Case study 4

For many years FP Stannard Ltd (FP), a large US retailer and wholesaler of office products, has been
under pressure from investors and customers to keep prices low. The U.S.- China trade war of 2019, and
the COVID-19 pandemic of 2020, have led to a major review to reconsider FP’s business priorities. The
risk of supply chain disruption has now become a major concern, along with the rising cost of
manufacturing in China and the long supply lines that result from the current strategy.
On reviewing its longer-term business objectives, FP has decided along similar views to several its
competitors that there is a need to move to dual sourcing of its manufacturing. By splitting the
manufacturing between Asia and the Western countries, PP management considers the risk of
disruption to the supply chain will be reduced especially with one part of the manufacturing
geographically nearer to their targeted consumer markets. FP accepts that supply chain costs may
increase because of this change in strategy.
However, improving availability of products to meet demand is viewed as the main priority and has the
support of their investors. FP knows that the forming of a more diverse sourcing network with better
relationships and improved analytics across the supply chain will be key to its growth objectives and
enhance resilience both of which could help mitigate some of the expected supply chain increased costs.
To support the aim of better supplier relationships FP will be adopting elements from the Collaborative,
Planning, Forecasting and Replenishment (CPFR) framework. In the first instance they aim to form
agreements with their new manufacturers and produce a joint business plan to include the sharing of
sales and order forecasts for their key product lines.
As part of this new strategy the company plan to share both current and historic sales and customer
related data with their manufacturers. This is a first step toward the investment in Artificial Intelligence
(AI) to radically streamline planning of demand, inventory and supply as well as influencing new product
design. The business anticipates such collaboration will bring them more in line with some competitors
and hopefully ahead of many others.
Question 57: In line with the supply chain risk related framework and standards which planning
horizon is FP currently addressing?
a. Tactical Planning.
b. Strategic Planning.
c. Operational Planning.
Question 58: FP’s approach to compliance with the CPFR model has failed to consider which of the
following?
a. The impact on existing manufacturer’s production and performance.
b. How exceptions in the forecast and order process will be handled.
c. The level of risk of sharing data with third parties.
Question 59: Aside from streamlining the process, what additional benefit will FP expect to gain from
the AI strategy?
a. It will help FP learn from past mistakes and deal with exceptions.
b. It will help FP diversify their supplier network.
c. It will help FP with better sourcing of products.
Question 60: How might the use of AI help FP influence product design?
a. By stronger working relationships with their manufacturers.
b. By quicker processing and better forecasting.
c. By continuous processing of market and customer data.