is placed, it should also follow up and expedite to ensure timely delivery of goods. One of the concepts that help with process is Just in Time. Just in time (JIT) is one of many concepts used by organizations to order material so the goods arrive just in time, so that companies do not have to invest money or pay taxes on inventory. This is where Huffman Trucking comes into play. It provides the delivery of goods to companies in a timely manner to ensure parts are delivered just in time.

In reviewing Huffman Trucking, it surely can use JIT philosophy to improve its scheduling problem. Huffman Trucking has two main customers categorized by Type S and Type L. Type S are small volume customers and Type L are large volume customers such as business and government. Since the majority of businesses are through large customers, it would make sense for Huffman to focus on Type L to make improvements on schedule. Currently, upon receipt of the order, Huffman holds the shipment at the consolidation point for a complete truck to ensure that trucks are being used at maximum capacity, reduce cost, and increase profitability. However, this scheduling method is creating delays in shipment causing trucks to wait overnight in order to make deliveries to customers. This is causing additional costs for Huffman as a result of drivers staying overnight and loss in production due to trucks being tied up. The best way to improve this scheduling issue is by collaborating with customers in real time. Should Huffman setup an automated system which allows them to see upcoming shipments, it can increase accuracy in scheduling methods. It can also alleviate holding of shipment to maximize capacity.

The benefit that comes out of this process would be tremendous not only for Huffman, but its customers as well. The ability to forecast days in advance at a high accuracy rate will make Huffman scheduling task much easier, effective, more profitable and offers competitive advantage. It will also allow maximization of truck capacity. This JIT method will allow Huffman to deliver the shipment on time at a very good on-time shipment and delivery rate. Its customers will appreciate the on-time delivery and consider the company a reliable freight carrier. They will also appreciate the ability to collaborate in real time, ensuring competitive advantage.

If you have any questions or comments regarding this, please do not hesitate to contact me.

Regards,

Safe Shaikh

They are cereal, milk and coffee.
Cereal
The first product selected was cereal. It is one of the most commonly consumed foods. As the competitor pressure rises, the companies are looking for better way to reduce cost in hope of impacting bottom line. In past, cereal companies have been packaging cereal in rather large box which made them look more expensive. The theory here was that bigger box tends to make consumers think they are getting more cereal, in fact, consumer were simply getting larger box full of air. Another tactic used by cereal manufacture is printing on package. “Cereal package graphics make the most sugary cereals impossible for young child ten to resist.” (Doyla M, 2008) This concept worked well for while however, consumers are now used to the big packaging along with marketing advertisement and so cereal companies are left with high packaging cost. Could this be a marketing problem or packaging problem? In recent years, many of cereal companies has changed their box size to be more competitive, saving millions simply by changing packaging size to be more optimal and efficient.
Milk
Another choice of product was milk. It too is commonly consumed product. In 1800’s, the cow were mainly used as a purpose of storing milk until it is required. Most people owned a cow as the world was still in agriculture phase. As the time progressed, the glass bottle was introduced in form of packaging which made distributing milk much easier. The bottles of milk were brought to consumer at doorstep. What happen then was perhaps interesting. The population grew and the evolution of industrial age came about. The agriculture began to phase off while the demand for the milk grew. “The growing demand for milk in towns and the high costs of milk production within their boundaries led to the development of containers suitable for various stages of marketing and distribution.” (Unknown, 1978) The new form of packaging was waxed paper carton followed by plastic bottles.
The milk comes in form of liquid and it also requires temperature control storing and distributing. Therefore, the distribution of the milk from production to retail store or consumer has to be efficient in manner that meets retail’s objective and considers consumer’s necessity. The most current form of packages is plastic bottles that come in different size. The most common is gallon of milk. The distribution of milk from production to retail is in temperature control truck, usually in local area. The gallons of milk are stored in square plastic rack similar to cube. It holds 4 quantities of gallon of milk. This makes storing, staking and distributing milk efficient.
Coffee
The final choice of product was coffee. The coffee is also commonly consumed food around the world. Unlike cereal and milk, the coffee requires special type of packing as it needs to be kept fresh and represent quality in eyes of consumers. Its packaging comes in plastic bag, paper bag, and plastic containers. “The rate of coffee staling will depend upon the amount of contact with oxygen. Conditions of heat and added moisture will accelerate staling. Moisture-resistant sealed packaging with a minimum of oxygen content is the key to coffee shelf life.” (Coffee Analysis, 2008) The quality of the material used in making package is excellent. It shows premium quality, it adds value and it resemble certain standard that attract and influence consumers in to buying. Perhaps the interesting finding is that coffee does not come in box for obvious reason of keeping fresh.
Packaging and Distribution
The packaging is important for organization as it makes certain impression on consumers while creating value. On the other hand packaging can also make handling the product difficult or at ease depending on type of packaging. Organization invests great deal of money in to packaging to ensure that packaging meets not only marketing objectives but also logistics objectives.
Conclusion
In the final words, packaging and distribution of product is important element of organization. With technology continuously improving, the organization can easily take advantage of improving the process of packaging and handling. The most efficiently packaged and distributed product can offer company excellent savings.

References
Doyle Mona. (2008). Cereal Boxes Spur Consumer Frustration. Retrieved on August 20, 2008 from http://findarticles.com/p/articles/mi_m0UQX/is_9_67/ai_108882147
Unknown. (1978). Packaging, storage and distribution of processed milk. Retrieved on August 20, 2008 from http://www.fao.org/DOCREP/003/X6511E/X6511E01.htm
Coffee Analysis, (2008) Oxygen and Packaging. Retrieved on August 20, 2008 from http://www.coffeeanalysts.com/testing/packaging.php

 ”Inventories are stocks of goods and materials that are maintained for many purposes, the most common being to satisfy normal demand patterns.” (Murphy R. and Woof F, 2004) In manufacturing world, the raw material and sub components are kept in inventory to complete assembly of final product. Furthermore, the final product is also kept in inventory to meet its demand. This is also known as cycle stock which is an inventory kept in stock to meet demand. For example, if the organization consumes 10 packs of paper a day, then organization may buy in 100 packs of paper at a time. This will satisfy the demand for 10 days. Furthermore, organization may also buy few extra packs known as safety stock to ensure any uncertainty in demand. For organization to buy, store then satisfy demand many sound simple, but challenge is also pay attention to cost such as carrying cost, shrinkage, obsolete parts, storage cost, handling cost, insurance cost, taxes, interest charges, and any opportunity cost. In addition, most important challenge of all is keeping satisfied customer through service.
One of the methods of overcoming inventory challenge is by forecasting. A lot of time, effort and money are spent trying to predict most accurate forecast as it has huge impact on bottom line. Inaccurate forecast can cause material shortage, lost of sales, inventory cost, and poor profit. Therefore, it is important for one to do its best to predict most accurate forecast. There is no such thing as 100% correct forecast, however, through quantities methods, one can create a forecast which may not be 100% accurate but it is fairly close given historic data, demand pattern and assumptions. Forecasting is one thing, but that forecast also needs to be measured to see its accuracy, also known as forecast error. Forecast error is the difference between actual quantity and forecast
Another method of overcoming the challenge of inventory is Make-to-order approach. Make-to-orders is a concept where good or service is made after the order is received from customer. Usually, the product is customer per specs than the standard or combination of both. This also means that longer lead time than standard product. On other hand Make-to-stock is concept where final product is manufactured and stocked before receipt of customer’s order. For this concept, normally customer places the order and supplier take the product off the shelf and delivers it in rather short time frame. Again, with inventory on hand organization must utilize forecast to ensure stock is maintained at optimal level.
In the service industry, inventory is little different from actual physical product inventory. Service inventory are normally found in travel agencies, insurance industries, and medical industries. “service inventories allow firms to buffer their resources from the variability of demand and reap benefits from economies of scale while benefiting customers.” (Chopra S, Lariviere M, 2005) While high customer service level is important for organization, low service level may cause loss of sale due to unserved order. Achieving just right balance is difficult, however, with forecast and historic demand pattern, it is in best interest of organization to set the level to optimal.
The challenges posed in managing inventory are sometime conflicting organization goal in stocking inventories. For example, in typical organization, sales team may want to have higher inventory to make sure that there is no stock. On the other hand finance may want minimize inventory in order to reduce cost. This conflicting organization objectives make a though challenges for one managing inventories. However, managing inventories with optimal level is a critical for organization in ensuring competitive advantage regardless of product or service industry.
In final words, inventory is very important to organization. Organization that manages inventory properly can have huge impact on bottom line. While high inventory level may reduce lead time and provide better customer service, the low optimal level inventory is more appropriate choice for organization as it reduces cost while maintaining good customer service.

References
P.R. Murphy and D.F. Wood, Pearson/Prentice Hall, (2004) Contemporary Logistics (8th ed.) Upper Saddle River, NJ
Sunil Chopra, Martin Lariviere (2005) Managing Service Inventory to Improve Performance. Retrieved on August 12, 2008 from http://harvardbusinessonline.hbsp.harvard.edu/b01/en/common/item_detail.jhtml;jsessionid=VMFZ31WOZWQ32AKRGWCB5VQBKE0YOISW?id=SMR187

To Make:
1. Desire to integrate plant operations
2. Cost consideration
a. Direct labor cost
b. Delivered purchase material cost
c. Inventory carrying cost
d. Overhead cost
e. Managerial cost
f. Capital cost
3. The productive use of excess plant capacity to help fix overhead
4. Design secrecy required
5. Unreliable suppliers
6. Desire to maintain a stable work force

To Buy:
1. Small volume requirements
2. supplier knowledge
3. desire to maintain stable work force
4. purchasing and inventory
5. Cost considered
a. Price of purchased parts
b. Freight or Transportation cost
c. Receiving and inspection costs
d. Purchasing cost
e. Other cost relates to quality or service
6. desire to maintain multiple-source policy.