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Supply chain management is an essential part of running a business. An efficient supply chain should be optimized for every link in the chain, meaning that the needs of every company involved in the supply chain should be met. The original supply chain of the MasterTag seed labeling business has proved to be inefficient with various issues leaving their customers unhappy. This paper will cover the problems that the company encountered, their plan for a new supply chain, and its benefits.
MasterTag began manufacturing plastic labels for plants in 1950. Soon the firm became popular among the seed companies that sold seeds to commercial growers. Those companies would order one or two batches of labels at the beginning of the growing season and then sell both the seeds and labels to the growers (Getter and Behe 878). The seed companies did not enjoy ordering the labels, but their customers saw great benefit in them and so labels had to be ordered. The issue was with the fact that seed companies could not predict how many labels they would need to order for the season because of the crop failures and change in the available items. This fact would lead to large numbers of labels being left unused, making the seed companies unhappy.
This issue pushed MasterTag toward creating a new plan for the supply chain. Instead of providing the seed companies with labels, the company decided to provide the growers with them instead. The growers would order seeds from the seed companies, and labels from MasterTag. When clients require more labels, they can order them again, without involving the seed companies. The key benefit of this approach is the lack of overproduction of labels. Although the company could sell more tags to the seed companies, this would eventually result in a possible decline in relationships between MasterTag and their clients. With the new plan, they can manufacture and sell exactly the required amount of labels according to the demand of the growers. This action should cut the costs of manufacturing because fewer labels would go unused (Pereira and Gonzaga 87). Subsequently, the growers should be satisfied with this system because it would provide them with the same service at a possibly lower price (Rubera and Kirca 19). The study does not cover whether the prices would change for the growers, but it is possible that the seed companies sold the labels at a higher price than MasterTag.
The pros of the new plan are the lack of overproduction, better relationships with the customers, and the streamlining of the supply chain (Khodakarami and Chan 39). The possible cons are slightly more complicated. With the switch to growers as the primary customers, it would create the need for a larger customer relations division. There are two reasons for this. The first is that the growers represent a larger group of customers than the company worked with previously. The second is that MasterTag would have to work with the clients throughout the growing season to provide additional labels when the customers require them. This fact would increase the cost of customer support (Xie 89). As previously mentioned, the study does not provide any pricing information, but the change in customer base could affect the prices of the product and will definitely affect the amount of product ordered by the clients (Hinterhuber and Liozu 420). However, these points were not addressed in the study, and therefore are not certain.
The new plan created by MasterTag would solve the company’s current issue but at the same time could create new ones. To make sure this plan is viable, both pros and cons should be considered. However, the old plan represents a faulty supply chain that would need to be addressed either way.
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