Glenn V. Valerta, Alyssa Faith A.

Niangar BSA – 1A 07/18/2023

Case Analysis #1

1. Problem Solving & Decision-Making Process

Step 1: Identify and define the problem.

Somerset Furniture Company (SFC) faced significant challenges that revolved around its
supply chain operations. One of the primary issues stemmed from the decision to outsource parts of
its product lines to manufacturers in China. While outsourcing can offer cost advantages, it also
introduced complexities and difficulties for SFC. Miscommunication with Chinese suppliers became
a frequent problem, leading to delays in the production and delivery of furniture components.

These delays in shipment were detrimental to SFC's customer service efforts and reputation.
The company recognized that late deliveries not only harmed its credibility but also resulted in
potential customer loss and excessive inventory. This presented a significant dilemma for SFC, as
maintaining customer satisfaction and meeting delivery timelines were crucial to their business
success.

Moreover, SFC also experienced challenges in effectively managing customer service. The
complaints received from customers indicated a breakdown in the communication and coordination
between the company and its suppliers. Inefficiencies and missteps in the supply chain resulted in
dissatisfied customers and tarnished relationships.

Furthermore, even with these measures in place, SFC faced additional challenges due to
supply chain variability and increased security measures following the events of 9/11. These factors
further contributed to shipment delays, with some reaching as high as 40%. SFC realized that their
global supply chain was losing its competitive advantage, necessitating further improvements and
adjustments to overcome these hurdles.

Somerset Furniture Company encountered various difficulties related to outsourcing,

delayed shipments, miscommunication with suppliers, and maintaining effective customer service.
Recognizing the impact of these issues on their reputation and profitability, SFC must seek to
improve their supply chain operations, enhance core competencies, and implement technological
solutions to regain competitiveness in the global market.

Step 2: Determine set of alternative solutions to the problem.

Taking into account the Somerset Furniture Company's issues, we have decided to present
alternative solutions as a means to handle these kinds of difficulties. The following alternative
solutions are suggested for the company to be able to further enhance their business operations
without a hitch while also satisfying their customers:

1. Foster upstream chain linkage

2. Interchangeable components
3. Customer service
4. Transportation & Shipping partnership/collaboration
Glenn V. Valerta, Alyssa Faith A. Niangar BSA – 1A 07/18/2023

Step 3: Evaluate the alternatives.

Now that the alternative solutions have been proposed, the criteria for evaluating the
alternatives must be determined. One of the key variables for the company to account for is how to
reduce operational delays. Clearly, time is of the essence for the company, as it affects both customer
service and its image and credibility. As a result, the company must choose a solution that will
improve their timeliness in order to satisfy customers and maintain their market reputation.
Following that, the company must also prioritize cost reduction. Naturally course, a company would
benefit more if it incurs less expenses while increasing its profit. Subsequently, when deciding on
the best alternative solution, the company has to assess the quality of customer service. Customer
service quality, in the sense that consumer demands are met or surpassed, resulting in fewer
complaints, while also keeping in mind that the company will not lose prospective consumers. After
the formulation of the criteria, the company will assess the following alternatives:

 Foster upstream chain linkage

Somerset Furniture Company should prioritize developing strong relationships with

its Chinese suppliers in order to strengthen its upstream supply chain. This is important
because suppliers are the primary source of materials for SFC products. Addressing the
issue of receiving faulty parts have a significant impact on customer satisfaction. It
motivates suppliers to consistently deliver higher quality products by providing incentives
and support. Building strong connections in the upstream supply chain ensures a consistent
supply of materials, reduces the risk of faulty parts, and ultimately improves customer
products and services. Somerset Furniture Company benefits from improved supplier
relationships through improved business performance, increased customer satisfaction, and
higher profits.

 Interchangeable components

It improves manufacturing efficiency while conserving customization by

standardizing and making components interchangeable. Bringing replacement parts
production in-house reduces costs and lead times. Establishing an assembly plant in the
United States improves quality control. Adding a distribution center in China and another
near the US port of entry also improves supply chain efficiency and streamline logistics.

 Customer service

Somerset Furniture Company should establish a proactive customer service team to

significantly improve its customer service quality. By increasing the size of the customer
service support function, the team will have more time to reach out to customers,
particularly those who have had a negative experience, via courtesy calls, follow-up calls,
emails, and texts. Failure to address customer issues promptly can result in customer loss,
making a proactive customer service team essential. While it is critical to respond quickly to
exceptions such as late deliveries or damaged products, it is also beneficial for the
organization to understand and meet customer preferences, dislikes, and needs.
Glenn V. Valerta, Alyssa Faith A. Niangar BSA – 1A 07/18/2023

Implementing customer service scorecards and online surveys provides Somerset with
invaluable feedback and improves communication between the company and its customers.

 Transportation & Shipping partnership/collaboration

Somerset Furniture Company, in collaboration with its transportation partners,

should leverage technology. RFID implementation enables real-time updates and tracking
for the transportation company. Predefined thresholds are set by improving forecasting
capabilities, triggering a truck pre-order when a complete order is expected to be ready
upon the truck's arrival at the manufacturing facility. The trucking company can better
estimate consumer demands and be more prepared by improving forecasting accuracy and
utilizing technology. On the other hand, Somerset may not be able to rely solely on China as
a supplier due to quality concerns with production facilities and challenges in improving
transportation and shipping resources. Somerset improves product quality, thereby
protecting its reputation, while also increasing the speed with which ordered goods are
received. These improvements may result in cost savings and improved customer service for
Somerset. Furthermore, delays and their consequences will be fixed.

Step 4: Choose an alternative.

In terms of criteria, the company should prioritize transportation and shipping

partnerships or collaborations. As the criteria implies, this alternative solution is the best one for
resolving the company's major issues.

According to the criteria, focusing on the company's transportation and shipping

partnerships would alleviate their issue with delays. Wherein these delays have an impact on the
company's reputation, customer service, and, of course, profitability.

By applying this alternative solution, the company would minimize their time of shipment,
as this solution provides answer in increasing the speed of their business operations. And in turn
for improving their timeliness, the company would improve their brand standing in the market, and
the customers would be delighted for this development. Thus, resulting to more potential
customers and higher customer service quality. And also, this affects the profitability of the business
as it incurs less costs of expenses while generating higher gains or profits.

Conclusion.

A company would be able to solve various types of problems or issues through employing
this process to make decisions. It is extremely important to note that decision-making is impossible
if a business organization does not understand the root cause or the primary problem of the
company.

The initial and primary phase in problem solving is identifying the issue, which leads to
decision-making. With the help of this analysis, the management can develop an effective approach
or remedy through this process. This is also true if the manager wants to conduct a thorough
analysis before making a decision. Just like in the case of the Somerset Furniture Company, they
were able to obtain the best solution or remedy for their problems. Following the process, which
includes defining the problem, stating alternatives, and selecting the best solution, the business
Glenn V. Valerta, Alyssa Faith A. Niangar BSA – 1A 07/18/2023

organization will be able to improve its performance and condition, and maintain its operations in
the long run. Furthermore, the company was able to achieve an arrangement that would generate
profits within their company and benefit the company's well-being.

Overall, the goal of this process is for every business organization to be able to make good
decisions while avoiding unnecessary risks that could adversely affect their condition and instead
enhance the company.

2. Do you think Cisco's centralized approach to risk management would be appropriate

and useful for retail companies like P&G and Walmart?
Cisco, a renowned IT and networking company, opts for a centralized approach due
to its nature as a manufacturing company. Centralization facilitates decision-making by top
management, leading to business advancement and improvement. However, it may not be
suitable or advantageous for other types of businesses, specifically those in the
merchandising or retail sector, such as P&G and Walmart. We firmly believe that a
centralized approach is not the most appropriate strategy for these businesses, although it
may have some relevance. In the realm of merchandising, the lower tier of the supply chain
plays a vital role, emphasizing customer orientation. Consequently, a decentralized
approach proves to be a superior solution. Decentralization reduces delays, enhances the
flow of product development, and encourages feedback and innovative solutions. Therefore,
Cisco's approach is not ideally suited for retail giants like Walmart and P&G. Instead, these
companies should adopt a decentralized approach to optimize the development of their
respective supply chains.