Case Number: 5-107-003, Year Published: 2007, Revision Date: March 11, 2009
HBS Number: KEL362
Supply Chain Management, Sourcing, Responsiveness, Flexibility
In 2003, ITC responded to the high level of obsolete inventory by shifting risk from finished products to manufacturing and raw materials. This required that their supply chain be much more flexible and responsive than it was in the past. By 2006, changes in the supply chain that included moving manufacturing in-house improved flexibility and responsiveness. Obsolete inventory was significantly reduced and the company was much better at matching supply and demand. Cost, however, continued to be higher than that at third parties. The company had to decide on the appropriate tradeoff between cost and responsiveness when structuring its supply chain.
The case illustrates how Wills changed its supply chain to become more flexible and responsive. This change, however, came at a cost. The case requires the students to analyze the tradeoff between cost and responsiveness/flexibility to decide on an appropriate level of flexibility/responsiveness. The case also requires the student to understand the relative value of increased flexibility versus increased responsiveness.
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