Spartan Heat Exchange
To achieve and accomplish the new business strategy, in which Spartan implemented after 5 years of planning, is to first adapt and adjust to the new business strategy. After many years of running a company that derives a majority of its revenue and profit from customized products, it will be difficult to completely reverse that culture, but it can be achieved. To begin, the supply chain model must change from a responsive model to an anticipatory one, within that we also have a shift of focus from differentiation and responsiveness to a responsiveness and cost value proposition.
Next, the new corporate strategy adjusts the job shop method, which is manufacturing with multiple departments and each produces different components, to a hybrid method which means there will be multiple stations that work at the same time. This will allow Spartan to add volume of production, cut down carrying cost, and reduce lead time.
Spartan once required many vendors due to their customization strategy, as well as high level of inventory. However, since they are moving to a standardized product and reduced their lines to 3-4 for each product, there will be less variety but there will be higher quantities. By decreasing the amount of vendors needed, Spartan gained more negotiation power for better conditions such as delivery time, cost, quality, price, and budget.
As for the reduction of the lead time from 16 to 4 weeks, it can be achieved effectively. As previously stated since they are reducing vendors, Spartan will have even higher negotiation power. Thus, Spartan can easily select and procure the vendors that can meet the new needs of the company, which would be consistent deliveries within a week and it can include such a clause in the contract. However, since the process is now standardized, Spartan should improve communications between the different parts of the company, such as: sales, material department, and vendors in forecasting demand. It would also be valuable to add a buffer stock just in case of inconsistent demand or supply. In addition, by overcoming the delayed lead time, it will lead to increased sales since they will now have access to new customers who were not willing to wait and wanted a standard product. Consequently, this will cause higher inventory turnover, lead to negotiation of prices, and increase turnover from 4 to 20.
This new business strategy will also effect corporate structure. Instead of specific requirements from the customer, which was more focused on research, the product will now be standardized. The organizational