Distribution Management at World Peace Industrial Group (Simplified Chinese)
(6 pages of text)
In November 2005, World Peace Industrial Group was at an important milestone as it prepared to join two other major electronics components distributors to form the WPG Holdings and become a dominant player in its industry. As its chief executive officer prepared for the merger, it became apparent that the company’s financial position was threatened by inventory management and forecasting problems. Although sales and market share were increasing, profit margins were dropping as a result of increasing inventory costs. The chief executive officer asked the director of the Business Effective Promotion Group to resolve the worsening problem. How would the director identify the sources of weakness and recommend a plan of action as soon as possible?
This case is intended for courses in supply chain management and inventory control at the MBA and undergraduate levels. After completion of the case, students will be able to
- discuss the complexities of supplying goods subject to rapid obsolescence to a volatile supply chain, characterized by power in the hands of both customers and suppliers;
- explore the consequences of being an intermediary when customers operate in a low-inventory, material-requirements planning environment, with rapidly changing production schedules, while suppliers ask for relatively long, locked-in purchase orders; and
- understand the practical issues of inventory control and ordering, when acting as an intermediary between powerful suppliers and customers.
Taiwan, Large, 2005
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