80.2K

Verified Solution

Link Copied!

Chelan Trading Company Case Study Chelan Trading, based in Hong Kong, buys electric connectors from about 50 factories in the Guangdong Province of South China. They sell them to distributors in Asia, Europe, and the US. Because their products are used in construction, demand is lumpy (erratic, and therefore difficult to accurately predict. They are 100% build-to-order, meaning that they dont purchase from their suppliers until their distributors place orders to them. They currently stock no inventory at all, and have no serious assets beyond computer systems and their client/supplier database.. Their products are generally low-cost with low margin, and their lifecycle is fairly long (2+ years). Their suppliers are all delivering products to Chelan on an FOB Hong Kong basis, and their average shipment from an individual supplier is 3-5 cubic meters. Sales from Chelan to their distributors are always CFR. Their annual volumes are roughly: Asia (10 countries with demand spread across them) 4-5 containers /week Europe (mainly UK, Netherlands, Germany, France) 10-15 containers/week US (demand mirrors US population distribution, more on East Coast) 20-25 containers/week In order to save on freight cost, they have historically tried to aggregate demand from multiple customers, and use a forwarder to build consolidations from Hong Kong to cities that are close to their distributors. Their singular focus on freight cost has resulted in two down-sides for their customers: Order-fill-lead-times are not only long, but erratic (theyre very focused on optimizing container space because of the low margin on the product). Distributors dont always receive the product in the same city (consolidation destinations depend on the specifics of the orders at any specific time). In other words, one week they may send a container to Miami and ask their Atlanta-based distributor to pick up his goods there, then the next week they ship to Charlotte, etc. While their demand in Asia is up this year, theyve noticed that their US and European customers are buying less from them, for the reasons noted above. They need help deciding what to do to protect and grow their US/European business, and are asking you to lay out multiple options, together with the pros and cons of each. You need to list what information youll need from them to do an objective comparison of these options, so they can make an informed business decision on which way to move forward. They have assured you that if you come up with the right possible solution for them, the consulting contract is yours.

: You are now a consulting company! Write up some ideas that would help Chelan address these difficult issues. Your report should be creative and at minimum 2 pages in lengthYou are representing your company, so double check sentence structure and grammar.

TIPS: Use your own knowledge of geography, along with what you are learning in this course. Feel free to ask me questions

. Link your suggestions to benefits, and associate the benefits to the problems outlined above. Use assumptions when you dont know a fact- but state your assumptions. The sky is the limit as to your ideas, but remember that Chelan is a small trading company.... The Chelan Diagram slide may be useful in understanding the flow of things

Answer & Explanation Solved by verified expert

See Answer