Case Study: Supply Chain Trends The Do-Green Solar Systems caseaddresses challenges faced by a Canadian manufacturer as a resultof the CUSMA trade agreement. As you read through the case, thinkabou the challenges, risks and complexities in changing theirsupply chain from North Americanto Internationalmarkets. Do-GreenSolar Systems Taylor Douglas, V.P of Do-Green Solar Systems, wasevaluating the strategic position of the company. With the newCanada-United States-Mexico (CUSMA) agreement in place and theuncertainty around future trade with the United States Taylor waspondering the future direction of Do-Green. Do-Green’s HistoryTaylor grew up in the family business. Established in 2000 Do-Greenbegan as a family run electrical contracting company. Their corebusiness focused on providing residential electrical contractingfor new home construction as well as renovations and electricalupgrades to existing homes. As the business grew Taylor began todeal more and more with requests from customers for solar poweroptions for their homes. Taylor realized that the market forresidential solar power was growing. Supply agreement/partnershipattempts with solar component suppliers proved to be unreliable. Itwas at that point Taylor decided to purchase a facility to beginmanufacturing solar power components for residential use. In 2004Do-Green Solar Systems was formed. Do-Green was now involved inboth the manufacture and installation of solar power systems forresidential use. The business saw steady growth through 2006.Do-Green had established a lucrative business niche for itself. NewOpportunities At the same time that Do-Green was establishingitself, Canadian’s saw the expansion of big box home improvementretailers and the proliferation of the “do-it-yourself” craze. In2008 Taylor Douglas approached several home improvement retailersand in 2009 Do-Green signed a supply agreement with a big box homeimprovement retailer to stock their products in 25 stores acrossOntario. People could now purchase and install their ownresidential solar power systems and Do-Green’s business profileevolved into that of a manufacturer/distributor. To meet theincreased production demands Do-Green acquired a local mid-sizemanufacturing facility. For the next two years Do-Green settledinto its new business model as installer, manufacturer and retaildistributor of solar power systems for residential use. Do-GreenBecomes Leaner and Looks to New Markets Not one to rest on pastsuccesses, Taylor began to look at ways to grow the business. Itwas now 2011. The Canadian dollar was at par with the U.S. dollarand Taylor wanted to break into the U.S. market. To do thatadditional capacity needed to be purchased or Do-Green needed tofind ways to run their operation more effectively and efficiently.Taylor decided to look within the company for capacity improvementopportunities. Do-Green increased their capacity through severalinitiatives. They invested in an ERP system which allowed then toincrease productivity and fully integrate the ordering andprocurement process. Supply chain visibility increased. Do-Greencould now receive replenishment orders from retailers directly intotheir system. This enabled them to reduce raw material, work inprocess and finished goods inventories by a combined 20%. Do-Greenalso implemented lean process integration throughout theiroperation. This accounted for an additional 15% increase inproduction capacity. Once fully implemented these initiativesaccounted additional capacity of 30%. Delivery times were reducedfrom three days to one. With the newly found capacity Taylorapproached the U.S. affiliate of the Canadian home improvementretailer. In 2012 Do-Green signed a contract to supply 30 U.S.based stores throughout the North East states. For the next severalyears Do-Green established themselves as a major stakeholder in theresidential solar power industry. The Canadian Dollar Loses ValueIn 2014 the Canadian dollar began to lose value against the U.S.dollar. Taylor and the Do-Green management team looked to furtherstreamline their manufacturing and distribution network. Profitsbegan to shrink as the devalued Canadian dollar began to become areal issue for Do-Green shareholders. However, even with theexchange rate being what it was, the company remained strong andprofits were steady. Do-Green Goes Green With consistent demand anda reliable and robust supply/distribution system in place in bothCanada and the U.S. Taylor began to focus on sustainability issueswithin the supply chain. Much of the dunnage and packaging Do-Greenused to ship their product to retail distributors could be reused.Taylor began to develop a reverse supply chain where packaging anddunnage was returned to the Do-Green manufacturing facility to beused again. This initiative helped to further Do-Greens reputationof being a sustainable and environmentally conscious organization.Cost savings were also realized through the reverse supply chainprogram which helped offset the ongoing disparity between theCanadian and U.S. dollar. The New Frontier As Taylor Douglaspondered the new strategic direction of Do-Green, Taylor knew theexact date that Do-Green’s future was in jeopardy. On November 30,2018 the (CUSMA) Canada United States Mexico agreement was signed.This new trade agreement took the place of the long standing NAFTAtrade agreement. Under the CUSMA agreement Do-Green now facedhigher tariffs to export into the U.S. This combined with an evenweaker Canadian dollar meant that Do-Green had to change direction.The U.S. market was no longer viable. Taylor and the Do-Greenmanagement team knew there were market entry opportunitiesoffshore. With 1.4 billion people and 18% of the world’spopulation, China was the obvious choice. Do-Green had to develop anew international supply strategy if they wanted to do business inChina. Issues and Concerns Concerns regarding exporting to Chinawere many. Taylor knew there would be logistical issues. Currentlytrucks left their facility and delivered directly to retail storesin both Canada and the U.S. International supply chains requiredmulti-tiered distribution systems. There would be currency issuesto consider as well as the potential for theft of products, productdesign and company intelligence. ERP and technology compatibilitywith Chinese distribution partners was of concern. Do-Green’soperational concept of being a lean organization would be taxed.The longer the supply chain the more inventory investment wasrequired. With a longer more diverse supply chain Taylor knew thatrisk would increase, supply chain visibility would decrease andoverall control reduced. As a green company Do-Green would incuradded cost to retain its circular supply chain. Taylor knew thatreclaiming packaging from China posed significant logistical andcost considerations. Among other things to consider there was therisk of natural disasters, terrorism and labour disputespotentially disrupting the supply chain. Where to go From HereTaylor and the Do-Green management team had some significantstrategic planning issues to consider. They understood supply chaintrends were heading toward more diverse and complex systems in thedelivery of products and services worldwide. They realized thatthey needed to resolve a significant number of issues if Do-Greenwanted to compete in the global supply chain.

1. Name and explain at least three risks the company faces andwhat dimensions of supply chain risk these fall under.