Case Study
Supply chain management at Regal Marine
Monte Carlo harbor. Caption: Regal customers expect luxury and value.
Read the case study that follows.
View the video tour of Regal Marine that addresses its supply chain issues, then view the brief video clip containing the authors’ observations.
If you wish to have further background, reread the material on supply chain management in Chapter 11.
Chapter 11 deals with Supply Chain Management. As firms become increasingly focused and specialized, the supply chain performance grows in importance. Money spent with suppliers represents a huge portion of most firms’ revenues. This is the case at Regal Marine where suppliers are relied upon not only for quality components delivered on time, but for up-to-date technology and innovation. Regal expects members of its supply chain to be full partners. Suppliers are expected to join Regal in providing the customer not just quality and on time delivery, but performance and image. Luxury performance boats require no less. At the same time, Regal expects value.
Vendors meet with Regal’s designers to discuss changes to be incorporated into new product designs. Regal’s strategy of differentiating itself by building luxury performance boats means that suppliers must participate in this ongoing effort. You will notice on the right hand side of Table 11.1 in the text the characteristics expected of suppliers when the strategy is one of differentiation. These include:
Share market research; jointly develop products and options.
Select primarily for product development skills.
Use modular processes that lend themselves to mass customization.
Minimize inventory in the chain to avoid obsolescence.
Invest aggressively to reduce development lead time.
Use modular design to postpone product differentiation for as long as possible.
These characteristics are high on the list of issues between Regal and its suppliers and lead to the concept of ‘partnering’. ‘Partnering’ extends from jointly developing components, to modular designs at suppliers and at Regal, to rapid delivery and low inventories. These techniques allow innovative products to be rapidly and economically included in Regal’s boats.
Regal has also developed special arrangements with suppliers who maintain shop floor components for Regal. In some instances title transfers when the item is used, and in other cases title transfers when items are delivered to the property. Both approaches help Regal reduce total inventory and the related costs.
Additionally, Regal’s membership in the American Boat Builders Association allows it to participate in lower costs because of the combined purchase strength of the association.
Finally, Regal works with an Orlando personnel agency to outsource part of the recruiting and screening process for employees. In all of these cases, Regal is demonstrating creative approaches to supply chain management that help Regal and the end user.
