Stoeckl Kinder Products Ltd.

Stoeckl Kinder Products Ltd. (SKP)

Report by David Lim

2018-07-17

Stoeckle Kinder Products Ltd.

Att: - Michael and Rick  

Dear

Kindly find attached report on global sourcing.

Your truly

David Lim

Tables of Contents

• Executive Summary                                                 4                        
• Issues & identifications                                                 5
• Environment & Root cause analysis                                 
• Alternatives and/or Options                                         
• Recommendation                                                         
• Implementation plan                                                 
• Monitor and control                                                         
• Exhibits, Appendix, Abbreviations                                        

Executive Summary

Stoeckl Kinder Products Ltd. ( SKP) opened in 1920 by Berndt Stoeckl Austrian origina migrated to Canada after Second world war in Ontario, London, crafted and sold wooden baby furniture as cribs, chair, stools, tables, as business grew small manufacturing company was purchased and his 2 sons involved in management after graduating from school, as time passed Stoeckle left 90% of shares to his sons equally and 10% to his daughter. Over the years company grew and gradually had its product lines boarder and gave way to plastic and metal products and generation grew with company revenue having its product lines at Car seats to 39%, Baby carriage to 54% and furniture at 7%. Geographically company sold its range in Canada at 66%, USA-23%, Mexico 4%, Austria and Germany 7%, two cousins had company shares at 24% each and rest within family, siblings, aunts, uncles and close family friends.

At the present juncture in 2014 company was facing as stagnant due to lack of cohesive direction and poor operational execution which was concern of other shareholder for their monthly income and retirement nest. Another major was souring its major revenue of 54% at 92% outsource from China which had issue of complex supply chain , greater lead time , lower level of control of supply chain with hidden cost, in addition to risk of safety issue and intellectual property theft for second tier of supply chain.

A new low cost sourcing opportunity was solution to its core issue with detailed EDC report, and detailed fact finding Vietnam was the destination to our core issue which can be implemented on sourcing on hybrid quantity i.e. half sourcing to remain from China and gradually to be full fill full quantity at later stage on success of its performance metrics.

Later followed by diversification and implementation of new product category and Introduce E-commence platform will have success and maintain its reputation in Toddler sector. Please find opportunity to detailed report.

Issue Identification –

Short terms

• Lack of structure and vision of company’s supply chain
• Significant stakes throughout the supply chain in 3 ranges of products and each division tries to improve its procurement strategy
• As efforts are individually made which confuses within chain which bring decentralisation of the chain.
• Financial situation tight to infuse more capital for growth of company

Long term

• Lack of global procurement strategy
• Missing long term vision on Supply chain management cost for success of business
• Lack of investment in efficient process i.e. experiencing supply chain problems in its three rages

Environmental analysis

SKI a family business founded shortly after second world war by a Austrian Berndt Stoeckl immigrant to Canada, in London Ontario, Initially company line of products manufactured wooden baby furniture, his sons also did a good job and company grew and expanded business company from small craftsmen to large manufacturing of children product, at present only company accounts its revenue 7% of furniture, car seats for children and babies 39%, stroller and carriage 54%. Sales categories accounts to Canada 66%, Northern US 23%, Mexico 4% and due to roots of Europe Austrian & Germany 7%, presently 2 Grand sons were in operation of company. Manufacturing of stroller and prams was outsourcing from China – 92% apart from engineering works supplier was responsible and due to its primary sourcing secondary sourcing was also done in China with 7 models by supplier including 3 models of its unique feature of sport look, and 1 model of hybrid made-in-house in conjunction of with car seat. With present scenario of SKI to maintain its true competitive edge in its market area a strategic decision needs to be constructed in view of Short and Long-term issue, mention its

SWOT analysis

Strength

• Strong product categories in durable juvenile products
• Strongest Canadian sales network
• Wide sale network in USA, Mexico, Austria, Germany
• Reliable sales through retails network and its independent baby stores
• Loyal Buyers committed on buying products that were safe with material for their children’s
• Loyal Buyer interested in purchasing from socially and environmentally responsible companies

Weakness

• Lack on vision of supply chain strategy
• No frim structure of company
• Decentralised purchasing strategy
• Missing global procurement strategy
• Too much influence of family shareholders focus and concerned only on one goal monthly income and retirement nest without any professional input
• No Contingencies funds or expansion strategies due to lack of capital funding, which hinder the strategies on either expansion of product development or adopting any new strategy  

Opportunities

• Adopt global procurement strategies
• Centralised procurement strategies
• Introduce Alternate Global sourcing strategies
• Reduce company carbon foot print – install solar panels, implement geothermal heating and grey water reclamations
• Best course of action offering broader products, array of features and benefits at reasonable price
• Due to strong R&D and agreement on supplier of Polypropylene manufacturer baby Car and booster seats were all assembled in Canada , a new market segmentation can be explored
• Introduction of baby sport equipment
• Announce company online web portal supporting sales comparison and customer support on immediate basis and introduce online sale in long term

Threats

• Revenue of carriage and stroller (54%) outsource from china 92% having secondary supply chain with low graded material resulting in jeopardising brand and safety concerns
• Second tier of sourcing supplier in China case an intellectual property theft – copy parts that were designed by Stoeckl and sell them to other companies
• Both the leader had a same goal, but not mutually agreed conclusion and lack of global sourcing strategy
• Regulatory issue in Canada – safety standards on car seat and consumer product safety
• Community pressure on kind of reshoring products in country from low cost countries to safe guard jobs
• Existing supply chain had longer and more complex supply chain from china, greater lead times and lower levels in offshore supply chain and hidden cost

Alternatives and/ or Options

Recommendation –

Reference to above alternative and options to over come present core issue on complex supply chain, longer lead time with hidden costs from China. A primary strong recommendation of Hybrid process is to focus on building partnership is new market and maintain half of our sourcing in China for 1 year secondly a country which can adaptable, versatile, economical and can achieve our prime concerns, as per my comparison data (as per EDC ) as per Exhibit from 5 countries Bangladesh, Czech republic, Hungary, Turkey and Vietnam, my suggestion is to focus and streamline to Vietnam.