Dear students,

As per the research paper “Mapping the Automotive Textile Supply Chain: The Importance of
Information Visibility” attempt the following questions. Each question carries 5 marks. Word
limit for each answer is not more than 150 words.

Submission deadline: 4th December 2021

Dipanjan Roychoudhary

Roll No 16C

Question 1: Suggest the possible ways to avoid the “bullwhip effect” from a global supply
chain.

Answer 1. Ways to avoid the “bullwhip effect” from a global supply chain.

1. Streamlining the supply chain – Reducing the number of suppliers and the number of tiers in
the supply chain to facilitate better communication across teams and decrease the swing that
creates the bullwhip effect.

2. Optimizing inventory management – Keeping track of stock levels, orders, and demand with
inventory management software leads to more accurate ordering from suppliers, decreasing the
bullwhip effect.

3. Minimizing sales and discounts – Maintaining a steady price point even during market
fluctuations decreases the bullwhip effect by encouraging a regular stream of customer demand.

4. Maintaining consistent, smaller order sizes – Offering bulk discounts may attract customers
but it also increases inventory levels and magnifies the bullwhip effect. Encouraging orders
according to customer need instead of bulk discounts helps mitigate the bullwhip effect.

Question 2: Explain the significance of “information flow” in the global supply chain with a
relevant example.
Answer 2. Information flow is one of the two major flow components of the supply chain.
Information serves as the connection between the supply chain’s various stages, allowing them to
coordinate their actions and bring about many of the benefits of maximizing total supply chain
profitability.

Example: Wal-Mart Stores, Inc. has used point-of-sale bar-code readers feeding data into a
system that links stores, distribution centers, and vendors. Wal-Mart has entered into
partnerships known as vendor managed inventory (VMI) systems with a large number of its
suppliers. Under this, a Wal-Mart supplier, decides on the appropriate levels of inventory to
carry at the retail stores, as well as the corresponding inventory policies to maintain such levels.
It allows the suppliers, given the easy access to information on consumer transactions, to
themselves take responsibility of their own products within Wal-Mart stores. This saves Wal-
Mart a significant amount of managerial and other resources.

Question 3: Highlight the main tactics used by OEM to optimize its value chain given in
this research paper.

Answer 3. In the given research paper, Dell has used the following tactics to optimize its value
chain:

 By promising customers, a lead time of 5 days even though it holds only hours of
inventory through its direct model
 Requiring component holders who wish to do business with Dell to hold some inventory
since their cycle time is much longer
 A lean, build to order manufacturing system that provides the supplier with forecasting
information and receives information about the supplier’s ability to meet the forecasts
 I2 technologies products for demand fulfilment operations and products from Agile
software for engineering change order and bill of materials management
 Communication between the engineering teams, component availability, capacity and
other information between Dell and its suppliers that flows freely and both ways
 Review of suppliers and web-based orders based on customer requirements instead of
third-party manufacturers
Question 4: Discuss the different types of inventories hold by OEM and explain the factors
affecting the OEM inventory.

Answer 4. Different types of inventories held by OEM:

1)Raw Materials/Components

2) Work In Progress

3) Finished Goods

4) MRO Goods: Maintenance, repair and operating supplies

Factors affecting the OEM inventory

1. Financial Factors- Factors such as the cost of borrowing money to stock enough inventory, the
tax costs associated with stocking, expenses associated with warehouse operations and
transportation costs, Fluctuations in the cost of fuel etc.

2. Suppliers - Suppliers can have a huge influence on inventory control. Successful businesses
require reliable suppliers in order to plan spending and arrange production. An unreliable or
unpredictable supplier can have huge knock-on effects for inventory control.

3. Lead Time -Lead time will vary widely depending on the product type and the various
manufacturing processes involved, and therefore changes in these factors can require changes to
inventory

4. Product Type - Inventory management must take into consideration the different types of
products in stock.