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Group 4 - Startech

Startech.com's supply chain strategy aims to improve the supply chain to accommodate increasing complexities. Sales revenue grew 70 million USD in the last 4 years. Ensuring key connectivity products are available is key to Startech's strategy. They focus on growth stage products and discontinue others. Inventory as a percentage of sales is 35%, and Paul Seed must strategize working capital utilization to achieve this. Centralizing safety inventory is considered, with pros being reduced operational and inbound costs, but cons including increased transportation costs and response times. Integrating the supply chain and combining moderate demand items could reduce costs while maintaining flexibility. Recommendations include sticking to the disaggregate inventory model if assumptions hold, combining moderate demand items, and balancing SK

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Subhasish Bala
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33 views7 pages

Group 4 - Startech

Startech.com's supply chain strategy aims to improve the supply chain to accommodate increasing complexities. Sales revenue grew 70 million USD in the last 4 years. Ensuring key connectivity products are available is key to Startech's strategy. They focus on growth stage products and discontinue others. Inventory as a percentage of sales is 35%, and Paul Seed must strategize working capital utilization to achieve this. Centralizing safety inventory is considered, with pros being reduced operational and inbound costs, but cons including increased transportation costs and response times. Integrating the supply chain and combining moderate demand items could reduce costs while maintaining flexibility. Recommendations include sticking to the disaggregate inventory model if assumptions hold, combining moderate demand items, and balancing SK

Uploaded by

Subhasish Bala
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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Startech.

com
Supply Chain
Strategy

Presented by: Group - 4


01 Startech was a manufacturer and
distributor of technology products

02 Paul Seed wanted to improve the supply chain to


accommodate the increasing complexities.

Case Facts 03 Sales revenue grew by 70 Mn USD


in the previous 4 Years

Ensuring that key connectivity products were


04 available was the key element of Startech’s
strategy

Startech focused on products in the growth


05 stage and discontinued products.

06 Inventory as a percentage of sales was 35%, and Paul had


to strategies the working capital utilization to achieve this.
Q1. Safety Inventory for 5 warehouses

• Disaggregate safety stock is the total amount of safety


stock for a particular product held across all warehouses.
• Aggregate safety stock is the resultant safety stock
requirement if they were centralized

• Lead Time = 1 month ( given in case)

• Safety Inventory = NORMSINV(CSL) * SQRT(L) * Stdev(D)

Warehouse No. Total Safety Inventory


● 10 2441
● 20 665
● 30 1806.123
● 40 2372.61
● 70 1852.34
Q2: As Jeff Brodie, what alternatives would you consider? What
are the probable advantages and disadvantages of this option?

1. The alternative under consideration: Centralizing the safety inventory in one place

Pros
• Reduced Operational Costs: Warehouses won't have to pay more rent, and they won't have to
spend more money on new tools and technology.
• Reduced Inbound Costs: Centralized storage can also lower the cost of shipping because it has
the potential to store more inventory.

Cons
• The time it takes to respond to customers will increase due to the fact that either the consumer
must visit the centralized location to purchase the product or the product must be mailed or
moved across great distances; the response time is lengthened.
• An increase in transportation costs
2. Jeff Brodie might integrate the Startech.com supply chain to maintain minimum
inventories while still being flexible.

Pros:
• A stronger supply chain coordination is supported by increased cooperation between the
parties involved in supply chain management, which also enhances information flow and
decision-making.

Cons:
• Organizing all the parties and participants in the supply chain takes much time.
• It calls on Startech.com to invest in costly supplier training and a shared dedication to
delivering top-notch customer service.

3. Savings in monthly transportation cost

• For items with high and medium demand, it is generally higher. For low & discounted it is
comparatively lower.
• Therefore, there is a lot of room to combine moderately in-demand commodities with other
items to cut down on shipping costs.
Q3. Recommendations for Paul Seed
• Because the total cost of the disaggregate model is less than the aggregate model, we advise them to stick
to it (in light of the presumptions).

• For a lead time of one month, the disaggregate model's total cost equals $15,291.79. We obtained a total
cost of $15,937 for the aggregate model with a one-month lead time.

• If all other presumptions are true, we are unconcerned about aggregate or disaggregate data for correlation
= 0.417. When the correlation coefficient is less than 0.417, we will favour the aggregate model, and when it
is greater than 0.417, we will choose the disaggregate model.

• Combining items with modest demand because they have the highest transportation costs and the highest
holding costs as compared to other groups of items.

• Inventory should be managed to have fewer SKUs with higher than optimal quantity and fewer with lower
than optimal quantity.

• Sort products into fast-moving and slow-moving categories based on inventory movement, as seen by the
inventory turnover ratio, which demonstrates that there is a distinct difference between the two types of
products.
THANK YOU!
M362-21 M Vishnu Gopinath
M347-21 Dipra Chakravorty
M208-21 Tarun Thakre
M413-21 Subhasish Bala

M356-21 Kanniguli Saumya Suresh


M337-21 Aryanika
M402-21 Shramana Mondal
M270-21 Parvati K Nair
M232-21 Aravindh C Ravi
M346-21 Dharsha R

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