Stoeckl Kinder Products Ltd.
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Stoeckl Kinder Products Ltd. (SKP) Report by David Lim 2018-07-17Stoeckle Kinder Products Ltd. Att: – Michael and Rick Dear Kindly find attached report on global sourcing.Your truly David Lim Tables of Contents Executive Summary 4 Issues & identifications 5Environment & Root cause analysis Alternatives and/or Options Recommendation Implementation plan Monitor and control Exhibits, Appendix, Abbreviations Executive SummaryStoeckl Kinder Products Ltd. ( SKP) opened in 1920 by Berndt Stoeckl Austrian origina migrated to Canada after Second world war in Ontario, London, crafted and sold wooden baby furniture as cribs, chair, stools, tables, as business grew small manufacturing company was purchased and his 2 sons involved in management after graduating from school, as time passed Stoeckle left 90% of shares to his sons equally and 10% to his daughter. Over the years company grew and gradually had its product lines boarder and gave way to plastic and metal products and generation grew with company revenue having its product lines at Car seats to 39%, Baby carriage to 54% and furniture at 7%. Geographically company sold its range in Canada at 66%, USA-23%, Mexico 4%, Austria and Germany 7%, two cousins had company shares at 24% each and rest within family, siblings, aunts, uncles and close family friends.At the present juncture in 2014 company was facing as stagnant due to lack of cohesive direction and poor operational execution which was concern of other shareholder for their monthly income and retirement nest. Another major was souring its major revenue of 54% at 92% outsource from China which had issue of complex supply chain , greater lead time , lower level of control of supply chain with hidden cost, in addition to risk of safety issue and intellectual property theft for second tier of supply chain. A new low cost sourcing opportunity was solution to its core issue with detailed EDC report, and detailed fact finding Vietnam was the destination to our core issue which can be implemented on sourcing on hybrid quantity i.e. half sourcing to remain from China and gradually to be full fill full quantity at later stage on success of its performance metrics. Later followed by diversification and implementation of new product category and Introduce E-commence platform will have success and maintain its reputation in Toddler sector. Please find opportunity to detailed report.
Issue Identification – Short terms Lack of structure and vision of company’s supply chain Significant stakes throughout the supply chain in 3 ranges of products and each division tries to improve its procurement strategy As efforts are individually made which confuses within chain which bring decentralisation of the chain.Financial situation tight to infuse more capital for growth of company Long termLack of global procurement strategy Missing long term vision on Supply chain management cost for success of business Lack of investment in efficient process i.e. experiencing supply chain problems in its three rages Environmental analysis SKI a family business founded shortly after second world war by a Austrian Berndt Stoeckl immigrant to Canada, in London Ontario, Initially company line of products manufactured wooden baby furniture, his sons also did a good job and company grew and expanded business company from small craftsmen to large manufacturing of children product, at present only company accounts its revenue 7% of furniture, car seats for children and babies 39%, stroller and carriage 54%. Sales categories accounts to Canada 66%, Northern US 23%, Mexico 4% and due to roots of Europe Austrian & Germany 7%, presently 2 Grand sons were in operation of company. Manufacturing of stroller and prams was outsourcing from China – 92% apart from engineering works supplier was responsible and due to its primary sourcing secondary sourcing was also done in China with 7 models by supplier including 3 models of its unique feature of sport look, and 1 model of hybrid made-in-house in conjunction of with car seat. With present scenario of SKI to maintain its true competitive edge in its market area a strategic decision needs to be constructed in view of Short and Long-term issue, mention its SWOT analysis StrengthStrong product categories in durable juvenile productsStrongest Canadian sales network Wide sale network in USA, Mexico, Austria, Germany Reliable sales through retails network and its independent baby storesLoyal Buyers committed on buying products that were safe with material for their children’sLoyal Buyer interested in purchasing from socially and environmentally responsible companies Weakness Lack on vision of supply chain strategy No frim structure of company Decentralised purchasing strategyMissing global procurement strategy Too much influence of family shareholders focus and concerned only on one goal monthly income and retirement nest without any professional inputNo Contingencies funds or expansion strategies due to lack of capital funding, which hinder the strategies on either expansion of product development or adopting any new strategy Opportunities Adopt global procurement strategies Centralised procurement strategies Introduce Alternate Global sourcing strategies Reduce company carbon foot print – install solar panels, implement geothermal heating and grey water reclamations Best course of action offering broader products, array of features and benefits at reasonable priceDue to strong R&D and agreement on supplier of Polypropylene manufacturer baby Car and booster seats were all assembled in Canada , a new market segmentation can be exploredIntroduction of baby sport equipment Announce company online web portal supporting sales comparison and customer support on immediate basis and introduce online sale in long termThreats Revenue of carriage and stroller (54%) outsource from china 92% having secondary supply chain with low graded material resulting in jeopardising brand and safety concernsSecond tier of sourcing supplier in China case an intellectual property theft – copy parts that were designed by Stoeckl and sell them to other companies Both the leader had a same goal, but not mutually agreed conclusion and lack of global sourcing strategyRegulatory issue in Canada – safety standards on car seat and consumer product safety Community pressure on kind of reshoring products in country from low cost countries to safe guard jobs Existing supply chain had longer and more complex supply chain from china, greater lead times and lower levels in offshore supply chain and hidden cost Alternatives and/ or OptionsOptions Pros Cons Alternatives Diversification on introduction of baby sports equipment, baby clothing and toys Increase in revenue Addition to product range category Easily move in Sound retailer network Great understanding on children product market No expertise on new fieldLack of market share New competitors and its strategy More capital infusionNeed to bring private lender or raise IPO Try to avoid diversification in short term as it will increase capital over existing working capitalA biggest hurdle in development Not a prime move New Market development in sale areas like China, India, BangladeshIncrease cost Market fit with company core competencies Fixed cost is recovered from existing sale Introduce core product in present sourced marketConsumer might have different needs, priority and might not have interest in SKP products Cultural barrier Risk of capital if proceeds are not recovered Regulation barrier if any!Try to avoid to go for new markets as its can be political risk, some developing countries might have different trade agreementsCan introduce baby car and booster seat only assembled in Canada i.e. better control of supply chainExpand of E-commerce Benefits of globalisation many consumer can be reached and might perform well in international markets Competitive advantage Direct consumer base Increase in salesEntering future trends before competitors Time consuming process for brand recognitionLow expertise in e-commerce businessExisting retail network might not like and be cooperative More working capital Existing retails network make a fuss of nothingPossibilities of end user asking for shipping charges Avoid new venture in short term until strong market capitalisation on reducing or sourcing from low cost countries is streamline Try to avoid shipping expenses on end user is introducing care competence product especially in emerging markets Building sourcing partnership in new markets – Bangladesh, Czech Republic, Hungary, Turkey and Vietnam ( details data analysis as per Exhibit by EDC ) Sourcing will prove viability and position of successSkills transfer, and network will result financial gains and achievements New sourcing strategy will reduce per unit cost and have more return on investment More control on supply chain complexity and dictate terms Risk of finance instability if goods not as per required standard Need to filter one country to over come existing core supply chain problem New sourced company can be of edge on few areas which were or had no control on supply chain Opportunity on long term business relations Recommendation –Reference to above alternative and options to over come present core issue on complex supply chain, longer lead time with hidden costs from China. A primary strong recommendation of Hybrid process is to focus on building partnership is new market and maintain half of our sourcing in China for 1 year secondly a country which can adaptable, versatile, economical and can achieve our prime concerns, as per my comparison data (as per EDC ) as per Exhibit from 5 countries Bangladesh, Czech republic, Hungary, Turkey and Vietnam, my suggestion is to focus and streamline to Vietnam.