Reference no: EM133333875

Case Study: The Company: Advanced Electronics Inc. Advanced Electronics Inc. (AEI) is a large Canadian firm based out of Vancouver, British Columbia. The company was founded in 1979 and specializes in low-end, highvolume electronics such as televisions and home theatre components. AEI's products are currently purchased from a manufacturer in China, imported to Canada and then distributed through electronics-focused stores and big-box furniture stores situated in British Columbia and Alberta and some small volumes in the north-western region of the US. The products are branded as Advantics and as store-exclusive brands and sold to consumers looking for quality products at affordable prices. Of the two brands, the Advantics products are marketed as a higher quality while the store-exclusive products are branded as a more affordable option with less high-tech options. By offering the two types of brands, AEI can increase sales and provide a store-specific brand that benefits the stores with more selection to appease customers. Over the past year, AEI has been researching additional markets to enter and expand the business, particularly central Canada, where the largest concentration of the population of Canada is located. Your Role: You have recently been promoted to Director of Operations for Central Canada for this project (You have been at the company for 2 years). You have been in the transportation industry for ten years and have your CCLP designation. Your responsibilities include warehousing, selecting, and coordinating work with 3PLs, transportation, and inventory management. The Market: Due to the 2020 pandemic, there has been a recent increase in demand for home theatre equipment. Research conducted in the Fall of 2020 determined that there is a significant opportunity to gain market share in central Canada and the north-eastern US through higher-end home theatre equipment. Research has also determined that it is a trend that is most likely to continue for at least the next 15 to 20 years due to the pandemic permanently changing the way consumers watch movies. AEI's business development division has been researching the central Canada market and the options for expanding manufacturing to serve the new market and recommended that AEI proceed with the expansion. Due to AEI's reputation in the electronics industry, the business development division was able to successfully negotiate a contract to supply high-end speakers and home theatre components for the largest big-box electronics store in central Canada and north-eastern US starting in the summer of 2021. The deal includes a store-exclusive brand as well as the Advantics brand and will increase AEI's annual volumes by 30% in the first year, 50% in the second year and 100% in the third year. Due to the significant volume, the new customer has stipulated that AEI's prices should reflect these volumes and include a 10% discount. AEI's financial department has analyzed the contract and determined through a cost benefit analysis that the deal is beneficial for the company however suggested that AEI's logistics department review the current supply chain processes to reduce costs. There are currently two options available to AEI for distributing the product to central Canada and northeastern US: Option #1 Increase the manufacturing volumes with the existing manufacturer in China, ship the product intermodally from China to Vancouver and then by rail to a distribution center in Mississauga, Ontario, where the product will be unloaded, stored, and distributed to Ontario, Quebec, and the northeastern US. The manufacturer in China currently has excess capacity and produces higher quality electronics for a few smaller companies. Option #2 A reputable, electronics manufacturer known for high quality in Denmark has made a proposal to manufacture the high-end home theatre products for AEI. The recent trade agreement between Canada and the EU, CETA, has made it financially viable to import electronics from the EU. This option would include shipping product out of the Port of Aarhus to either the Port of Montreal or the Port of Halifax and then by truck to the distribution center in Mississauga, Ontario. Same as Option #1, product will be unloaded, stored, and distributed to Ontario, Quebec, and the northeastern US. In this initial phase of researching the project, you have been tasked with completing a qualitative analysis, which will then be used by the financial department to complete a quantitative analysis on both options. Assignment #1 Technology and Transportation Efficiencies AEI currently uses a warehouse management system (WMS) and a transportation management system (TMS) in its distribution center in Vancouver. With distribution out of only one location, the WMS and TMS proved effective. With volumes potentially increasing by 100% in the next 3 years, the company has considered investing in technology and looking at developing a collaborative relationship with three carefully selected road transportation providers in Canada that will be used for Option #2 and final delivery for both Options #1 and #2 (Rail will be used for Option #1 from Vancouver to Mississauga). The company is considering three providers to minimize the risk of service failures and will have contingency plans in place outside of the three chosen providers. You have been tasked with researching the benefits of Enterprise Resource Planning systems (ERPs) and researching the benefits of the increased volumes for transportation providers to help with the rate negotiations. Specifically, you have been asked to:

Questions:

1. Describe the specific benefits of an ERPs and how an ERPs will increase supply chain efficiencies for the increased volume of product.

2. What economies of scale might be achieved by the transportation providers that will be chosen by AEI for the additional volumes? Be sure to discuss the economies of scale achieved for both options. Also, could there be any related diseconomies of scale? Your Assignment Your response should be approximately contain a brief introduction, your analysis and recommendation, and finally a conclusion. You can use the Word template provided to get started. Please include with allteam member names and submit your assignment in Word (.doc or .docx) format. For this assignment, you do not need to include a table of contents, or executive summary. However, you are encouraged to include appendices of reference material where appropriate (i.e. computation tables or reference material not required in the discussion portion of your submission).