Daikin Case Essay

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SCM 701- Supply Chain & Logistics Management CASE #4 – Daikin Industry Zhenqiu Liu Recommendation It takes Daikin 57 – 147 days to place order, order materials, manufacture, and ship and then be ready for sale in a assumed perfect situation when order from sales companies and material order to suppliers is highly consistent. Graph 1 demonstrates the information flow from the end-consumer back through the supply chain to Daikin’s suppliers of residential air conditioners and the supply chain forward from its suppliers back to the consumer. Each step in the supply chain system can be tighten up or even eliminate to cut costs and better meet the market needs, especially in its long term survival. The report provides possible solutions to three major steps – interaction with retailers, order and procurement process and manufacturing process. Graph 1 Daikin Industry’ Current Supply Chain System Interaction with Local Retailers It is highly recommended for Daikin to abolish sales companies. First of all, It takes time for those 21 sales companies to collect data and then to provide sales forecast to the manufacturing factory in Shiga under a “pre-purchase orders” which only allows the sales companies to cancel order at least one month before the requested delivery date while the peak season usually lasts for less than two months. In addition, they are afraid of stock-outs therefore forecast can err on the optimism side. Third, as these sales companies would not be aware of retailer inventory at either the store or warehouse level and there were large fluctuation in residential air conditions weekly demands, the forecast provided by sales companies could not provide useful information as Daikin expected. To take place of the regional sales companies, Daikin can directly refer to the information provided by local retailers. With the help of

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