You own a company based in Liverpool (UK) that assembles and manufactures starter motors for the major automotive manufactures with factories domestically and in Europe. The European division of your business accounts for 74% of your annual revenue and employs 300 of your 420 strong work force. To manufacture your starter motors you source 68% of the components from Europe, the balance is sourced locally. You have been trading in the UK for the past 18 years and have become very successful based on the European free market philosophy. Your starter motors are deemed to be an essential requirement by the factories you supply and you focus on the JIT philosophy to supply your customers so that they have limited inventory holdings and this reduce their investment in stock. To service your customers’ requirements more efficiently you have bought a fleet of 26 trucks (40 foot trailers and tractors). To bring stability to you and your customers relationships you have 5 year contracts with your customers and all contracts are supplemented by service level agreements that define the service level you are to adhere to, most importantly there are severe penalty clauses applicable with respect to lead and delivery times of components by your company.
In June 2016 the UK voted to exit the European Union (Brexit) – the way forward is not yet clearly defined however it would appear almost certain that the UK will lose the access to the EU free market in the next 24 months, a huge game changer in your existing business model:
- Identify4 key factors that will have a direct impact on your business’s up stream / downstream supply chain should the UK not have free access to the EU Markets (40 marks : 20 marks a & 20 marks b).
Please mention about the hard objectives like (Quality, Cost, Time, and Supportive Capabilities)and how it will impact on your business’s up stream / downstream supply chain should the UK not have free access to the EU Markets.
- Discuss2 of the factors above you have highlighted taking into account; the overall impact to your business, your production and landed cost, your customers, your suppliers, your staff, the local economy, the risk, the mitigation strategy you will deploy to offset the impact.
Choose any two of the hard objectives that you have mentioned in question 1 and talk about it in how it will impact to your business, your production and landed cost, your customers, your suppliers, your staff, the local economy, the risk, the mitigation strategy you will deploy to offset the impact.
- Define and discussthe skills sets that your company will have to develop to manage the changes effectively that might occur if you lose access to the EU Markets and you retain your current customers in terms of production levels and delivery schedules.
Here you can talk about facing the Immigration/everybody needs to speak in English Language/ Changing in structure & Management & maybe need to add a new department like (Legal department).You can add some other skills that might retain current customers in terms of production levels and delivery schedules.
- Evaluatein terms of your supply chain the possibly of seeking new markets to both source components from and supply finished motors to. Can you expand your supply chain into new markets and if so what will be required? (20 marks).
Do you think that you can expand your supply chain into new markets and if so what will be required and is it worth to do so, is it good or bad, you think it is and what are the advantages and disadvantages you think it is to go in new market and try to give a solution for that.(You can get it from the hard & soft objectives)
- Will it still be viable to given your small domestic market to operate your business from the UK given the customers reliance on the JIT methodology? Justify your argument based on your findings to stay or relocate your factory in terms of the logistics challenge.
Do you think you need to have a Head Quarter for your small market in UK to operate your business or you think it’s not necessary to have within UK and you can move it somewhere let say in Asia as its lower cost and why, please justify the argument based on your findings to stay or relocate your factory in terms of the logistics challenge.