Richard Binish who has been appointed by GARD wants to review these contracts and revive supply chain. Basically a lot has been changed in supply chain management and Binish wants to review all this supply chain with the change in situation (current market trends). Banished trimmed GARD's products line and primarily based it on faster moving products with higher moving velocity. Now more and more suppliers with specific criteria have come up and everyone's product is comparable. At present, GARD wants to review its supply chain with the improvement in its service window, and minimum threshold percentage. DEP's polymers having 6 major compounds which has been sourced from three firms as 60%, 25% and 15%. DEP has standardized its purchasing criteria and generally maintains a 7 days supply of each compound DEP is not using JIT because of bad experience, but it relies on electronic linkages for procurement. Most customers' orders are produced with in 6 to 8 days of order. In addition to it, DEP takes 3-6 days for shipment from its warehouse. Transportation and distribution which is done by DEP truck service to customers mostly within 200 miles through twice a week delivery routes. This needs maximum 6 days. So DEP supply chain is too much time consuming and hence needs to be streamlined.
Basically in this case study, the kind of relationships between buyer and supplier is adding value to the supply chain, GARD and DEP's long relationship and understanding as well as DEP's knowledge about the requirement and quality with arm's length purchasing relationship is adding value to the chain, value in a supply chain is not simply the organizational value but it is the value created across different organizations that combine to create the supply chain.
Inside an organization Porter (1980) identifies nine keys areas that need to be examined when examining how value may be created. He divided these 9 areas into what he referred to as: Primary activities and support activities. The primary activities included: inbound logistics, processes, outbound logistics, marketing & sales, customer service. The support activities included: technological developments, human resource management, procurement and firm infrastructure. Basically in the case study, procurement stage of DEP is adding value to the chain because it provides certain option to purchase six basic compounds from 6 companies having different percentage of order completion as well as supply time. So we can analyze and reach out a suitable combination of companies and products to minimize the supply time and increased percentage of supply. DEP's supply bid has been divided into three parts and maximum quantity suppliers' supplies 60% whereas the remaining two are supplying 25% & 15% respectively. Firms' basic infrastructure with electronically connected procurement with marketing/sales department can easily assess demand of the market and proper information system can act fast. DEP is also adding value through outbound logistics with its own hired truck fleets. DEP also maintains inventory for 7 days so that they may have enough time for reordering and to get supply of raw material. The stages including inbound logistics, more time in warehousing activities as well as truck services time (twice a week) are some stages which are basically not