Scientific Glass Case Case Solution And Analysis, HBR Case Study Solution & Analysis of Harvard Case Studies

Recommendations

Based on our evaluation of this case the outsourcing seems to be the most efficient options due the following parameters:

Lowest inventory cost
Negligible warehousing operation expenses.
Poor inventory management
To better, fill rate at lower cost
Insurance cost borne by the Global Logistics

In addition, by outsourcing warehousing, inventory management and order fulfillment, SG’s senior managers would be able to focus on increasing sales, understanding emerging customer needs, and developing the next generation of the firm’s products. Given the low touch outsourcing model, the SG should be able to expand easily into other markets by replicating the business model. With all order-fulfillment and inventory-control, Global Logistics personnel would administer functions, and outsourcing seems to be the cost effective option, SG need not go for the implementation of the proposed policy changes.

Creative Options

Restructuring Order-Fulfillment Steps

SG can think of shipping the inventories to the customer directly from other warehouses in case of insufficient inventory at the original warehouse and thereby the company can avoid the transfer price between the warehouses. As highlighted in the below flowchart.

Redesigning the Transportation Options

In the event SG chooses to run all eight regional warehouses across North America, they can think about redesigning the transportation option by introducing Milk Run transportation and Distribution Centers.

Plan ahead

SG’s current market of their annual sale is split between North America (40%), Europe (30%), Asia Pacific region (20%) and Rest of the World (10%) and therefore the focus primarily has been in North America with existing relationship with distributors in Europe and Asia.

The company should review its strategy in developing markets, especially in Asia Pacific and Latin America has given the relative saturation of North American and European markets. The SG should explore the possibility of establishing their own sales offices and increase their dedicated representation in these developing markets, something which the distributors will not be able to offer due to their vested interests. Also, given the fact that outsourcing their inventory and distribution management seems a viable option, the company should access this option in the overseas markets to reduce their costs.

Economies of Scale

SG is experiencing an increase in low-end competition and standardization in quality of laboratory products, the company by outsourcing its non-core activities can concentrate on its main functions and focus on understanding the market requirements and needs of its customers. As the company is striving to achieve 99% fill rate, which will provide the company a competitive advantage and the cost efficiencies achieved can be reinvested to grow the economies of scale that acts as barriers for their competitors.............................

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