TSC’s Project: Distribution and Inventory Management

Key Issues

Short-Term Objectives

The major component of TSC’s Project 275 aimed to achieve growth in sales, EBITDA, and RONA is distribution center storage and throughout capacity. The analysis helped the company to reveal some constraints in distribution and inventory management which are primarily correlated with poor logic and lack of integrity in the system. Since the effective inventory management is directly linked to the organizational ability to reduce bank debt and increase profitability, this issue represents an immediate concern for TSC.

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There is the need to enhance logistical capability to support business expansion. The developmental strategy requires TSC to have more locations for inventory and greater logistics flexibility. According to Grigore (n.d.), flexibility includes three major components: machines, product handling, and transportation; elaborated supply chain system; and appropriate technology enabling the system to cope with environmental changes and strategic needs. Based on this, to fulfill its short-term objectives, TSC may implement third-party logistics services to support turnover during high seasons, establish new storage and distribution locations, and store some merchandise at its retail stores.

Long-Term Strategies

TSC’s long-term supply chain strategy is primarily focused on the improvement of logistics infrastructure which is needed for the maintenance of the increased inventory turnover and a greater level of logistics service. This goal is associated with the growth in logistics flexibility as well, and it requires the development of an efficient and systematic approach to inventory handling. A responsive supply chain needs a constant information flow among the internal organizational units and external partners (e.g. suppliers), and appropriate policies which allow hedging inventory against uncertain demand (Perez, 2013).

Nowadays, there are many logistics models which can help organizations to improve financial outcomes. Since TSC performs in the market characterized by a high level of competition, it may implement the efficiency-oriented supply chain model which implies the optimization of end-to-end results. It means that the company should achieve a high degree of asset utilization in combination with the increased overall equipment efficiency which leads to cost reduction (Perez, 2013). Moreover, it is important to improve forecasting accuracy and ensure that the outbound logistics can effectively meet demand during high seasons. As stated by Perez (2013), the efficiency of supply chain modeling will also largely depend on the decrease of the SKU portfolio because excess SKUs often create barriers to smooth performance of logistics operations.

SWOT Analysis

Strengths and Weaknesses

The main TSC’s internal strength is the high degree of criticism towards its existing practices and activities as well as a profound understanding of both short-term and long-term objectives. It seems that the management is aware of major alternative solutions which may support the company in its expansion initiatives. Nevertheless, there are many internal weaknesses as well. The underdeveloped supply chain model, lack of accurate forecasting system, logistics inflexibility, and absence of extra storage capacity are the major ones. These weaknesses challenge TSC’s ability to realize the opportunities and mitigate potential risks of failure.

The review of the organizational strategic targets makes it clear that the managerial focus which allows the linkage between supply chain and distribution activities and strategic financial goals is strong enough. However, other essential components of TSC’s current supply chain strategy are lacking. For example, researchers emphasize the significance of organizational unique value proposal (i.e. competitive positioning) and the systematic maintenance of internal logistics processes for the smooth supply chain performance (Perez, 2013). Moreover, as Grigore (n.d.) states, the flexibility of organizational supply chain management should be regarded from the perspective of firms’ value chains aimed to increase customer satisfaction. But is seems TSC does not consider the given factor when setting its strategic goals. However, it could be useful to integrate the data on customer needs and preferences in the design of new supply chain strategies because, in this way, it would be possible to understand the interests of the targeted consumer groups in a better way and increase forecasting accuracy.

Opportunities and Threats

TSC’s opportunities are mainly related to its expansion and enhancement of current operations and practices. Nowadays, the external environment in the retail market allows companies to achieve the desired goals and significantly increase firm’s competitiveness. The identified internal organizational strengths and the understanding of own weaknesses, as well as a well-determined strategic orientation, may help the company to improve service quality, establish a standardized approach to management which may substantially facilitate the achievement of greater productivity and mitigate potential financial risks.

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The researchers observe that infrastructure investments are positively correlated with increased revenues because they allow companies to obtain opportunities to use savings realized due to infrastructure enhancements and reinvest them in the creation of new competitive advantages (Jacoby & Hodge, 2008). Thus, if TSC succeeds in the remodeling of its supply chain system, it will achieve greater cost efficiency which will positively affect the company’s profitability. At the same time, aggressive competition is one of the major threats TSC may face during business expansion. The underdeveloped supply chain and distribution systems, as well as niche segmentation, may inhibit organizational success in meeting continually changing customer demands. Therefore, it is possible to say that along with the expansion of business operations and opening new stores, TSC should endeavor to capture the attention of more versatile customer groups by expanding its product portfolio.

References

Grigore, S. D. (n.d.). Supply chain flexibility. Romanian Economic and Business Review, 2(1), 66-70.

Jacoby, D., & Hodge, D. (2008). Infrastructure investment: The supply chain connection. Supply Chain Quarterly. Web.

Perez, D. H. (2013). Supply chain strategies: Which one hits the mark? Supply Chain Quarterly. Web.

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StudyCorgi. 2020. "TSC’s Project: Distribution and Inventory Management." December 11, 2020. https://studycorgi.com/tscs-project-distribution-and-inventory-management/.

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StudyCorgi. (2020) 'TSC’s Project: Distribution and Inventory Management'. 11 December.

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